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April 2009

ChartWatchers

GO AWAY IN MAY? REALLY?

by Tom Bowley

Ok, I understand the logic - partially.  In order of S&P 500 calendar month performance since 1950, May ranks 8th out of 12 and June ranks 10th out of 12.  However, both have produced positive annualized returns and in this period of very low interest rates, does it really make sense to pull that portion of your investments devoted to equities?  What's not mentioned by most who follow this theory, though, is that there are VERY bullish periods that fall within both of these calendar months.  Simply avoiding the market during May and June makes little sense given Read More 

ChartWatchers

CHANGE IS IN THE AIR AT STOCKCHARTS

by Chip Anderson

Wow.  This past week has been a very hectic one here at StockCharts.com.  Four - count 'em - four H-U-G-E changes have happened in addition to our 10-year Anniversary Sale is drawing to a close.  I posted about most of this stuff in my blog, but I wanted to review it again here to make sure everyone was aware of what's been happening. Last Chance for our 10th Anniversary Special Pricing! All through the month of April we've been running a special to celebrate our 10th year of providing great Internet financial charts.  Right now, if you subscribe (or renew) for a year Read More 

ChartWatchers

DIFFERENT STRATEGIES FOR DIFFERENT MARKETS

by Tom Bowley

In my last article, I noted that I was "undeniably bullish".  I can tell you that nothing occurred these last two weeks to change my mind.  More and more corroborating technicals have lined up to suggest this current rally has legs.  Perhaps the most important of them all was the triangle breakdown on the VIX.  The first chart below highlights the triangle that developed on the VIX during the 2000-2002 bear market and the subsequent breakdown of that triangle and how the S&P 500 surged higher following the breakdown: Read More 

ChartWatchers

LUCKY #7

by Richard Rhodes

The various US market averages have seen six straight weeks of rally, and one must wonder is "lucky #7" is in the offing. We don't know honestly; however, there are signs the rally off the March 9th low is becoming "long in the tooth" and primed for a rather "nasty correction"in our minds. To this end, we think it instructive to look at the weekly CBOE Volatility Index or VIX. Our interest here is upon the recent decline from rough panic-level of 80 to its current complacent-level of 34. Quite a bit of marginally good or second derivative news as we could Read More 

ChartWatchers

PULLBACK IS LIKELY, BUT NOT GUARANTEED

by Carl Swenlin

The bear market rally has continued to move prices higher, and the strength is greatest in the smaller-cap stocks. For example, the S&P 500 has rallied 30% from the March lows, but the Rydex S&P Equal Weight ETF (RSP) has advanced 45%. Looking through the list of the Spider Sectors and their equal weighted counterparts, we can see that the equal weighted indexes are doing much better than the traditional cap-weighted indexes. Nevertheless, the S&P 500 has managed to move above the medium-term resistance presented by the declining tops line of the recent trading Read More 

ChartWatchers

MCCLELLAN OSCILLATOR IS STILL POSITIVE

by John Murphy

The McClellan Oscillator is a short- to intermediate-term momentum breadth indicator. It's calculated each day by taking the difference between the 39-day and 19-day exponential moving averages of the number of net advances on the NYSE (see Chart School for a more in-depth explanation). The chart below shows the NYMO (black line) compared to the NYSE Composite Index (green line). The McClellan Oscillator fluctuates between an oversold level below -100 and overbought territory above 100. Short-term buy and sell signals are given when it crosses above or below its zero (flat) line. The Read More 

ChartWatchers

DIA MAINTAINS UPTREND

by Arthur Hill

The Dow Industrials ETF (DIA) shows a classic case of becoming overbought and remaining overbought. I featured DIA in ChartWatchers two weeks ago as it hit potential resistance around 80. The song remains the same as DIA finished at 81.31 on Friday. Let's review resistance. First, the middle of the prior consolidation (yellow area) marks resistance in the lows 80s. Second, the Mar-Apr advance retraced around 62% of the Jan-Mar decline. In addition to resistance, the Commodity Channel Index (CCI) moved above 100 (overbought) for the fourth time in the last four weeks. Even though Read More 

ChartWatchers

DAILY EMA COMBO TURNS POSITIVE

by John Murphy

I've received a number of requests to review the current position of the 13-34 exponential moving averages (EMAs). As you probably know, I place a lot of importance on that combination because of its strong track record over the years. I apply the 13-34 EMA combination to daily, weekly, and monthly charts. Let's start with the "daily" lines which measure the market's "short-term" trend. Chart 1 shows the 13 and 34 day moving average combination. For a short-term buy signal to occur, the 13-day (blue line) has to cross over the 34-day (red line). That short-term buy signal took place Read More 

ChartWatchers

LOOKING AT HOMEBUILDERS

by Richard Rhodes

As the market continues it counter-trend bullish rally, we find is more than interesting that the Homebuilders haven't yet taken a leadership role. We would posit that given it was the Homebuilders that was the "canary in the coal mine" for the sharp broader market decline, then if the economy were going to turn around and push higherthe Homebuilder ETF (XHB) would be in a very good position to benefit from it given they are quite oversold and heavily shorted. Thus, we would expect XHB to outperform the S&P as a rally unfolded. Thus far Read More 

ChartWatchers

UNDERLYING BULLISH SIGNALS STRENGTHENING

by Tom Bowley

I am undeniably bullish right now.  My only question at this point is whether this is a very significant bear market rally or the early legs of a new bull market.  Believe it or not, I think it's the latter.  As pointed out in my last article, this rally is being fueled by two very influential groups - financials and semiconductors.  Wide participation in any short-term rally is necessary to justify any bull market call.  We are definitely seeing wide participation on this rally.  Breadth has routinely been 3 to 1 or 4 to 1 in favor of advancers on the NYSE Read More 

ChartWatchers

TEN YEARS YOUNG!

by Chip Anderson

OUR TEN-YEAR CELEBRATION IS NOW ON!  Chip started StockCharts.com ten years ago this month and to celebrate we are running our best special ever! * Subscribe to (or renew) any of our online services for a year and get two additional months of service free!Normally, you'd only get one month free. * Subscribe to (or renew) any of our online services for six months and get one additional month of service for free.Normally, you wouldn't get any free months.* Order anything from our online bookstore and get free shipping (to anywhere in the US or Read More 

ChartWatchers

DIA SURGES OFF 50-DAY

by Arthur Hill

The Dow Industrials ETF (DIA) surged off its 50-day moving average with a big advance on Wednesday and a gap on Thursday. While the four-week surge is most impressive, the ETF is running into a resistance zone and becoming overbought. First, broken supports around 80 turn into resistance. This level is equivalent to 8000 on the Dow. Second, DIA retraced 62% of the prior decline and this key retracement can act as resistance. Third, the consolidation from late January to early February also acts as resistance (yellow area). Finally, DIA has advanced four weeks straight and is now up 23% Read More 

ChartWatchers

TECHNICAL ANALYSIS 101 - PART 5

by Chip Anderson

This is the fifth 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.) Candlestick Charts Compared to traditional OHLC bar charts, many traders consider candlestick charts more visually appealing and easier to interpret.  Each candlestick provides an Read More 

ChartWatchers

RALLY CONTINUES

by Carl Swenlin

Last Friday I said we should be looking for a short-correction because the CVI (Climactic Volume Oscillator) was very overbought, and prices were approaching overhead resistance. There was a very small correction, but prices kept moving higher, while the CVI zigzagged at overbought levels. We also observed the STVO (Short-Term Volume Oscillator) move down from overbought to neutral. This is the kind of thing that happens in bull markets, and bear market rallys. There is no guarantee that this bullish behavior will continue, but I suspect that it will. Read More