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October 2009

ChartWatchers

SAFETY FIRST

by Tom Bowley

It's very easy to get caught up in the euphoria of this market run.  I'd be careful to do that.  Invested Central turned from aggressively optimistic to cautiously bullish in early May and we've maintained that more cautious stance since.  Call us conservative if you'd like.  We view it as a compliment.  After all, if we don't protect our capital, who will?  Does anyone believe the folks on Wall Street have our personal best interests in mind?    As I've mentioned in recent articles Read More 

ChartWatchers

OIL ETF BACK ON BUY SIGNAL

by Carl Swenlin

In my September 25 article I headlined the fact that the Oil ETF (USO) had generated convincing sell signal, so I think it is appropriate to report that the signal has recently turned to a buy. Below is the chart from the 9/25 article showing the breakdown from the triangle formation that accompanied the sell signal. It still looks good to me, but that breakdown turned out to be a shakeout, a final decline clearing the market of sellers and setting up another advance. On the next chart you can see how the shakeout lows redefined the lower limits and shape of the Read More 

ChartWatchers

SHORT-TERM RATES AND THE DOLLAR

by Arthur Hill

While there has been a negative correlation between the Dollar and stocks this year, there has been a positive correlation between the Dollar and short-term interest rates. The chart below shows the US Dollar Index ($USD) with the 1-Year Treasury Yield ($UST1Y). Both rose in January-February and then declined from March to October. Notice that stocks declined when these two rose and advanced when these two declined. While correlation is not the same as causation, there is clearly some sort of connection here. Therefore, we should be watching short-term rates for clues on the Dollar. A Read More 

ChartWatchers

NYSE AD LINE NEARS 2007 HIGH

by John Murphy

NYSE ADVANCE-DECLINE LINE NEARS OLD HIGH One of our readers asked for a look at the NYSE Advance-Decline line, and this may be a good time to start keeping an eye on it. Chart 7 shows the NYAD nearing a test of its 2007 peak. What's surprising is that the NYAD has retraced nearly its entire downtrend while major market indexes have retraced only half. That's probably good news since the NYAD is viewed as a leading market indicator. One possible concern, however, is that the AD line may meet some resistance near its old high. That's why it's worth keeping a close eye on as its retests Read More 

ChartWatchers

INTERNET CONNECTION AND DATAFEED UPGRADE REPORTS

by Chip Anderson

Internet Connectivity Upgrade Progress Report: On Monday night we moved our site traffic off of our old 180 megabit T3 connections and back onto the gigabit Fiber connection.  Later we ran a test of our new automatic failover configuration by physically disconnecting the fiber cable from its router and we saw that our traffic immediately moved back onto the old T3 connections.  We then plugged the fiber cable back in and traffic immediately moved back onto the fiber cable. This means that we should not have a repeat of last month's site disruptions - at least not because of lost Read More 

ChartWatchers

TECHNICAL ANALYSIS 101 - PART 14

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 entire series.) Fibonacci Lines How high is "too high?" How low is "too low?" Think back to any time that you've owned a stock and think about when you started to get worried about its performance. At what point did "your gut" start to Read More 

ChartWatchers

BREAKDOWN IN BOND YIELD MAY BE BAD FOR STOCKS

by John Murphy

One of the catalysts behind Thursdays heavy stock selling was the breakdown in Treasury bond yields. The 10-Year T-note yield fell below its July low to the lowest level in more than four months. Bond yields are an indicator of confidence in the economy. When investors are optimistic, they buy stocks and sell Treasuries. That pushes bond yields higher. When they're more pessimistic, they sell stocks and buy Treasuries. That pushes yields lower. So the direction of Treasury bond yields has some bearing on the direction of stocks. That's been especially true over the last two years. The Read More 

ChartWatchers

Major Indices Hit Major Resistance and Fail

by Tom Bowley

I've cautioned recently about the risks of being long in the market.  There were too many warning signs.  Yes, the market could have kept its head down and pushed to higher levels.  But that wouldn't have been the healthy way to extend the recent uptrend.  Many of the major indices failed at critical long-term resistance and now must regroup from lower levels as they approach key short-term support levels.  I'm featuring a few key indices/ETFs in order to highlight the importance of the resistance levels tested.  Check these out below: I used the Read More 

ChartWatchers

COMPLACENCY IN THE MARKETS

by Richard Rhodes

Complacency, complacency and more complacency. While the media worries about a correction in the strong cyclical bull market, they should quite simply be considering whether or not the cyclical bull has indeed topped out and a cyclical bear market has begun. This is the nature of higher prices; market participants tend to extrapolate the present far into the future - and this is what most market participants are doing right now. To wit, note the CBOE Volatility Index ($VIX) has forged a low at the 23 level after having traded to mind-numbing 80. Where everyone was bearish the broader Read More 

ChartWatchers

SUPPORT STILL HOLDS CORRECTING PRICES

by Carl Swenlin

The market has begun another correction, but so far no serious technical damage has been done. The S&P 500 remains within the grasp of an ascending wedge formation, the dominant feature on the daily chart. On Friday prices hit their lowest level of the correction, but they remained above the support of the 50-EMA and the rising trend line. Next major support is at the 200-EMA. As regular readers know, it is most likely that prices will break down from the rising wedge pattern, and I am inclined to believe that will happen in this case. Internal conditions for the medium-term are Read More 

ChartWatchers

TECHNICAL ANALYSIS 101 - PART 13

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 entire series.) The Infamous Head and Shoulders Reversal PatternOne of the most common reversal patterns is the Head and Shoulders pattern.   This pattern forms in an uptrend and its Read More 

ChartWatchers

BREAKDOWN IN BOND YIELD MAY BE BAD FOR STOCKS

by John Murphy

One of the catalysts behind Thursdays heavy stock selling was the breakdown in Treasury bond yields. The 10-Year T-note yield fell below its July low to the lowest level in more than four months. Bond yields are an indicator of confidence in the economy. When investors are optimistic, they buy stocks and sell Treasuries. That pushes bond yields higher. When they're more pessimistic, they sell stocks and buy Treasuries. That pushes yields lower. So the direction of Treasury bond yields has some bearing on the direction of stocks. That's been especially true over the last two years. The Read More 

ChartWatchers

QQQQ Tests the 50-day

by Arthur Hill

With a sharp decline over the last eight days, the Nasdaq 100 ETF (QQQQ) is testing support from the rising 50-day moving average and RSI is testing support around 45-50. QQQQ broke the 50-day moving average briefly in July, but held the 50-day during the May, June, August and September pullbacks. Some bounces were bigger than others, but the moving average held for the most part. A clean break below the 50-day would be negative for the current uptrend. Click this chart for more details. The bottom indicator window shows 14-day RSI. Notice the support zone around 45-50. RSI Read More