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June 2009

ChartWatchers

TECHNICAL ANALYSIS 101 - PART 9

by Chip Anderson

This is the ninth 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.) Price Channels Trending prices often form a channel where prices can be bounded above and below by parallel trendlines.  When trend channels form, it is helpful to draw the top and bottom Read More 

ChartWatchers

BPNYA TURNS DOWN FROM OVERBOUGHT TERRITORY

by John Murphy

I recently showed the NYSE Bullish Percent Index (BPNYA) having reached overbought territory over 70. the BPNYA is the percent of NYSE stocks that are in point & figure uptrends. I suggested that a drop below the May trough at 68 could signal a short-term top. Chart 1 shows that downturn has taken place as the breath indicator has fallen to 65% and formed a small "double top" in the process. Chart 2 shows the point & figure version of the same indicator. A three-box reversal into the down column also took place this week. That's another sign that the current uptrend is losing some Read More 

ChartWatchers

BREAKDOWN AND SNAPBACK

by Carl Swenlin

On Monday, in predictable fashion, prices broke down from the ascending wedge pattern we've been watching. Then, after a correction of 5%, prices began a snapback move up toward the recently violated support line (now overhead resistance). Prior to the breakdown, you will notice that overhead resistance was presented by the 200-EMA (exponential moving average), which also happens to coincide with the top of the wedge pattern. Once the snapback is completed, I am inclined to expect the correction to continue for a while. There is good support at 880, and after that the most obvious support Read More 

ChartWatchers

NOT MUCH TO LIKE ABOUT HOUSING...

by Richard Rhodes

As the "green shootists" shout from the rooftops about the bottoming of the US and world economy; we think a technical and the Housing Index ($HGX) in particular offer keen insight as to whether one component of what led the US into the housing & credit market bubblewill lead it out. We hear very little about the housing stocks these days, for many are trading at very low levels and many do not believe they will come back anytime soon. Moreover, the current technical patterns may bear this outno pun intended. Quite clearly, the downtrend in place since 2005 remains in Read More 

ChartWatchers

GOLD SETTING UP FOR MOVE HIGHER

by Tom Bowley

There are lots of questions in the market regarding possible inflation, deflation, and general market weakness.  One way to hedge against all three is to play gold.  Below is a long-term weekly chart that shows gold in a very bullish inverse head & shoulders continuation pattern.  The current pattern is preceded by an uptrend, a requirement for an inverse head & shoulder pattern to be effective.  While there are plenty of fundamental reasons to include gold in your portfolio, the technical reasons may be even stronger. Check out the 5 year weekly chart on Read More 

ChartWatchers

VIX BREAKS A TRENDLINE

by Arthur Hill

A downtrend in the S&P 500 Volatility Index ($VIX) underpins the current rally in the S&P 500. After all, decreasing fear gives way to confidence. The chart below shows the VIX as a 3-day SMA to smooth out daily fluctuations. The VIX broke support on 12 March and this coincided with the March surge in the S&P 500. The VIX continued to trend lower as the S&P 500 extended its advance. While the S&P 500 hit a new high for the move in June, the VIX recorded a new reaction low to keep pace. With the sharp decline early this week, the VIX surged off its June low and broke Read More 

ChartWatchers

AUTO-COMPLETE TICKER BOX

by Chip Anderson

We've just added a new "auto-complete" dropdown box feature to our home page.  As you enter a ticker symbol or company name into the "Symbol" box, we now display suggestions from our symbol database for what we think you are looking for.  As you type more information, we'll make better and better suggestions.  It you see what you want, just click on it to see the chart.  Give it a try and let us know what you think.  We plan on adding this capability throughout our website over time. Read More 

ChartWatchers

TECHNICAL ANALYSIS 101 - PART 8

by Chip Anderson

This is the eighth 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.) Trend Psychology The psychology of fear and greed of market participants ultimately determines the direction of prices in a market. Prices rise with greed (demand) and fall with fear Read More 

ChartWatchers

TIME TO TURN CAUTIOUS

by Tom Bowley

I've been bullish for several weeks now, but the tide is changing.  We are running out of historical bullish periods until later in 2009.  We have a few periods that are a bit more optimistic, but by and large the stock market remains either neutral or bearish through the remainder of the summer from a historical standpoint.  I've discussed previously the tendency for the stock market to perform well early in May, then again late in May.  The same generally holds true for June, as historical bullishness falls mostly in the early and latter parts of the month. Read More 

ChartWatchers

DRUGS & HEALTHCARE POISED TO OUTPERFORM

by Richard Rhodes

As the current rally perpetuates beyond what reasonable technicians would have thought at this point - the buying surge has now surpassed 57 trading sessions, it would appear traders are searching rather intently for those "laggard" groups or stocks to provide them with enhanced risk-reward benefits. This is certainly reasonable we think for the theory is that they will eventually play "catch up" with the broader market as gains in other "high beta" groups are wrung out. To this end, we believe that the Pharmaceutical-Healthcare-Biotechnology groups offer just such a "catch-up" Read More 

ChartWatchers

200-DAY AVERAGE IS STILL DROPPING

by John Murphy

Virtually all major market indexes (including the Dow) have now exceeded their 200-day moving averages. That's a positive sign for the stock market, and adds more weight to the view that a major bottom has been seen. As I wrote a couple of weeks ago, however, the "direction" of the moving average line itself is also important. Legitimate bull markets usually require that the 200-day average also turn higher. For that to happen, stock indexes have to first clear the 200-day line (which they've done). Then, stock indexes have to reach the price level formed 200 days ago. In other words, the Read More 

ChartWatchers

IMPORTANT RESISTANCE ENCOUNTERED

by Carl Swenlin

On the chart below we could attach a callout window to the rally that began in March and entitle it "Bull Market Rules Apply". Bull market rules generally mean that bullish setups will almost always resolve positively, and that bearish setups will usually fail to execute, because the market is being driven by a strong bullish bias. For example, at the early-May price top we had a perfect setup for a price reversal that could have declined into a nice correction. Many medium-term indicators were very overbought, and that condition needed to be cleared. However, instead of Read More 

ChartWatchers

OVERBOUGHT AND BULLISH

by Arthur Hill

Even thought the Dow Diamonds (DIA) is overbought medium-term, the recent breakout is short-term bullish and this breakout is holding. On the daily chart, DIA broke above flag resistance with a surge on Monday. This move pushed CCI above 100 to turn momentum overbought. Even so, I would consider the trend both overbought and strong as long as CCI holds above 100. Notice how CCI bounced off the zero area in late May. Medium-term momentum should be considered bullish as long as CCI stays positive. The second chart shows 60-minute candlesticks to focus on the recent breakout. This chart Read More