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January 2006

ChartWatchers

DOW LEADS THE WAY LOWER

by Chip Anderson

Wall Street took a pounding on Friday and the Dow took the biggest technical beating of all the major indices. The Nasdaq, S&P 500 and Russell 2000 all remain above their 3-Jan lows, but the Dow broke below its 3-Jan low. This shows relative weakness and bodes ill for the Dow. The Dow Diamonds (DIA), which is the ETF that corresponds to the Dow Jones Industrial Average, broke falling flag resistance with a move above 109 the first week of the year. This signaled a continuation of the November advance, but that signal has been reversed in a major way. Read More 

ChartWatchers

UNDERMINING GOLD

by Chip Anderson

While mining gold has become very profitable, there are many signs that future prices are being undermined. For example, our first chart shows total assets and cash flow for Rydex Precious Metals Fund. While assets have risen along with price, cash flow (the bottom panel on the chart) reflects that money has actually been flowing out of precious metal stocks. This means that the rally has very thin support. SIDEBAR: We are seeing similar divergences across a wide range of Rydex index and sector funds. Our next chart of the gold ETF shows that Read More 

ChartWatchers

SHARPCHARTS2 BETA 7 ARRIVES FEB. 1st!

by Chip Anderson

SHARPCHARTS2 BETA 7 DUE OUT ON FEBRUARY 1st! We continue to work feverishly here at StockCharts getting the final "Beta" version of our new SharpCharts2 charting tool ready for its February 1st debut.  Here are just some of the changes that we think will dazzle you: No more waiting for the screen to refresh whenever you add or remove an indicator or overlay Clearer lines and more color options Indicators based on prices or based on other indicators Reordering Indicators and Overlays with a single click Store charts and settings in your account Read More 

ChartWatchers

VIX TURNS UP -- S&P TURNS DOWN

by Chip Anderson

A week ago Thursday I wrote a message entitled: "Low Volatility (VIX) Index May Increase Market Risk in 2006 -- S&P 500 Pulls Back From Overbought Condition" (January 12, 2006). The next two charts are updates of the ones shown at that time. I was concerned that a rising VIX from the lowest level in a decade could start to put downside pressure on an overbought market. So far that has been the case. Chart 1 shows the VIX breaking through its December highs to register an intermediate upside breakout. It's no coincidence that the jump in the VIX accompanied heavy stock selling Read More 

ChartWatchers

Hello Fellow ChartWatchers!

by Chip Anderson

Jitters have crept back into the stock market with last Friday's big drop in the major averages.  In addition to breaking the Dow's low from the start of the year, Friday's selloff ended with the first close below the 50-day moving average since the end of October.     Note also that the RSI is now lower than it has been since late October as well and that the MACD is probably going back below zero soon.  Finally, notice that Friday's volume was the highest the Dow has seen in quite some time.  If prices don't immediately rebound Monday morning, look Read More 

ChartWatchers

RETAIL HOLDRS HAVE YET TO RECOVER

by Chip Anderson

Despite a strong start in the S&P 500 this year, the Retail HOLDRS (RTH) remains under pressure and is lagging the overall market. This is not a good sign for the industry group or the Consumer Discretionary sector, which is heavily weighted towards retail stocks. In addition, retail sales drive 2/3 of GDP and weakness in this group is not a good sign for the economy. The Retail HOLDRS (RTH) is trading near broken resistance, but shows no signs of strength and weak relative strength argues for continued underperformance. On the price chart, the Retail HOLDRS (RTH) broke resistance Read More 

ChartWatchers

2006 ASSESSMENT

by Chip Anderson

I am often asked to make an annual forecast, and I frequently oblige, but this year I'd like to take a different approach. Rather than making a "forecast," let's make an assessment of some significant factors that will be affecting market progress in 2006. First is the 4-Year Cycle. On the S&P 500 chart below I have drawn vertical lines through the actual 4-Year Cycle troughs, as well as a few places where price troughs should have occurred but didn't. For the most part we can say that significant price lows occur every four years about 85% of the time. Take note that the Read More 

ChartWatchers

FALSE BREAKOUTS AHEAD?

by Chip Anderson

The first 4-days of US trading has shown nothing but gains; and we believe that this “euphoria” is providing an upcoming opportunity to be come short the technology sector as a whole. Allow us to explain: Using the weekly NASDAQ Composite chart, the rally off the low has clearly traded within a well-defined bearish rising wedge pattern. In fact, it has gone further into the apex that we would have thought, which last week saw prices breakout very modestly above trendline resistance. Common technical convention notes that the further along the apex – the higher risk of “false breakouts” Read More 

ChartWatchers

BETA 7, FUND DISTRIBUTIONS, YIELD DATA

by Chip Anderson

SHARPCHARTS 2 BETA 7 TO LAUNCH ON FEBRUARY 1ST - As we mentioned above, the next version of our SharpCharts2 charting tool will appear on February 1st.  This version of SharpCharts will give you greater control over your charts and overlays and will allow members to save charts into their accounts.  We expect that this will be the last "Beta" release for SharpCharts 2 and that SharpCharts 2 will go into general production soon afterwards. FUND DISTRIBUTION SEASON - The end of the calendar year is also the time when many mutual funds have distributions.  As a technical Read More 

ChartWatchers

CONCENTRATING ON STRENGTH

by Chip Anderson

The market is starting the new year with a bang. Virtually all of the major market averages have risen to new 52-week highs. Some of that new optimism is the result of the Fed minutes released earlier in the week hinting that it might be close to ending its rate-hiking. I've expressed skepticism about the staying power of the early 2006 strength. But only time will tell if that skepticism is warranted. I've also suggested that January is traditionally the best month of the year to take some money out of the market is one is so inclined to do so. An alternative to taking money out of the Read More 

ChartWatchers

Hello Fellow ChartWatchers!

by Chip Anderson

Wow!  Six years into the new millennium already - and into StockCharts.com's seventh year of existence!  Last year was our strongest year ever as we continued to expand our site and our subscribership.  This year looks even brighter with the upcoming release of SharpCharts2 and our long-awaited streaming chart tool. Speaking of which, the final Beta release of SharpCharts2 - Beta 7 - will be out on February 1st.  With greatly expanded control over overlays and colors, as well as the ability for members to store charts into their accounts, SharpCharts 2 Beta 7 Read More