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January 2010

ChartWatchers

IT ALL COMES DOWN TO DEFENSE

by Tom Bowley

Ask any NFL coach and he'll tell you unequivocably that defense wins championships.  If you're looking for market-beating returns, then you'd better improve your defense first, then your offense.  Plain and simple, Invested Central did everything possible to prepare defensively for last week's massacre.  Two weeks ago, we acknowledged that the banking sector was showing marked improvement, especially relative to the S&P 500, and that could bode well for later in 2010.  And it still might.  But at the same time, red flags were being raised and, as a result, we Read More 

ChartWatchers

$USD INDICATING A CHANGE?

by Richard Rhodes

The past week was punctuated with sharp stock market weakness, with many pundits believing that it is transitory and doesn't have the makings of a larger top. Quite obviously, there is nothing definitive at this juncture, but we're giving odds of over 50% that indeed a major top has formed. Our reasoning is a bit circuitous, but suffice to say that it starts with the US dollar. In recent years, larger turning points in the US dollar have preceded larger stock market turning points from 1-to-4 months. If this is the case - and we think it is - then the late-November 2009 USD bottom and the Read More 

ChartWatchers

ON HIATUS THIS WEEK

by John Murphy

John Murphy is on hiatus this week.  His article will return in the next issue. Read More 

ChartWatchers

FINALLY A BREAKDOWN

by Carl Swenlin

The S&P 500 has finally decisively broken down through the support formed by the rising trend line that marks the bottom of the ascending wedge formation. This was the technical expectation, but the market sure did fight it. The break has also carried the price index through the 20- and 50-EMAs. I have drawn a dashed line from the November low, parallel with the upper boundary of the wedge to suggest a possible bottom of a rising trend channel. This line is not drawn by strict technical rules, just a bit of speculation on my part. The first obvious support is at about 1030, not a Read More 

ChartWatchers

STOCKCHARTS IS GOING TO "BATS" FOR YOU

by Chip Anderson

Hello Fellow ChartWatchers! I am thrilled to officially announce that StockCharts.com now provides free real-time charts and quotes for everyone! Thanks to the BATS exchange and the fine folks at IDC/Comstock, our free users and our Basic and Extra members are now able to see charts based on non-delayed price data during market hours. The data comes directly from the BATS exchange and we highlight it in yellow on our charts. While that change is very exciting, it is important to keep in mind several differences between real-time data from BATS and the "official" real-time data from the Read More 

ChartWatchers

OFFENSIVE SECTORS TAKE A HIT

by Arthur Hill

Offensive sectors took a hard hit in January. Offensive sectors include technology, consumer discretionary, industrials and finance. I call them the offensive sectors because their participation is key to a bull market. Technology represents growth and the appetite for risk. Consumer discretionary is the most economically sensitive sector. Industrials represent big global manufacturers like GE, United Tech, 3M, Boeing and Caterpiller. Finance represents the banking system. The first chart shows the technology SPDR (XLK) as the weakest of the offensive sectors. In fact, it is the weakest Read More 

ChartWatchers

FINANCIALS CONTINUE TO SURGE

by John Murphy

On Tuesday, I showed the financial sector in the process of turning from a market laggard into a market leader. Chart 1 shows that new financial leadership continuing. The Financials SPDR (XLF) has now exceeded its mid-November peak at 15.07 to turn its short-term trend back up again. That puts the XLF in position to challenge its October high. The upturn in its relative strength ratio (top of chart) shows financial stocks starting to outperforming the S&P 500 for the first time since mid-October. Similar bullish patterns are now visible in most financial stocks. One of the biggest Read More 

ChartWatchers

RELATIVE STRENGTH RETURNING TO FINANCIALS

by Tom Bowley

Happy New Year!!!! It's been awhile since I've spoken about the financials in a positive light.  As sector rotation continues though, it appears as if the financials may get their turn after all.  I've been watching bank after bank, financial after financial, either moving to a fresh 52 week high or blowing past 50 day SMAs over the past couple weeks, this latest week especially.  JP Morgan (JPM), Bank of America (BAC) and Wells Fargo (WFC) are among the largest financials and have led the parade.  Volume on these stocks and other financials was on the rise as well Read More 

ChartWatchers

ROTATION THE THEME OF 2010

by Richard Rhodes

Rotation, rotation and more rotation. This is what 2010 will be about, with the first week of trading a very good example of what to expect. During 2009, there were only 3 S&P sectors out of 10 that out-performed the S&P 500: Consumer Discretionary, Basic Materials and Technology. Thus far in 2010, we've seen relative weakness in the Consumer Discretionary and Technology groups, with money rotating into the Energy group. This interests us greatly, for it presents an excellent relative trading opportunity to be long Energy and short the S&P 500. We've Read More 

ChartWatchers

STILL NO DECISIVE MOVE

by Carl Swenlin

One would think, after a three-week hiatus, that there would be plenty to write about the market. But there isn't. The S&P 500 has drifted higher in an ever-narrowing ascending wedge pattern, making little progress. Since the mid-October top, the S&P 500 has only gained about 40 points. You can see on the chart that the price index has kind of oozed above the top of the wedge, but only by a tiny amount, and certainly not decisively. In my opinion, the ascending wedge has not yet been resolved, and the most likely resolution will be to the down side. While I Read More 

ChartWatchers

New highs expand in December-January

by Arthur Hill

With the advance over the last 3-4 weeks, Net New Highs expanded to their highest levels since October. Net New Highs equals new 52-week highs less new 52-week lows. The bulls have a clear edge when Net New Highs are positive and rising. Conversely, the bears have an edge when Net New Highs are negative and falling. The bottom window in first chart shows Net New Highs for the Nasdaq moving above +200 in early January. This total fell to +158 on Friday, but Net New Highs are clearly in positive territory and this is bullish. The main window shows Cumulative Net New Highs. Like the AD Line Read More 

ChartWatchers

TECHNICAL ANALYSIS 101 - PART 16

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.) Candlestick Patterns A series of candlesticks often develop into recognizable patterns that can give a trader insight about the current market psychology and likelihood of near term price moves.  Many of these 1, 2 or Read More