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November 2005

ChartWatchers

NASDAQ CUP-WITH-HANDLE BREAKOUT

by Chip Anderson

The Nasdaq’s breakout at 2200 confirms a bullish cup-with-handle pattern and targets a move to around 2500. Until there is evidence to the contrary, this is the dominant chart pattern and further gains should be expected. William O’Neil of Investor’s Business Daily (IBD) developed the cup-with-handle pattern. It is a bullish continuation pattern that marks a corrective period followed by a minor pullback and a breakout. Looking at the Nasdaq chart, I think the characteristics of a bullish cup-with-handle are present. First, there was a sharp advance from 1750 to 2192. This established Read More 

ChartWatchers

MARKET BECOMING OVERBOUGHT IN ALL TIME FRAMES

by Chip Anderson

When a stock is above a moving average it is considered bullish, and the stock can be considered to be in a rising trend for that time frame. A good way to determine the market's overall condition (overbought/oversold) across a range of time frames is to analyze the percentage of stocks above their 20-, 50-, and 200-day moving averages. The following chart shows the condition of the stocks in the S&P 500 Index. As you can see the market is becoming overbought in all time frames. Each of the three indicators is not only approaching the top of its trading range, but they are Read More 

ChartWatchers

NASDAQ HITS FOUR-YEAR HIGH

by Chip Anderson

The chart below shows the Nasdaq Composite having hit a new four-year high this week. It's now trading at the highest level since the spring of 2001. There's another shelf of potential resistance to watch at 2328 (see circle), but the action has been impressive. That also continues the trend of higher lows and higher lows that started in the fourth quarter of 2002. Some of our readers have asked, however, about a price pattern that's been forming since the start of 2004 that's marked off by the two converging trendlines shown on the chart. Read More 

ChartWatchers

Hello Fellow ChartWatchers!

by Chip Anderson

This week the markets have started pushing into bullish territory.  John, Carl and Arthur all dig into these new events in more detail, but first let's have a look at the S&P 500 Index: The blue arrow shows where the latest close, just below 1250, has broken the upper line on the 52-week (260 day) price channel - which is just a fancy way of showing that it set a new 52-week high.  In fact, you have to go all the way back to June 15, 2001 to find the S&P 500 at this same level.  Is this the big breakout we've been waiting for?  Or is this just a temporary Read More 

ChartWatchers

MIND THE GAPS

by Chip Anderson

The Information Technology SPDR (XLK) broke support in early October, bottomed in mid October and surged over the last few weeks. This surge featured two gaps last week and these hold the key to recent strength. The stock gapped up on Monday and again on Thursday (gray oval). Gaps show power and both of these gaps should be considered bullish unless they are filled. The stock is nearing resistance from the August trendline and early October high. A move above the early October high would break the August trendline and forge a higher high. This would be enough to turn the medium-term Read More 

ChartWatchers

LOWER PRICES AHEAD FOR NASDAQ?

by Chip Anderson

On a longer-term monthly basis, the Nasdaq Composite is very clearly forming a rather bearish "wedge" pattern. Resistance between 2080 and 2220 is quite strong, and rallies back into this zone are becoming weaker and weaker. Ultimately – and we think rather soon, this pattern will lead to lower prices…and perhaps sharply lower prices. Certainly the probability will have increased, and will initially be confirmed once prices decline through wedge support at 2098, and then through of the 25-month moving average at 2032. Then, and only then can we say with any confidence a ravaging bear Read More 

ChartWatchers

HURRICANE DONATIONS, CHARTSCHOOL UPDATE

by Chip Anderson

OUR PROBLEMS ARE PUNY IN COMPARISON - While our weekend power problems were unusual, we realize that they were nothing compared to the problems faced by residents of the gulf coast in the aftermath of Hurricanes Katrina and Rita. For the past two months, StockCharts.com has pledged $5 of every subscription or renewal order to the American Red Cross and its hurricane relief efforts. Last week, we delivered a check for $42,275 to the Red Cross to cover that pledge. In addition, we have automatically extended the subscriptions of all members who were unable to use StockCharts.com due to Read More 

ChartWatchers

S&P TREND IMPROVES -- SOX REGAINS 200-DAY LINE

by Chip Anderson

The weekly bars in Chart 1 show the improvement in the S&P 500 this past week. Not only did it close back over its (red) 40-week average, but it closed above its (blue) 10-week average as well. Even more impressive was the heavy upside volume. That strong action moved the market out of its danger zone. Having survived the dangerous month of October, the market has now entered a seasonally strong period between now and yearend. The weekly histogram bars are still negative (below the zero line). However, they have risen for two consecutive weeks (meaning the MACD lines are starting Read More 

ChartWatchers

Hello Fellow ChartWatchers!

by Chip Anderson

While last week was a really good week for the markets - Dow up 3%, Nasdaq up over 5% - it was a really lousy week for StockCharts.com.  As most of you know, the site had problems creating charts on Thursday and again on Friday and then we were also down much of the day on Sunday.   Soon after the market opened on Thursday, we suddenly stopped getting data from both of our data feed servers.  It was an extremely unusual and unexpected situation.  Why would two separate computers suddenly stop communicating at the same time?  Another frustrating part of the Read More