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April 2007

ChartWatchers

EARTH DAY HIATUS

by Chip Anderson

Look for Tom's commentary next time. Read More 

ChartWatchers

SMALL CAPS LAGGING LARGE-CAPS

by Chip Anderson

The Dow Diamonds (DIA) moved to a new all time high this past week and the S&P 500 ETF (SPY) recorded a multi-year high. En route to these highs, both exceeded their late February highs and large-caps are showing relative strength. In addition, both gapped higher on Monday and held these gaps throughout the week. On the other side of the market, the Russell 2000 iShares (IWM) is having trouble with resistance from the late February high and small-caps are showing relative weakness. The ETF also pulled back rather sharply on Thursday and actually filled Monday's gap. IWM bounced back Read More 

ChartWatchers

CYCLE ORIENTATION IS BULLISH

by Chip Anderson

Back in November 2006 I speculated that the 4-Year Cycle trough had arrived in June/July 2006, and that the implication was bullish for stocks – bullish because we normally expect an extended rally out of those cycle lows. At this point, I think that assessment is proving to be correct because there has been a substantial rally, and the recent correction low has failed to challenge the 2006 lows. In other words, the first leg of the current 4-Year Cycle has shown unusual strength, and it is reasonable to assume that there could be a few more good up legs before the bull market finally Read More 

ChartWatchers

STOCK MARKET SEEING "ROTATION"

by Chip Anderson

The positive stock market rally is undergoing significant "rotation" within various indices, which in our opinion is quite important from both an investment and trading perspective. First, when we invest or trade, we want to run with the "fastest horses" in order to outperform the markets or one's particular benchmark. Therefore, it behests us to use technical analysis on specific ratio charts to discern where to put our money in order to earn outsized profits. This is relative investing 101. Last week, we will note that the large caps handily outperformed the small caps. This is a trend Read More 

ChartWatchers

ASIA RECOVERS

by Chip Anderson

Thursday's 4.5% drop in Chinese stocks caused nervous selling in other Asian markets. By the time the U.S. market opened, however, Europe had already started to recover and initial U.S. losses were modest. By day's end, the Dow had closed at a new record high. A strong Friday open in Asian markets set the stage for a strong day in global stock markets. Chart 1 is an hourly bar chart of the last ten days. It shows the Pacific Ex-Japan iShares (EPP) gapping down on Thursday (red arrow). The good news is that the EPP then gapped back up on Friday (green arrow). Thursday's isolated price bars Read More 

ChartWatchers

MORE SPEED LEADS TO HUGE SLOW DOWNS

by Chip Anderson

The markets did great this week with the Dow hitting record highs and closing in on 13,000 however almost no one here at StockCharts.com was paying much attention. As most ChartWatchers know, we spent much of the week wrestling with technical glitches. I thought I'd take some time to explain what we've learned about the problems and the steps we are taking to prevent them from happening again. If you are not interested in computers and networks, now might be a good time to skip down to the other articles . About a year ago we started upgrading all of the equipment here at Read More 

ChartWatchers

USING THE PUT CALL RATIO

by Chip Anderson

The put call ratio ("PC") is quite simply the total number of put options divided by the total number of call options. These options include both individual equity options and index options. Every day you can monitor the relationship between put options and call options at www.cboe.com. Once in the site, click on "Data", then "Intra Day Volume". Every half hour, the information is updated. This article is not the appropriate forum to discuss options strategies and definitions, but in its most basic form, put option buyers are expecting the market to decline and call option buyers are Read More 

ChartWatchers

UP SWING CONTINUES

by Chip Anderson

The Nasdaq rally continued into its fourth week with a gap up on Tuesday and move into the late February gap zone. This late February gap started a sharp decline to the March lows and the recovery back above 2460 is quite impressive. Even though volume is not so impressive, the current swing is clearly up and we should at least respect this up swing until it is proven otherwise. Just what would it take to reverse the current upswing? I am watching three items: Tuesday's gap, the late March lows and RSI. The Nasdaq gapped higher on Tuesday morning, closed strong on Tuesday and continued Read More 

ChartWatchers

THRUST/TREND MODEL NEARS BUY SIGNAL

by Chip Anderson

Our Thrust/Trend Model (T/TM) is so-named because it treats bottoms and tops differently – tops tend to be rounded trend changes, and bottoms tend to be formed by sharp changes in direction accompanied by internal up thrusts. At price tops, T/TM changes from a buy to neutral (or sell) based upon a downside crossover of the 50-EMA in relation to the 200-EMA, evidence that a change in trend from up to down has occurred. (The T/TM for the S&P 500 is currently in neutral.) At bottoms the model uses a double screen – the PMO (Price Momentum Oscillator) crossing up through its 10-EMA, and Read More 

ChartWatchers

LOOKING AT CRUDE OIL

by Chip Anderson

For the past couple of weeks, the markets have focused in upon crude oil prices and their attendant rise given the Iran hostage situation. The prevailing thought was that "geopolitical premium" was on the order of $4-to-$5 a barrel of the $67/barrel price; and that once the situation was concluded successfully - the premium would be lost rather quickly. Of course the situation was concluded last week, but the price of crude oil didn't "plunge" as expected. In fact, only not been the case as crude oil has lost only -$2.50 off its highs, with the decline quite orderly indeed. We cannot Read More 

ChartWatchers

CHILLER INSTALLATION THIS WEEK!

by Chip Anderson

Regular readers know that we've been trying to complete a big upgrade to our server room for almost a year now. It's been extremely frustrating dealing with the various powers-that-be about completing things, but we are on the verge of the last big step in the project - the installation of our outdoor "chiller" - a huge air conditioner that will generate cold water which will be used to keep our server room from getting too hot. We expect for that work to be completed next week. After that, we will start moving our servers from their temporary space back into their spiffy new digs Read More 

ChartWatchers

EURO HITS TWO-YEAR HIGH AGAINST DOLLAR

by Chip Anderson

The U.S. Dollar Index fell during the week and is drawing dangerously close to last December's low (green circle). The foreign currency with the biggest influence on the USD is the Euro. Expectation for continuing economic strength in Europe – and the likelihood for further ECB rate hikes – pushed the Euro (blue line) to a new two-year high against the dollar. The weekly bars in Chart 2 show the Euro (blue line) moving up to challenge its late 2004 peak near 136. A close above that chart barrier would increase the odds for the USD to threaten its corresponding low near 80. That would be a Read More 

ChartWatchers

WHICH CHARTS DO I LOOK AT?

by Chip Anderson

Hello Fellow ChartWatchers! This week I thought we'd look at something different - the charts that matter the most to me personally. Now, brace yourself these charts are not financial charts. Nope. These are the charts that tell us at an instant how well the StockCharts.com website is performing. If there is trouble with the site, these charts frequently help us find and fix the problem. In addition, whenever we add or reconfigure our servers, these charts can tell us if the improvements we expect to see actually occur. This first chart shows the memory Read More