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January 2009

ChartWatchers

TECHNICAL ANALYSIS 101 - PART 1

by Chip Anderson

This is the first part of a series of articles about Technical Analysis from a new course we're developing. If you are new to charting, these articles will give you the "big picture" behind the charts on our site. if you are an "old hand", these articles will help ensure you haven't "strayed too far" from the basics. Enjoy! Defining Technical Analysis Technical analysis is the study of price and volume changes over time. Technical analysis usually involves the use of financial charts to help study these changes. Any person who analyzes financial charts can be called a Technical Analyst Read More 

ChartWatchers

OTHER BOND CATEGORIES ARE BOUNCING

by Chip Anderson

I recently wrote about how investment grade corporate bonds were starting to gain some ground on Treasury bonds. Today, I'm adding two other bond categories to that list. The flat line in Chart 1 is the 20+Year Treasury Bond iShares (TLT) which has been the strongest part of the yield curve over the past few months. That's been partly due to a flight to safety and deflationary concerns. The three other lines in Chart 1 are relative strength ratios versus the TLT. All three bond ETFs have been gaining ground on Treasury Bonds since mid-December. The strongest has been the LQD (blue line) Read More 

ChartWatchers

IS THE DOLLAR TOPPING?

by Chip Anderson

An interesting result of the government bailout of the financials and automakers, along with the huge economic stimulus package will be the long-term impact on the U.S. dollar. Can the dollar maintain its relative value as interest rates fall and deficits mount? Let's take a look at a few charts regarding the dollar and how we can profit if the dollar does plunge. First, let's take a look at the long-term picture of the dollar: As you can see, the long-term trend in the dollar is down. Unless the dollar can pierce through the 92-93 area, the intermediate-term trend is down as Read More 

ChartWatchers

RALLY FAILURE

by Chip Anderson

In my January 2 article I pointed out that the stock market was overbought by bear market standards, but that the rally had plenty of internal room for prices to expand upward if bullish forces were to persist. There was a brief rally and a small breakout, but then the rally failed, breaking down from an ascending wedge formation. I wasn't really expecting a bullish resolution, but one must keep an open mind when appropriate conditions appear. On the chart below you can see the short-term declining tops line through which the breakout occurred. Instead of a buying opportunity, it was a Read More 

ChartWatchers

EURO FINDS SUPPORT AS DOLLAR HITS RESISTANCE

by Chip Anderson

With a bounce on Friday, the Euro Trust ETF (FXE) found support from a confluence of indicators and chart features. First, broken resistance turns into support in 130-132 area. Second, there is support in this area from the 50-day moving average. Third, the decline over the last few weeks retraced around 62% of the prior advance. The ETF was also oversold after a rather sharp decline from 145 to 130. This combination of conditions and chart features made FXE ripe for a bounce. With the Euro bouncing, the US Dollar Index Bullish ETF (UUP) came under pressure on Read More 

ChartWatchers

WHAT LIES AHEAD?

by Chip Anderson

In order to gain a decent perspective as to where we might go in 2009, it's always helpful to take a look at the past to see how we got here. 2008 was a horrible year for the major stock market indices. The Dow Jones, S&P 500, NASDAQ and Russell 2000 lost 33.84%, 38.49%, 40.54% and 34.80%, respectively for the year. It didn't matter where you put your money - nearly every stock index here in the U.S. as well as abroad suffered major financial and technical damage. It's not irreparable damage, but building a solid foundation for a future advance will be a key in 2009. Holding price Read More 

ChartWatchers

QQQQ BREAKS CONSOLIDATION RESISTANCE

by Chip Anderson

QQQQ broke consolidation resistance with a big surge on the first trading day of the year. After surging in late November and early December with two gaps, QQQQ stalled for most of December with a flat trading range. The consolidation pattern looks like a flag and the upside breakout calls for continuation of the Nov-Dec surge. For an upside target zone, the October-November highs mark the next resistance area around 34-36. As expected, QQQQ volume levels have been low throughout the holiday season. In fact, QQQQ volume has been uninspiring throughout most of December. Volume Read More 

ChartWatchers

HOW OVERBOUGHT IS IT?

by Chip Anderson

For the last few weeks the stock market has been drifting higher on low volume, and there is no doubt in my mind that the Fed/Treasury has been the invisible hand that has quickly moved in to squelch any selling that started. Under these conditions, I find it difficult to draw any solid conclusions from indicators that have been fed a diet of questionable market activity. Nevertheless, we must work with the information we have and accept it at face value until more normal market action increases our confidence in our conclusions. Looking at the chart below we can see pretty much all Read More 

ChartWatchers

PURSUING HEDGING STRATEGIES IN 2009

by Chip Anderson

As the credit crisis continues apace into 2009, we believe the time is rather "ripe" for pursuing various hedging "thematic" strategies to profit from relative valuations across the globe. Quite simply, we believe that the credit crisis will fundamentally impact various global regions in a different manner. Asian countries are likely to prosper more so than Latin American countries as Asia isn't as dependent upon energy or natural resources as is Latin America. Also, Ecuador's tacit default has caused a bit of angst in the region. Therefore, we are putting on a long Asia-Pacific ex-Japan Read More 

ChartWatchers

INTERMARKET TRENDS TURN MORE POSITIVE

by Chip Anderson

Chart 1 shows how the interaction between the four main asset classes unfolded during 2008 and how they're entering 2009. The two weakest assets were commodities and stocks. The two strongest were Treasury bonds and the dollar. During the first half of the year, commodities were the strongest asset class while the others lost ground. At midyear, however, a sharp rally in the dollar (green line) caused a massive collapse in commodities (black line) which continued until November. Treasury bonds (red line) rallied sharply on plunging commodities. During most of the second half, bonds and Read More 

ChartWatchers

STYLEBUTTONS GIVE YOU MULTIPLE WAYS TO ANALYZE A STOCK INSTANTLY

by Chip Anderson

Hello Fellow ChartWatchers! First off, Happy 2009! Let's hope this year is better than 2008 - one of the all time stinkers in terms of stock market performace. How bad was it? Here ya go: Ugh. Well, let's not dwell on it too much. Instead I wanted to talk about another "hidden gem" feature of our website that can help subscribers get the most bang for their charting buck. Last time I talked about ChartStyles - templates of chart settings that you can save into your account. This week I want to show you how you can hook your saved settings up to Read More