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December 2008

ChartWatchers

MARKET RALLIES TO FIND RESISTANCE

by Chip Anderson

I knew eventually we'd get a rally with legs. The recent long-term positive divergences across our major indices suggested a 50 day SMA test was on the horizon and that's exactly what we saw this past week. Key indices hit resistance and, not surprisingly, backed away on the first attempt. The bears have been in the drivers seat for the last few months. They were not going to be taken down without a fight. The battle was waged and the bears were victorious - for now. The market has stabilized somewhat and that's a positive. I wouldn't go so far as to say it's stable, just that it's in Read More 

ChartWatchers

GOLD BENEFITS FROM WEAK DOLLAR

by Chip Anderson

After surging from the low 70s to the upper 80s, the U.S. Dollar Index ($USD) experienced its sharpest decline in years. In fact, this week's decline was the sharpest in over 10 years. The bottom indicator window shows the 1-week Rate-of-Change dipping to -3.89% this week. While this may seem like a trend changing event, keep in mind that the Dollar was quite overbought after the prior advance. Some sort of correction is normal and the index could very well retrace 50% of the prior advance. Weakness in the greenback sparked a rally in gold this week as the Read More 

ChartWatchers

TIME RUNNING OUT ON RALLY

by Chip Anderson

Last week we looked at a descending wedge pattern on the S&P 500 chart that could have sparked a rally had it resolved to the upside. Prices actually did break upward, but volume was poor, and the up move stalled immediately. Now there is an ascending wedge pattern inside a declining trend channel. The technical expectation is for the wedge to resolve to the downside, but I should emphasize that it would only have short-term implications. I am becoming more concerned with the medium-term prospects for the stock market. In late-October the market became extremely oversold Read More 

ChartWatchers

WORLD MARKETS, CRUDE OIL, AND S&P ENERGY

by Chip Anderson

As we approach the end of the year, we find world stock markets attempting to trade a bit higher, although volatility remains quite high, but off it's worst high levels. However, we believe it shall not be low for very long; hence our propensity is to use this rally attempt to put put back on several short positions. From our trading perspective, we believe the energy sector have quite a bit of downside remainingeven thought the sector has been decimated. Our reasoning: lower crude oil prices on the order of $30-$36/barrel. This range is a bit wider than we have previously stated, and Read More 

ChartWatchers

% NYSE STOCKS ABOVE 200 AVERAGE

by Chip Anderson

A reliable measure of the market's strength or weakness can be found in the % of NYSE stocks trading above their 200-day averages. That's because 200-day averages are used to measure a market's long-term trend. [A 50-day line measures short- and intermediate- market trends]. Chart 1 shows the indicator since the start of 2006. The sharp drop during the second half of 2007 was one of the bearish signs that warned of a coming bear market. During bull market corrections, the indicator will often pullback into the 40-50% region. The April 2006 bull market correction bounced from 40%. Drops Read More 

ChartWatchers

CHARTSTYLES ARE POWERFUL, UNDERUSED FEATURE OF STOCKCHARTS

by Chip Anderson

Hello Fellow ChartWatchers! Happy Holidays and welcome to our December issue of ChartWatchers. We only do one newsletter in December and so you can bet it's a good one. John, Arthur, Carl, Richard and Tom are all focused on the market but I wanted to take time today to make sure that everyone is getting the most out of one of the key features of our website: ChartStyles. ChartStyles are basically "templates" of charts. They contain everything about the chart except the ticker symbol. Members of our Basic and Extra services can save multiple ChartStyles into their accounts for quick Read More