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March 2009

ChartWatchers

GOLD STOCKS TOP 200-DAY AVERAGE

by John Murphy

The Fed's midweek surprise announcement that it was buying Treasury bonds had a fairly predictable ripple effect through the various financial markets. Naturally, Treasury bond prices jumped and yields collapsed. The big drop in bond yields pushed the dollar sharply lower and commodities higher. As Arthur Hill described during the week, gold experienced an impressive upside reversal and may have reverted back to an inverse relationship to the dollar. One of the top stock groups on the week was precious metals. A month ago, I turned cautious on the short-term outlook for precious metals Read More 

ChartWatchers

FOCUSING ENERGY ON COMMODITIES

by Richard Rhodes

The FOMC has now become very serious to put an end to the financial crisis. To put it simply, Wednesday's FOMC  announcement that they plan to roll the printing presses in order to buy $200 billion in longer-dated treasury paper is certainly a "positive." This will no doubt create more inflationary tendencies than we care to talk about, for the FOMC will be forced to buy far more in treasury paper thananyone believe, so let's just call this the FOMC's "initial position." The fact of the matter is that it will be positive towards the commodity markets; and this is where we should Read More 

ChartWatchers

LIGHT AT THE END OF THE TUNNEL?

by Tom Bowley

The market performance the last two weeks was very impressive.  Was it simply a sequel to the bounces we saw in October and November?  That is certainly a possibility, but we saw a few sparks in this rally.  For instance, the volume that exploded in financials must be respected.  Perhaps more important, however, was the relative breakout in financials as shown below:   On the surface, the annihilation of financials on Thursday and Friday seemed to potentially crash the party.  I'd like to point out, however, that option Read More 

ChartWatchers

SPY HITS RESISTANCE

by Arthur Hill

After a sharp advance the last two weeks, SPY hit a classic resistance zone and pulled back over the last two days. Three items confirm resistance in the low 80s. First, broken support around 80-81 turns into resistance. Second, the falling 50-day moving average marks resistance. Third, the advance retraced 50% of the Jan-Mar decline, which is typical for a retracement. In addition to resistance, there were also signs that SPY was overbought. The bottom indicator shows the Commodity Channel Index (CCI) moving above 100 for the third time this year. The Read More 

ChartWatchers

NEW LOOK, NEW FEATURES, NEW NAME FOR OUR MARKET MESSAGE SERVICE

by Chip Anderson

Today we're unveiling several design changes to the "John Murphy" area of our website.  These changes include: A new, cleaner design that echos the look of our free commentary areas - i.e. out blogs (i.e., this page!) Email notifications that let subscribers see the title of each post along with the author's name without having to visit the website. A new name - "StockCharts' Market Message with John Murphy" that reflects our approach of supplementing John's commentary with content from Arthur Hill and others. A new video version of the Market Message that will debut Read More 

ChartWatchers

TECHNICAL ANALYSIS 101 - PART 4

by Chip Anderson

This is the fourth 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!  (Click here to see the beginning of this series.) Line Charts Line charts are created by plotting a line between the closing prices for each period set on the chart.  On a daily chart, a line is plotted between the daily closing prices.  Read More 

ChartWatchers

SHORT-TERM TOP

by Carl Swenlin

Quite a few years ago I used to write a daily newsletter, but I decided to give it up because it got tiresome trying to invent new ways to say the same thing over and over. More important, having to form an opinion on the market every single day, especially during volatile times as we have been experiencing, can build a of stress. Also, since I am primarily focused on the intermediate-term and long-term time frames, it can be counter productive to put too much effort into short-term analysis. This week was especially challenging due to the Fed's announcement, which caused big rallies in Read More 

ChartWatchers

SITE NEWS FOR MARCH 7, 2009

by Chip Anderson

NEW "WHAT'S NEW" AREA - We've reworked the "What's New" area on the "Members" page so that it now shows you all of the latest posts from our various blogs.  I know that some of you just look at your charts and never read the "What's New" area but please do yourself a favor and click the "Members" tab every now and then to look for interesting articles and announcements there. BLOGGING FOR THESTREET.COM - Our new blog "Don't Ignore This Chart!" is pretty popular.  So popular in fact that it has been picked up by TheStreet,com's new website, StockPickr.com!  If you haven't Read More 

ChartWatchers

LOOKING TOWARDS SECTOR ROTATION

by Richard Rhodes

This year has seen the S&P decline by -24.3%; with the building crescendo of "fear" likely to provide for a bottom that can be traded sooner rather than later. We're looking towards sector rotation to play a large part in our trading strategy; and we're quite interested in the fundamentals as well as the technicals regarding a "long Industrials/short Healthcare (XLI:XLV)" pairs position. Quite simply, the Industrials have underperformed the S&P by -10.2% YTD, while Healthcare has outperformed by +7.5% YTD - this notes the obvious safety factor inherent in the Healthcare sector Read More 

ChartWatchers

DOW THEORY STILL IN DOWNTREND

by John Murphy

At the start of the 20th century, Charles Dow invented the Dow Theory. It was a simple idea. He created two stock indexes -- one for industrial stocks and one for the transports (which were exclusively rails). His reasoning was that both indexes should rise together in a healthy economy. While industrial companies made the goods, the rails transported those goods to market. One couldn't function without the other. Although he was applying that idea to the economy, his Dow Theory became a basic part of traditional technical analysis. When both indexes are rising together, a bull market Read More 

ChartWatchers

BREAKDOWN!

by Carl Swenlin

At the end of last week the S&P 500 had declined to and had settled on the support created by the November lows. It was poised to either rally and lock in a double bottom, or break down. On Monday prices broke down through support, and by Thursday's close it could be said that the breakdown was "decisive". When a breakdown is classified as decisive (greater than 3%), it means that chances are very high that the market will not be able to gather enough strength to rally back above the recently violated support. Reaction rallies back toward the support are possible, but not Read More 

ChartWatchers

WHERE'S THE FEAR?

by Tom Bowley

Significant market bottoms generally share many key characteristics.  I like to see a spike in volume to get that last wave of selling in place.  During this "panicked" phase, it's also important to see pessimism rise to a relative level where we can be fairly confident that a rally can last more than an hour or two.  Obviously, oversold momentum oscillators like stochastics and RSI are in play at a bottom.  My favorite momentum oscillator - the MACD - can provide clues as to the duration of any potential rally. On the Dow Jones chart below, notice that the MACD is Read More 

ChartWatchers

TECHNICAL ANALYSIS 101 - PART 3

by Chip Anderson

This is the third 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!  (Click here to see the beginning of this series.) Chart Construction Charts are created from data - Price data and Index data.  After discussing the various types of data used, we’ll look at how charts are constructed. Price Read More