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July 2010

ChartWatchers

STOCKCHARTS NOW ON FACEBOOK

by Chip Anderson

DO YOU LIKE US?  DO YOU REALLY, REALLY LIKE US? -  StockCharts now has an official page on FaceBook that FaceBook users can use to keep up with the latest site developments and articles.  Just visit http://facebook.com/stockchartscom and click the "Like" button at the top of the page.  FaceBook users can also leave messages on our "Wall" and add comments to our article posts for other FaceBook users.  Keep an eye out for some FaceBook-only specials to appear on that page from time to time also. (Note: Our support team is unable to actively monitor Read More 

ChartWatchers

THE NEED FOR SPEED

by Chip Anderson

Hello Fellow ChartWatchers! Are you feeling more bullish now?  Last week's rallies have put some needed energy back into the traders that haven't gone on vacation this summer.  Technically the market is mixed and you can see evidence of that in the articles below - John Murphy talks about a positive development on the daily charts while Arthur Hill points out a negative sign on the latest monthly charts.  Clearly the markets have a ways to go before anyone can say a bull market has returned, but last week's trading was the first bullish action in a long time. THE Read More 

ChartWatchers

S&P 500 BREAKS LONG-TERM MOVING AVERAGE

by Arthur Hill

On the monthly chart, the S&P 500 broke below its 12-month moving average for the first time since July 2009. Even though moving average crossovers do not pick exact bottoms or tops, this moving average cross captured the major moves over the last eight years. As with all moving average crossover systems, success depends on a strong trend or sustainable move. A trading range or choppy market will produce whipsaws. For now, the S&P 500 broke below the 12-month SMA with a sharp decline in May-June. This is bearish until proven otherwise. There was a rebound in July, but the index Read More 

ChartWatchers

STOCK INDEXES BREAK DAILY DOWNTREND

by John Murphy

Stocks turned in a strong performance Thursday. The three major stock indexes shown below closed back over their 50-day moving averages. The S&P 500 (Chart 2) and the Nasdaq Composite (Chart 3) did so for the first time since early May. Another positive sign is the ability of all three indexes to close above the down trendline drawn over their April/June highs. The next hurdle to overcome is their July highs and 200-day moving averages. The short-term stock picture does appear to have improved with the growing possibility of a rebound to the mid-June peak. The rally in stocks was Read More 

ChartWatchers

UNDERSTANDING DIVERGENCE

by Tom Bowley

Divergences are among the most misused technical analysis tool anywhere, in my opinion.  The first step in successful trading using divergences is understanding both their strengths and their limitations.  My preference is to focus on divergences as they relate to the Moving Average Convergence Divergence (MACD).  Others use divergences on bound momentum oscillators like the RSI and stochastics.  The word "bound" refers to the physical limitations of both of these oscillators.  They cannot print a reading higher than 100 nor lower than 0.  That's a Read More 

ChartWatchers

NOW THAT'S A TRADABLE RALLY!

by Richard Rhodes

After a horrid 2nd quarter, the S&P 500 is sure making up it's losses at a rapid rate. We've been rather bearish of late given the S&P was trading below its major moving averages that delineate bull & bear markets, with the prospect of these important resistance levels proving their merit with another leg lower. The only caveat we've had is that our models were near oversold levels. They never made it that far, but certainly they have now turned higher - with the S&P now gingerly breaking back above our resistance levels. This is material in our mind, and it has caused us Read More 

ChartWatchers

MONITORING EQUAL-WEIGHT INDEXES

by Carl Swenlin

We have added a new page of charts to help us monitor the relative strength of equal-weighted indexes against their capitalization-weighted counterparts. Cap-weighted index values are dominated by the larger-cap stocks in the index. For example, the 50 largest-cap stocks in the S&P 500 represent about 70% of the index value. Conversely, the Rydex S&P Equal Weight ETF (RSP) gives each of the 500 stocks equal weighting when calculating the index value. As a general rule, the equal-weighted indexes will outperform their cap-weighted counterparts because smaller-cap stocks dominate Read More 

ChartWatchers

NYSE SUMMATION INDEX'S "400" SIGNAL

by Chip Anderson

Hello Fellow ChartWatchers! With the market posting four solid up days over the past week, is now the time to get back in to the market?  That's the main topic of this week's newsletter and there are lots of opinions going around right now. One of the key things to watch for after a prolonged market decline are the major market breadth indicators like the NYSE Bullish Percent ($BPBYA) and the NYSE Summation Index ($NYSI).  Like all market indicators, these lines condense the movement of hundreds of stocks down into a single line that can be used as a proxy for the overall health Read More 

ChartWatchers

THE MID-YEAR UPDATE

by Tom Bowley

In the life of a technical analyst, a month seems like a week, a week seems like a day and a day seems like minutes.  Time flies and so do the charts and various technical patterns.  I think it's always a good idea to periodically take a step back and look at the broader picture.  It sounds like a good time for a mid-year update.   The following is a chart of the QQQQ, an ETF that tracks the NASDAQ 100 index.  In my last article, I took a look at the QQQQ and pointed out the likely resistance at the 50 day SMA and provided reasons for potentially trading a juiced Read More 

ChartWatchers

CURRENT S&P RALLY HAVE STAYING POWER?

by Richard Rhodes

The July 4th fireworks came a bit more belatedly this year as the S&P 500 rose +4.86% in the holiday shortened week. This performance was rather impressive in terms of points and breadth, but certainly not in terms of volume. To us, this calls into question the veracity and staying power of the current rally. To wit, the current S&P rally has simply retraced back into major overhead resistance at the 380-day exp. and 200-day exp. moving averages at 1087 and 1095 respectively. Thus, we would expect to see prices fail at this zone given these moving averages are now Read More 

ChartWatchers

NEW LONG-TERM SELL SIGNAL GENERATED

by Carl Swenlin

As you can see in our Decision Point Alert Daily Report below our Trend Model has triggered a Long-Term SELL signal for stocks.  This occurs when the 50-EMA crosses below the 200-EMA.  It has been headed this direction for quite some time so it is not unexpected. Note on the chart below that the margin on this signal was a 50/200-EMA difference of 0.01. Not much, but as long as price remains below those EMAs, the distance between them will continue to increase. In the daily chart of the SPX we see prices moving up toward resistance in the descending Read More 

ChartWatchers

Gold and silver test support zones

by Arthur Hill

After sharp declines in late June and early July, gold and silver are testing important support zones from their prior lows. The fist chart shows the Gold ETF (GLD) hitting new 52-week highs in late June. These highs did not hold long as GLD declined towards support around 114-116. This zone stems from broken resistance, the May low and the February trendline. GLD remains in a clear uptrend as long as support holds.  Failure to bounce and a support break would reverse the 4-5 month uptrend in gold. Click these images for details Read More