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June 2006

ChartWatchers

GOLD ETF ENTERS SUPPORT ZONE

by Chip Anderson

After a harrowing decline the last 5-6 weeks, the StreetTracks Gold ETF (GLD) finally reached a support zone and RSI became oversold. This paves the way for a bounce and possibly a continuation of the long-term uptrend.A number of technical items have come together to mark support around 55. First, the rising 200-day moving average currently sits at 54.16. The fact that GLD is above this moving average and that the moving average is rising is long-term bullish. Second, the January to March consolidation provides a nice support zone between 53.5 and 57. Third, the blue trendline extending Read More 

ChartWatchers

BEARS HAVE HARDLY BUDGED

by Chip Anderson

(Editor's Note: This article was written on June 16th - over a week ago. Given the market's sideways motion since then, the article's basic premise remains valid. It is also instructive to compare commentary from the past with current conditions to see how the commentary "played-out".) Despite a massive rally on Thursday, the Rydex Cash Flow Ratio reflects that very few bears have given up. The Rydex Cash Flow Ratio, an exclusive DecisionPoint.com indicator, gives an improved view of sentiment extremes by using cumulative cash flow (CCFL) into Rydex mutual funds rather than using the Read More 

ChartWatchers

A LOOK AT THE NASDAQ COMPOSITE

by Chip Anderson

The NASDAQ Composite is now in danger embarking on an extended move lower. Quite simply, we use the 25-month month moving average to demarcate the difference between bull and bear trends; and given the Composite is trading only 22 points above this level within the context of an RSI breakdownincreases the odds that this level will indeed be violated. We don't know how to be more simple than this. To take advantage of this decline; we are in the process of putting on short positions via semiconductor equipment-makers such as Cymer (CYMI) and Lam Research (LRCX), and also looking to put Read More 

ChartWatchers

READING MY LIPS AT THE NYBOT

by Chip Anderson

READING MY LIPS On Tuesday June 13, I gave a speech to traders on the New York Board of Trade. I used that opportunity to review the major intermarket principles relating to the dollar, commodities, bonds, and stocks. I talked about the impact of the dollar on foreign ETFs, and the close connection between commodity prices and emerging markets. I reviewed why I believe the new emergence of Japan is contributing to global inflation pressures and rising global bond yields -- and the potentially negative impact that could have on global stocks. I also review recent sector rotations out Read More 

ChartWatchers

Hello Fellow ChartWatchers!

by Chip Anderson

"Summer-time and the trading's easy!" Sorry for the singing folks, but we are in a happy mood here at StockCharts right now. Summer time always cheers people in the Pacific Northwest up (I wonder why? ;-). We're so happy that we decided to roll out our Summer Special this week! That's right, sign-up (or renew) now for any our of long-term subscription packages and get extra time for free: 1 free month for a 6-month subscription, 2 free months for a 12-month subscription. This is our best deal ever so don't let it pass you by! Click here to get started. Also this week we're Read More 

ChartWatchers

DOW CONSOLIDATES ABOVE KEY SUPPORT

by Chip Anderson

The Dow came down hard in May, but found support at 11050. This support level stems from January resistance and the April low. A key tenet of technical analysis is that broken resistance turns into support. The Dow broke above 11050 in February and this level turned into support in April and May. Since reaching support, the Dow consolidated over the last two weeks and a pennant type consolidation is forming (gray oval). The sharp decline created an oversold condition and the Dow needed to work off this condition. A two week trading range is just the trick, but the pennant is a bearish Read More 

ChartWatchers

BOTTOM LOOK PRETTY SOLID

by Chip Anderson

On Tuesday we saw the market successfully retest last week's lows, then on Thursday there was a climactic rally that broke above last week's highs. This was a lot more positive than many people (including me) were expecting. The most significant short-term event was that the CVI (Climactic Volume Indicator), which is the very nervous purple line on our first chart, hit its highest reading in over a year-and-a-half. This marked what I believe was an initiation climax (as opposed to an exhaustion climax). As the name implies, an initiation climax signals that a new short-term trend has Read More 

ChartWatchers

THE DAMAGE FROM "THE MAY SWOON"

by Chip Anderson

The May Swoon as we are apt to call weakness seen during the month had led to an increase in confusion amongst technical analysts. However, we would argue that is all about "time horizons", and we should confuse short-term movements with long-term time horizons as we are beginning to see. In fact, our short-term indicators and models have traded to their lowest points in months; however our longer-term work has just begun to weaken. Everyone is conditioned to buy the dips, and those that haven’t have paid the price. Hence, we think the market is well seasoned for a larger sell-off from a Read More 

ChartWatchers

SERVER UPGRADES COMPLETED, MORE BANDWIDTH, FUTURE PLANS

by Chip Anderson

SERVER UPGRADE COMPLETED - We hit another major milestone last week when we upgraded our final database server. In addition to the SharpCharts2 roll-out, we've been quietly upgrading our 8 database servers to the newest, fastest hardware from Dell with the newest, fastest software from Microsoft. Last Monday we replaced the last server. What this means to you is fastest response time and more charting data! MORE BANDWIDTH - This weekend saw another major milestone in the advancement of our website; we added a third super-highspeed Internet connection to ensure that everyone can get to Read More 

ChartWatchers

US DOLLAR AT CRUCIAL JUNCTURE

by Chip Anderson

The chart below compares the Dollar Index (green line) to the CRB Index (purple line) since last September. The main message to be drawn from the chart is that the two markets have been trending in opposite directions which is their natural tendency. Dollar peaks last November and again in March coincided with CRB upturns. A dollar bounce during the first quarter coincided with a CRB selloff. The recent minor bounce in the dollar may have contributed to the recent slide in commodities. That's why commodity traders need to watch the dollar especially closely at this point. That's because Read More 

ChartWatchers

Hello Fellow ChartWatchers!

by Chip Anderson

The results are in! We have the five winners for our "Seeing Clearly with SharpCharts2" contest! Thanks again to everyone that entered. There were over one hundred entries and all of them were very well done. The judges' job was not easy at all. The five winners (in alphabetic order) were: Aaron Brussat, Michael Ham, Kevin Krueger, Leilani Lazo, and Kevin Pasternack. Each will receive a Dell 24" LCD Monitor as their prize. In a surprise move, the judges also decided to award Craig Ferguson an Honorable Mention award and one free year of StockCharts.com service. Congrats to all of our Read More