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May 2006

ChartWatchers

QQQQ BREAKS KEY SUPPORT

by Chip Anderson

QQQQ established support at 40 with three bounces over the last six months and broke this key support level with a sharp decline over the last two weeks. The break below 40 signals a major victory for the bears and the first downside target is to around 37-38. The August 2004 trendline and October low mark support in this area.The decline was enough to push the McClellan Summation Index into oversold territory. This version of the McClellan Summation Index is based on the stocks in the Nasdaq 100 and is directly related to QQQQ. This is the fourth dip below –500 in the last two years Read More 

ChartWatchers

OVERSOLD BOUNCE IS DUE, BUT . . .

by Chip Anderson

During the last two weeks the market has experienced a much needed (and long anticipated) decline, and now it is due a bounce out of a short-term oversold condition; however, the decline could continue for a few more months. On our first chart below we can see that the CVI (Climactic Volume Indicator) and the STVO (Short-Term Volume Oscillator) have reached deeply oversold levels and have turned up. This is a pretty good indication that a short rally could be starting. Also, note the rising trend line I have drawn on the chart. For several Read More 

ChartWatchers

S&P 500 IS ENTITLED TO A BOUNCE

by Chip Anderson

Although the longer-range chart picture has weakened (with most weekly indicators on sell signals), the S&P 500 has lost about 5% this week and looks to be in a short-term oversold condition. Its daily chart shows the 9-day RSI line below 30 for the first time this year. In addition, the S&P has reached its 200-day moving average and potential chart support along its first quarter lows. That may be enough to cause a market rebound next week. If one does materialize, the first level of resistance would be at 1280 which would also be a one-third retracement of the recent selloff Read More 

ChartWatchers

Hello Fellow ChartWatchers!

by Chip Anderson

The markets moved lower last week with some disturbingly large downward movements. As you can see in the chart below, last week's losses put the Nasdaq Composite into negative territory for the year - the first of the major averages to get there. (Did you notice the cool Performance chart that SharpCharts2 can now create? StockCharts member's can click the chart to see exactly how it was constructed.) At this point, the small caps are still leading the other averages as they have all year, but recent strength in the Dow Industrials could change that soon. BETTER Read More 

ChartWatchers

ANOTHER BREAKOUT FOR THE RUSSELL 2000

by Chip Anderson

The Russell 2000 has not been the strongest broad index over the last few weeks, but it is still by far the strongest index in 2006 and shows no signs of stopping after another falling flag breakout on Thursday. This is the third such breakout since December and the death of small-caps has been greatly exaggerated. Longer term, the index remains in a rising price channel with lower trendline support at 755 and upper trendline resistance around 820. I also use RSI to gauge the strength and direction of the long-term trend. This key momentum indicator Read More 

ChartWatchers

GOOD AND BAD NEWS ABOUT THE DOLLAR

by Chip Anderson

On March 17 our trend model turned from bullish to neutral on the US dollar, and since then the technical picture has continued to deteriorate. Prices have dropped precipitously from near 90 to near 85, and the weekly 17-EMA has crossed down through the 43-EMA, a long-term sell signal. (The weekly moving average crossover is not "official" until the end of the week, so the sell signal could be erased if there is a sharp rally on Friday.) The weekly moving average crossover is a big deal, because, as you can see on the chart below, it doesn't happen very often. Read More 

ChartWatchers

SC2 OFFICIALLY RELEASED

by Chip Anderson

SHARPCHARTS2 OFFICIALLY RELEASED - Late last week we officially released SharpCharts2. This is a huge step forward for StockCharts.com and we couldn't have done it without the help and support of our users. Thanks again to everyone that provided feedback to us during the Beta process. We are still interested in hearing from anyone that has suggestions for improving things - use the "Report Problems" link below the chart to send us your ideas. Attention New SC2 Users! Be sure to read our SharpCharts2 FAQ page for help with transitioning from SharpCharts1 to SharpCharts2. NEW Read More 

ChartWatchers

WHY JAPAN IS STILL A GLOBAL VALUE

by Chip Anderson

The first chart below shows why I believe Japan to be one of the best global values. While most other global markets are at or near record highs, the Nikkei 225 has recovered barely a third of its losses from 1990 to 2003. The Nikkei is still down 55% from its 1990 peak at 39,000. During that same time span, the S&P 500 has risen over 300%. What I also like about Japan is that it's been poorly correlated with other global markets over the last fifteen years. That makes it an excellent global diversification vehicle. This isn't a new view. Those of you who have followed by writing know Read More 

ChartWatchers

Hello Fellow ChartWatchers!

by Chip Anderson

SIGNAL LINES GALORE One of the huge new features of SharpCharts2 is its ability to plot "indicators of indicators." In other words, SharpCharts2 can chart indicators based on the value of another indicator which, in turn, is based on the value of the chart's main stock, index or fund. In our last newsletter, I included an example of how you could use the Slope indicator to see the changes in the MACD more clearly. This time around I want to show you how the same technique can be used to add signal lines to just about anything. A signal line is a moving average of an indicator Read More