ChartWatchers Newsletter logo

May 2009

ChartWatchers

Reflections of May 2008

by Arthur Hill

With a huge rally from early March to late May, the S&P 500 ETF (SPY) is trading just above its 40-week moving average and a key momentum oscillator is overbought. The 40-week moving average is the weekly equivalent to the 200-day moving average (40 weeks x 5 days = 200 days). Also notice that the ETF is meeting resistance from this key moving average for the second time in two years. SPY first failed at the 40-week moving average in May-June 2008. SPY hit this moving average in late April 2008 and hovered near the moving average for 4-5 weeks. The indicator window shows the Read More 

ChartWatchers

BIGGER PIPES, BETTER SERVICE

by Chip Anderson

BIGGER PIPES, BETTER SERVICE - On Friday, we upgraded our Internet connection from a 180 Megabit connection to a 1 Gigabit Fiber connection (1 Gigabit is 1024 Megabits).  That's over 5 times more bandwidth!  If you have been experiencing slowness, especially during busy market times, you might see an immediate benefit to this change.  We're going to be monitoring the new connection closely on Monday to make sure it lives up to its promise.  Please let us know if you see any significant changes one way or the other. DESIGN CHANGES CONTINUE - Look for us to be Read More 

ChartWatchers

TECHNICAL ANALYSIS 101 - PART 7

by Chip Anderson

This is the seventh 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 Analysis - Support and Resistance Prices are driven by two of humanity‚Äôs strongest emotions: Fear and Greed.  When more investors are fearful that a stock will fall, it Read More 

ChartWatchers

EMERGING MARKETS TAKING THE LEAD

by Richard Rhodes

As the markets have rallied off the March 9th bottom, we find it rather interesting that the Emerging Markets have taken a lead role and have outperformed rather handily. The growing consensus believes that when the worlds' stock markets do bottom, then the Emerging Markets will take the role of "leader" once again. However, we would caution, for rarely do the leaders of past bull markets lead new bull markets. Moreover, and from a fundamental perspective - much of the Emerging Market economic growth was built upon the back of Western credit expansion and conduits to these countries Read More 

ChartWatchers

ANOTHER LOOK AT JUICED ETFS

by Tom Bowley

In February, I wrote an article discussing the fact that juiced ETFs (ETFs designed to double or inversely double the returns of an underlying index) do not perform as you might expect.  There was a huge response to this article and mostly positive feedback.  There are plenty of reasons why taking another look at juiced ETFs makes sense, but the inability to perform over longer periods is the primary one.  To give you a recent example, the Dow Jones U.S. Financial Index fell precipitously early in 2009, but since has rallied strongly reversing earlier losses.  From the Read More 

ChartWatchers

MARKET FAILS TEST OF JANUARY HIGH

by John Murphy

I started the week on Monday with the headline that "Upside price and time targets had been hit" and added that overbought readings suggested that the market was vulnerable to profit-taking. The NYSE Composite Index had just reached overhead resistance at its January high and its 200-day moving average as shown in Chart 1. A number of other indexes (like the Nasdaq Composite in Chart 2) and sector indexes were stalled at their 200-day moving averages as well. So were numerous foreign stock markets. Chart 3 shows the MSCI EAFE (Europe Australasia and Far East) Index stalled at its January Read More 

ChartWatchers

DOW HITS RESISTANCE

by Arthur Hill

After a massive 9 week advance, the Dow ran into resistance with its biggest weekly decline since early March. There is a resistance zone coming into play around 8700-8800 from the falling 40-week moving average and the Oct-Nov consolidation. After establishing support in Oct-Nov, this triangle consolidation now turns into a resistance zone. In addition, notice that 14-week RSI is trading in the 50-60 zone, which acted as resistance in April 2008. Prior to this week, the Dow was up eight of the last nine weeks and advanced around 2000 points. We do not need a Read More 

ChartWatchers

REVERSE HEAD AND SHOULDERS FORMING?

by Carl Swenlin

The ascending wedge pattern we discussed last week has broken down as we expected. Considering that the market has rallied nearly 40%, I think it is reasonable to expect more corrective action. The next development to watch is the possible formation of a reverse head and shoulders. We currently have the left shoulder, head, and neckline. The correction that has started could result in a right shoulder, if the correction does not turn into the next leg of the bear market. The ideal resolution (if you are a bull) would be for the correction to end in the area of 750-800, then for a rally Read More 

ChartWatchers

IMPROVEMENTS GALORE!

by Chip Anderson

NEW HOME PAGE DEBUTS - Our slick new home page provides you with a quick way to see all of the latest happenings at StockCharts.  Which stocks are hot; which blogs have been updated recently; the latest improvements to the website; and much more are all right there on http://stockcharts.com.  And - as an extra bonus - no more home page ads!  Bookmark it and check it frequently. Watch for us to update the "Free Charts" area next. MARKET MESSAGE SUBSCRIBERS GET MORE FOR THEIR MONEY - ART'S CHARTS & VIDEOS! - Arthur Hill continues to provide additional content for our Read More 

ChartWatchers

TECHNICAL ANALYSIS 101 - PART 6

by Chip Anderson

This is the sixth 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 Scaling Charts are created with one of two different kinds of vertical price scales.  An arithmetic scale evenly spaces price along the right side of the chart.  Read More 

ChartWatchers

ENERGY vs S&P 500: A MAJOR MOVE SOONER RATHER THAN LATER

by Richard Rhodes

The past several trading sessions have shown an increased propensity for traders to "allocate or rotate" funds into commodity and natural resource stocks. Those gains were no starker than during Friday's trading session, when the S&P Energy Sector (XLE) was higher by +3.23% versus the S&P 500's (SPY) +.54% gain. This circumstance however, hasn't been the norm in recent months, but perhaps it is the beginning of a larger rotation move out of those sectors that have done relative well off the S&P 500 March 9th low such as the S&P Technology Sector (XLK). Time will tell as Read More 

ChartWatchers

IT'S ALL RELATIVE

by Arthur Hill

The PerfChart below shows the percentage change for the S&P 500 and the nine sector SPDRs. The S&P 500 acts as the benchmark for relative performance. Sectors with greater percentage gains are outperforming the S&P 500. Sectors smaller percentage gains are underperforming. Defining the leaders and the laggards can tell us a lot regarding the quality of the rally. Relative to the S&P 500, the Financials SPDR (XLF) is the leader of leaders since early March. Other leaders include the Consumer Discretionary SPDR (XLY), Industrials SPDR (XLI) and Materials SPDR (XLB) Read More 

ChartWatchers

NASDAQ TESTS 200-DAY LINE

by John Murphy

One of the problems with doing an analysis of the "stock market" is choosing which market index to represent it. Like most analysts, I rely on the S&P 500 which is generally viewed as the market benchmark. As we've pointed out several times, however, some parts of the market have been rallying much stronger than others. One of those groups is technology which is heavily represented in the Nasdaq market. Generally speaking, relative strength by technology and the Nasdaq are good signs for the rest of market. And the fact that the Nasdaq Composite has already exceeded its January high Read More 

ChartWatchers

STEADY ADVANCE PERSISTS

by Carl Swenlin

I have been referring to the slow, steady advance of the last few weeks as a "correction". To be more specific, it is a "running correction", which means that prices have moved higher as indicators have chopped sideways and lower. This is evident on the chart below which shows the CVI and STVO (two short-term volume indicators). The CVI has been oscillating above the zero line in an ever-narrowing range for almost two months. The STVO is almost become a flat line. This kind of indicator activity is very unusual, and the impression I get when I look at the charts is that it is not likely Read More