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August 2006

ChartWatchers

A MOMENT OF TRUTH FOR THE RUSSELL 2000

by Chip Anderson

The Russell 2000 has been lagging the S&P 500 and Nasdaq 100 over the last few months. Even with the big bounce off support this past week, the Russell 2000 remains below its August high. In contrast, the S&P 500 and Dow broke above their June highs this week and the Nasdaq broke its early August high this week. With a lower high in early August, the Russell 2000 traced out a bearish descending triangle (blue trendlines) and a break below support would signal a continuation of the current downtrend. What exactly is a descending triangle? This pattern forms with a series of lower Read More 

ChartWatchers

NASDAQ 100: TURNING BULLISH, BUT SHORT-TERM OVERBOUGHT

by Chip Anderson

The Nasdaq 100 Index has declined farther than the broader indexes, and it has been slower in turning around; however, this week the index has turned the corner, and appears ready for a continued advance. The only problem is that it has become short-term overbought. To demonstrate, let's look at the first chart which presents our On-Balance Volume (OBV) Indicator Set. The Climactic Volume Indicator (CVI) measures extreme OBV movement within the context of a short-term OBV envelope for each stock in the index. The Short-Term Volume Oscillator (STVO) is a 5-day moving average of the CVI Read More 

ChartWatchers

STILL BEARISH IN TECHNOLOGY

by Chip Anderson

Our recent comments stating we believe a bear market in technology stocks via the NASDAQ 100 has begun remains valid; however, our technical bearish must be tempered somewhat by last week's sharp rally. Quite simply, the rally has put monthly prices back above the 25-month moving average - the level that demarcates "bull and bear markets". If it holds and extends higher, then we must reconsider our stance going forward; but given the rally has come into major daily resistance levelswe are betting that prices will weaken from near current levels in the weeks ahead. In any case, the Read More 

ChartWatchers

AUTO-REFRESH CHARTS AND COOLING PROJECT

by Chip Anderson

AUTO-REFRESHING CHARTS - We're continuing to monitor and tune the performance of our new Auto-Refreshing charts feature and so far things are going very, very well. We've heard feedback from tons of people saying that they really love this new capability. Here's what one person had to say: Now my trading day couldn't be easier. I just set up my three charting windows and start auto-refreshing. At any point in the trading day, a quick glance over to my StockCharts screen tells me everything I need to know about the markets! - A.J. Tripp Do you have a StockCharts success Read More 

ChartWatchers

CRB BREAKS 200-DAY AVERAGE

by Chip Anderson

I wrote yesterday about recent selling in commmodity pits pushing the Reuters/Jefferies CRB Index into a test of its 200-day average. Today's five point drop has pushed it below that long-term support line in pretty decisive fashion (see red arrow). Chart 1 shows the CRB peaking in early May at 366 and bottoming in mid June at 329.61. The July rally attempt fell short of its May peak thereby leaving a pattern of "lower tops". Today's price drop puts the CRB in danger of breaking its June low. If it does, it will initiate a pattern of "lower peaks" and "lower troughs" which is symptomatic Read More 

ChartWatchers

BUBBLING RIGHT ALONG

by Chip Anderson

Hello Fellow ChartWatchers! There hasn't been much talk about it in the press but the Dow Industrials has continued its slow rise to new heights. How high? On the follow chart you can see that there are only two labelled peaks that are higher than the Dow's current level: Last May's peak close of 11,577 seemed too good to be true, but if the Dow can re-rally to that level, it will be well positioned for a push up to its all-time high of 11,722 set way back in 1999. Yes, I know, I know. That's just overly optimistic "bubble-talk" right? Well, not exactly. What the Dow is doing is a long Read More 

ChartWatchers

QQQQ REMAINS IN CLEAR DOWNTREND

by Chip Anderson

On the weekly QQQQ chart, it is clear that the stock remains in a falling price channel and has yet to break key resistance at 38. There are two falling price channels on the chart (magenta trendlines) and lessons from the first can be applied to now to identify a trend reversal. Both price channels are similar in duration (3-4 months) and depth (~15%). The first price channel ended after a long black candlestick and the current one formed a long black candlestick four weeks ago (red arrows). The trend reversed with a break above the upper trendline and high of the long black candlestick Read More 

ChartWatchers

TECHNICAL PICTURE IS MOSTLY BULLISH

by Chip Anderson

The decline from the May top, and the subsequent sideways chopping have been hard on investors' nerves as they try to decide how things will eventually resolve; however, even though the rising trend line has been challenged twice in the last few months, the technical picture has been steadily improving. Also, sentiment indicators have been persistently and strongly pessimistic – some even worse than at the 2002 bear market lows – and this is bullish for the market. The first chart shows the components of our Thrust/Trend Model, our primary timing tool. (A full discussion of this model Read More 

ChartWatchers

AUTO-REFRESHING CHARTS ARE HERE!

by Chip Anderson

See Chip's article at the top of this newsletter for more details. Read More 

ChartWatchers

BOND YIELDS HIT FOUR-MONTH LOW

by Chip Anderson

The U.S. economy added fewer jobs than expected during July and the unemployment report rose for the first time in five months to 4.8% from 4.6%. The weak job report is the latest in a string of signs that the economy is weakening. That's usually good news for bond prices which do better in a slowing economy. Technically, this is a logical spot for bond prices to start doing better and bond yields (which move in the opposite direction) to start dropping. Chart 1 is a monthly bar chart of the 10-year Treasury Note yield. The chart shows the 10-year yield testing a a major down trendline Read More 

ChartWatchers

A "REFRESHING" CHANGE

by Chip Anderson

Hello Fellow ChartWatchers! This week we are pleased to announce a brand new feature for StockCharts.com users - Automatically Updating Charts! Starting Monday when the market opens, members of our "Extra" service will have a new way to watch the market. On the SharpCharts Workbench page, Extra members will find a new setting called "Auto-Refresh" (located just below the Ticker Symbol box). By changing that setting to 15 seconds (for example), members can now have their chart updated automatically throughout the trading day. Of course, this feature works best with short duration intraday Read More