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March 2011

ChartWatchers

DOLLAR INDEX DROPS TO THREE-YEAR LOW

by John Murphy

Traders continue to sell the U.S. Dollar. In yesterday's trading, the dollar fell to a 20-year low against the Japanese yen. Today, it's falling against everything else. More importantly, the greenback is breaking important support levels. Chart 1 shows the PS Bullish Dollar Index (UUP) falling to the lowest level in three years. One of the side-effects of a falling dollar is stronger commodities and shares tied to them. Right on cue, both are bouncing. Chart 2 shows the DB Commodities Tracking Index Fund (DBC) bouncing off its 50-day moving average (blue line) and gaining 2%. Virtually Read More 

ChartWatchers

CORRECTIVE PROCESS IN FULL BLOOM FOR RUSSELL 2000

by Richard Rhodes

Over the past several weeks, we've seen the market leader Russell 2000 Small Cap Index ($RUT) falter modestly given Middle East/North Africa and Japanese concerns. Commonsensically speaking, this would have been expected, but certainly on a longer-term basis RUT was ready to decline from a technical perspective due to a number of reasons. They are: 1. RUT has rallied sharply off its low in a very short amount of time and back into the 2007 highs; long-term previous high resistance almost also proves difficult for a few months.2. As resistance was tested, the 9-month RSI moved above the Read More 

ChartWatchers

PREPARING FOR THE "BANG!"

by Carl Swenlin

(This is an excerpt from Friday's blog for Decision Point subscribers.)  My wife is something of an insomniac, so she listens to a lot of nighttime talk shows -- not the best cure for insomnia, I'll bet. Recently she told me about the comments of some guest on some talk show -- sorry, but that's as good as I can do for attribution -- who had an analogy for the U.S. financial woes. He said we are like a person who makes $50,000 a year, spends $75,000 a year, and has $375,000 in credit card debt. Hopeless is what it is. From Mauldin and Tepper's Endgame: The End Read More 

ChartWatchers

DA BEARS ARE IN CHARGE!

by Tom Bowley

For the first time since August 2010, the bears are in control of the short-term action.  I haven't lost sight of the intermediate- and long-term uptrends that are in place (which remain bullish), but I also am not going to ignore the clear breakdowns of the past few weeks on heavy volume. Perhaps the most bearish indication has been the impulsive nature of the selling.  Below is a chart of the NASDAQ 100:   There are a few things to point out here.  First, this is a 6 month chart showing that the near-term technicals have eroded.  Longer-term weekly Read More 

ChartWatchers

HOW ARE THE MARKET SECTOR BPI'S HOLDING UP?

by Chip Anderson

Hello Fellow ChartWatchers! Talk about your "Wall of Worry"!  These days there are tons of things to worry about.  So are the bulls going to be able to keep climbing?   Whenever I want to get a solid, high-level view of the overall market I turn to our trusty Bullish Percent Indexes.  Specifically the Bullish Percent Indexes for the nine S&P Market Sectors. Remember, a Bullish Percent Index (BPI) takes a group of stocks and records the percentage of those stocks that have a "P&F Buy" signal on their Point and Figure charts.  So BPI's Read More 

ChartWatchers

QQQQ and IWM Form Pennants at Potential Support Levels

by Arthur Hill

With big declines on Wednesday, the Nasdaq 100 ETF (QQQQ) and the Russell 2000 ETF (IWM) both became oversold and hit potential support zones. The first chart shows QQQQ hitting support around 54 after an 8+ percent decline the last few weeks. This decline pushed the Commodity Channel Index (CCI) below -200 for the first time since early May, seen of the infamous flash-crash. Broken resistance, the December consolidation and the 62% retracement combine to mark support here. The ETF consolidated the last three days with a small pennant taking shape. A break, up or down, from this Read More 

ChartWatchers

FALLING DOLLAR IS CONTRIBUTING TO RISING COMMODITIES

by John Murphy

In my Tuesday message, I agreed with the Fed chairman that commodity prices were rising against all currencies. That doesn't mean, however, that the falling U.S. Dollar isn't a major contributor to rising commodities. After all, global commodities are priced in dollars. Chart 3 shows that the latest surge in the CRB Commodity Index began last June just as the U.S. Dollar Index was peaking (see arrows). A dollar bounce during the fourth quarter coinicided with a modest commodity pullback. The dollar downturn during the first quarter of this year has contributed to another commodity surge Read More 

ChartWatchers

DOLLAR INDEX BREAKING DOWN AGAIN

by Carl Swenlin

(This is an excerpt from Friday's blog for Decision Point subscribers.)  The U.S. Dollar Index is in immediate danger again, so lets take a close look at charts from all three time frames, beginning with the daily bar chart. The most important feature on the chart is the bold rising trend line near the bottom. That is a long-term rising trend line that we will see on the longer-term charts. Note that in November the Index bounced off that line only to retest and penetrate it just a month later. The November breakdown was a bear trap, resulting in a strong rally, which Read More 

ChartWatchers

SILVER AND GOLD

by Richard Rhodes

The recent gold price rally to new highs hasn't been impressive when compared to silver's sharp rally; but then again, the race may not always go to the rabbit. And it is this thought that has prompted us to consider the horridly lagging gold stocks (GDX). They haven't been able to get out from under their own weight, and they stand not too far off their respective 200-day moving averages, and haven't moved to new highs with gold. This is a rather large divergence, and one we don't believe shall remain in place for very long as gold shares (GDX) appears poised to breakout sharply versus Read More 

ChartWatchers

FINALLY CONSOLIDATION!

by Tom Bowley

It's hard to believe it's been two years since that infamous 2009 March bottom.  I'm going to focus on the NASDAQ for purposes of today's article.  Let's take a quick look at the advance since late August 2010 to gain a real appreciation for how far the NASDAQ has come in such a short period of time:   The NASDAQ rose nearly 35% in less than 6 months.  That came AFTER the NASDAQ had already bounced 75% from the March 2009 low to the August 2010 low shown above.  It's truly been a remarkable recovery as the NASDAQ recently approached its 2007 highs at Read More 

ChartWatchers

BEWARE THE "ETF" TRAP

by Chip Anderson

Hello Fellow ChartWatchers! (This is a repeat of an article I wrote in 2007.  Seems like now is a great time to review its message. - Chip) Last month I had the pleasure of sitting in on several local Technical Analaysis User Groups and seeing how they used many different tools to do group stock analysis. It was a very educational experience for me and I strongly recommend that everyone reading this newsletter join your local technical analysis user group. (If there isn't one in your area, why not start one?) Doing technical analysis with other people is probably the best way to Read More 

ChartWatchers

Overall Uptrend Remains As SPY Battles a Pair of Gaps

by Arthur Hill

The S&P 500 ETF (SPY) is hitting resistance from last week’s gap down, but may just find support from this week’s gap up. The latest round of gaps started with a gap down from a new high on 22-February. The ETF rebounded later that week, but fell sharply on Monday with a long black candlestick. This candlestick met resistance from the 22-February gap. SPY firmed above its late February low and gapped up on Thursday. However, once again, the ETF met resistance from the 22-Febuary gap with a decline on Friday. This puts the ETF between a rock (gap down) and a hard place (gap up). The Read More