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November 2010

ChartWatchers

MUNIS TUMBLE

by John Murphy

We've been showing the upward trend in bond yields since the Fed's latest QE2 package was announced last week. We've also shown the drop in bond prices, especially Treasury bonds and notes. The bond category that's been hit the hardest has been tax-exempt municipal bonds. The first two charts show just how bad they've been hit. Chart 1 shows the S&P National Municipal Bond ETF (MUB) tumbling to a new 2010 low over the last month. It has also broken its 200-day moving average for the first time in two years. Mutual fund bond investors haven't escaped the price plunge. Chart 2 shows the Read More 

ChartWatchers

DETERMINING "RISK-ON/RISK-OFF" TRADE

by Richard Rhodes

Happy Thanksgiving!We view the ratio between stocks and bonds as a barometer for the "risk-on" or "risk-off" trade. Therefore, the recent upward movement in the ratio has our attention, and so too should it have our readers as it on the precipice of breaking out into a full-fledged "risk-on" bull market in stocks vs. bonds as the 170-week moving average looks to be violated to the upside given 40-week stochastic is turning higher in bullish fashion. This simply means that stocks shall gain at the expense of bonds, and more importantly - given the bond market has harbored the "risk-off" Read More 

ChartWatchers

COMPLACENCY ONCE AGAIN MARKS TOP

by Tom Bowley

The top in April was laced with warning signs, from record complacency to negative divergences on daily and weekly MACDs to underperforming financials to overbought oscillators to oversold bonds.  In particular, the negative divergence on the MACD on the weekly charts suggested the weakness was likely to last.  Recently, complacency once again became an issue.  As expected, the market reversed lower.  Check out the chart below:  In my long-term analysis of the market and the history of market tops, high complacency is definitely a contributing factor.  The Read More 

ChartWatchers

THE VALUE OF A STOCKCHARTS MEMBERSHIP CONTINUES TO INCREASE

by Chip Anderson

Hello Fellow ChartWatchers! We are now halfway through our current plan for adding more value to every StockCharts.com subscriber's membership.  Two weeks ago, we doubled the amount of chart storage that Extra members get and we drastically increased the "freshness" of our Scan Engine results.  This week, we've increased the number of charts Basic members can store from 100 to 500 and we've given then access to many of the same features that Extra members have - i.e., multiple list views, storage for annotated charts, etc. (At this point there are only 3 differences Read More 

ChartWatchers

EURO STOXX 50 INDEX HOLDS UP IN THE FACE OF ADVERSITY

by Arthur Hill

Despite weakness in the Euro and European debt concerns, we have yet to see significant weakness or a breakdown in the DJ Euro Stoxx 50 ($STOX5E). This index is the Dow Industrials of Europe. There are 50 stocks representing 9 countries and 18 industry groups. French and German stocks dominate the index, while finance-related stocks (14) form the single biggest industry group. It is a good cross-section of “core” Europe. While there are concerns with “peripheral” Europe, these have yet to spread to the Stoxx 50 Index. he chart above shows the Stoxx 50 Index remaining in an uptrend Read More 

ChartWatchers

SECULAR STATUS

by Carl Swenlin

According to our mechanical timing models, as well as my conclusions through visual analysis, we are in a bull market, a cyclical bull market, which refers to the bull/bear cycle that occurs about every four years. A subscriber wanted to know if we were also in a secular bull market, which refers to trends that usually persist over many years, even decades. The next chart shows about 85 years of S&P 500 history, and I have marked it with red lines to highlight where, in my opinion, secular bull and bear markets took place. The decline from the 1929 top to Read More 

ChartWatchers

SEMICONDUCTOR HOLDERS CLEAR APRIL HIGH

by John Murphy

The ability of any stock index or group to clear its April high is a sure sign of strength. In case you haven't noticed, the Semiconductor Holders are doing just that today. I point that out because, up until a couple of months ago, chip stocks were market laggards. Chart 1, however, shows that's no longer the case. Not only is the SMH clearing its April, high, but the SMH/SPX ratio (below chart) has been rising since early September. A number of individual stocks in the group have hit new 52-week highs including (in order of size) Texas Instruments (TXN), Analog-Devices (ADI), Altera Read More 

ChartWatchers

A LONGER-TERM LOOK AT THE NASDAQ COMPOSITE

by Richard Rhodes

With the "troika" of the US mid-term elections, FOMC meeting decision on QE-2,  and the US Employment Situation Report having been digested by the markets, we thought it instructive to step back and take a longer-term viewpoint of the NASDAQ Composite. Perhaps by looking at the Composite, we can infer whether or not QE-2 will be successful in terms of raising asset prices in the coming year or years. Certainly the Composite has been a relative laggard since the bubble days of 1998-to-2000, that is until the past year. Thus, it piques our long-term interest, and perhaps more Read More 

ChartWatchers

MARKET GLASS HALF FULL OR HALF EMPTY?

by Tom Bowley

It's been a breathtaking move.  The NASDAQ was trading near the 2100 level at the end of August.  Friday it closed at 2579.  That's more than a 25% move in just over two months.  Of course that followed a 17% decline from April through August.  The bottom line is this:  The NASDAQ is approximately 2% higher than it was at the April high.  The Dow Jones is also roughly 2% higher since April.  The S&P 500 and Russell 2000 are closer to breakeven. Here is the good news - the financials broke above key resistance as the Dow Jones US Financial Read More 

ChartWatchers

MORE VALUE FOR STOCKCHARTS SUBSCRIBERS

by Chip Anderson

Hello Fellow ChartWatchers! One of the things we are always trying to do here at StockCharts is "improve."  We are always trying to make the website better - faster, more powerful, more flexible, you name it.  We are also always trying to increase its value.  Today, I'm thrilled to announce two big changes that are happening which will GREATLY increase the value of a StockCharts membership. (For all you skeptics out there, the price hasn't changed at all.  I'm announcing new features and improvements for the exact same price as before.) FOR ALL OF THE Read More 

ChartWatchers

NIKKEI 225 FORGES INVERSE HEAD-AND-SHOULDERS

by Arthur Hill

Although a little late to the party, the Nikkei 225 ($NIKK) is showing signs of life with an inverse head-and-shoulders pattern taking shape. Note that the S&P 500 formed an inverse head-and-shoulders from mid May to mid September and broke resistance in the second half of September. The Nikkei continued to a new low in late August, but forged a higher low in early November to form the right shoulder. The chart below shows the left shoulder forming in July and the head in late August. With the global rally in stocks, the Nikkei surged to neckline resistance with a strong move the last Read More 

ChartWatchers

US DOLLAR INDEX BREAKS LONG-TERM SUPPORT

by Carl Swenlin

(This is an excerpt from Friday's blog for Decision Point subscribers.) As of 7/14/2010 the US Dollar has been on a Trend Model NEUTRAL signal, and it has been in a bear market since the end of September when the 50-EMA crossed down through the 200-EMA. On the daily chart below you can see that the index has been in a declining trend channel since the June top. When it hit the bottom of the channel in October, I thought it might bounce back up to the top of the channel, but QE2 killed that idea. While the index remains above the bottom of the Read More