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August 2009

ChartWatchers

TECHNICAL ANALYSIS 101 - PART 11

by Chip Anderson

This is the next 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 Patterns Price Patterns result when the market is not in agreement on the value of a stock.  Essentially, they are the “visual remains” of a big battle between Bulls and Bears.  In many Read More 

ChartWatchers

ON HIATUS THIS WEEK

by John Murphy

John will return for our next issue. Read More 

ChartWatchers

"IF THEY A YELL'IN; THEN YOU SHOULD BE SELL'IN"

by Richard Rhodes

The July-August stock market rally has caught many surprised given its strength and duration; however, we are of the opinion that this "freight train" is running of out of fuel, and shall falter from roughly current levels in what may be quite a "quick and nasty" setback at a minimum. It very well may take on a more decidedly bear market decline, but it is far too early for us to determine this. Quite simply, if we look at the broad-based Wilshire 500 Index, we find the rally off the March low is substantial, but only insofar as a mean reversion exercise towards the 70-week Read More 

ChartWatchers

LONG-TERM BUY SIGNAL

by Carl Swenlin

On Tuesday of this week our long-term model for the S&P 500 switched from a sell to a buy signal. While it is a simple model -- the signals are generated by the 50-EMA crossing over the 200-EMA -- it can also be very effective, capturing a gain of 28.7% over a period of 580 calendar days. During that period the S&P 500 lost -28.5%. Past performance is no guarantee of future results. In fact, like any trend following model it is subject to whipsaw, and will be unprofitable in some cases. It probably will not be fast enough to sidestep to sidestep a surprise crash, such as we had in Read More 

ChartWatchers

CAUTION IS ADVISED NEAR-TERM

by Tom Bowley

Two weeks ago, I pointed out what appeared to be the early stages of a new trend of outperformance by the financials and suggested they might be primed for a move higher to rescue the stumbling stock market.  Right on cue, money rotated back into financials and we saw the Dow Jones US Financial Index rally nearly 10% in one week, breaking out above its May highs.  That spurred the S&P 500 to its highest level since mid-October 2008.  Therein lies the problem.  We've now retraced much of the collapse from late September and staying aggressively long at key Read More 

ChartWatchers

Keeping an Eye on Bullish Percent

by Arthur Hill

The Bullish Percent Indices measure the percentage of stocks on a Point&Figure buy signal for a given index. In general, an index has a bullish bias when its Bullish Percent is above 50% and a bearish bias when below 50%. Stockcharts.com users can easily keep an eye on the bullish percent indices in the Market Summary page. In fact, the table below comes directly from the bottom of the Market Summary page. The major indices are at the top, followed by the sectors. As you can see, the Bullish Percents are above 70% for all the major indices. No sign of weakness Read More 

ChartWatchers

TRENDING UP, DOWN OR SIDEWAYS?

by Chip Anderson

Hello Fellow ChartWatchers, Here's an article that first appeared in 2006 about using the ADX indicator.  With lots of stocks starting to trend upwards now, I thought it was a good time to revisit this topic.  Enjoy!  - Chip Trend analysis is one of the most important technical analysis skills anyone can have. Knowing if a stock is trending or oscillating can have a big impact on what kind of approach you take to trading it. Stocks that are in a strong uptrend should be bought and held until one or more momentum oscillators show signs of weakness (a moving average Read More 

ChartWatchers

ITB VERSUS XHB

by John Murphy

On Monday, I wrote a bullish message on the homebuilding group and suggested using the SPDR S&P Homebuilding ETF (XHB) as one way to participate in the housing recovery. I pointed out, however, that the XHB has a relatively heavy weighting in a lot of housing-related stocks that aren't necessarily homebuilders (like Home Depot, Bed Bath & Beyond, Masco, etc.). A purer homebuilding play can be found in another ETF -- iShares Dow Jones U.S. Home Construction (ITB) -- which is shown in Chart 2. The two charts are basically similar, show the same bottoming characteristics since last Read More 

ChartWatchers

COMMODITY SECTOR PICKING UP

by Richard Rhodes

On Thursday and Friday of last week, we saw the US dollar resume its downtrend, and the commodity sector begin to pick up participation as a result. This is likely to continue into the future as the US dollar is destined for lower lows; thus we are quite interested in finding parts of the commodity sector that have been "laggards" recently. The first that comes to the "radar screen" is the Agriculture group as it has been "most laggard." This group is primarily comprised of the grains such as Soybeans, Corn and Wheat; but the ETF that we are interested in - the DB Agricultural ETF (DBA) - Read More 

ChartWatchers

FINANCIALS TO THE RESCUE?

by Tom Bowley

During the initial phase of the market recovery, from the March lows to the early May highs, financials were a primary driver of the move.  Since that time, financials have lagged badly as sector rotation has caused money to flee to other, better-performing sectors over the last 8 weeks or so.  However, the relative outperformance that financials enjoyed in the Spring has returned of late.  Will it continue?  That's hard to say, but our first major clue is upon us.  Check out the following chart: Should the sector break above key near-term price Read More 

ChartWatchers

HOPING FOR A PULLBACK

by Carl Swenlin

Since the price lows of early-July, the market has moved relentlessly higher, penetrating the important resistance posed by the 200-EMA. When this rally began, a narrow window of fairly low-risk opportunity was presented. Those who missed it are now hoping that prices will pull back far enough to provide another good entry point. The most obvious and promising pullback target would be a move down to the 200-EMA, but would such a move fuel confidence, or would it only serve to crank up the level of anxiety? As you can see, another ascending wedge has formed, and, if you have been Read More