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May 2011

ChartWatchers

SPRING SPECIAL ENDS ON MAY 31st

by Chip Anderson

Hello Fellow ChartWatchers! This week's newsletter features some great Bullish vs. Bearish discussions including some Elliot wave analysis from John Murphy.  I also wanted to take time to remind everyone that our Spring Special will end shortly.  I really hate when people write in to us after a special ends because they missed it.  Please don't put yourself in that position!  Remember: everyone can take advantage of our special - both members and non-members.  Even if your account doesn't expire for a while, you can still renew NOW to get the extra month of Read More 

ChartWatchers

BULLS ON THE DEFENSIVE

by Tom Bowley

Issues are mounting and the pressure is definitely weighing on the bulls.  While we haven't seen any major breakdowns to confirm several bearish signs, you should be approaching the market with caution in my opinion. In my last article, I discussed one of the warning signs - the significant outperformance of defensive sectors as traders become much more risk-averse.  History tells me that it's time to be cautious when money rotates exclusively to defensive groups. Let's talk about two more problems. First, there are clear long-term negative divergences across all Read More 

ChartWatchers

THE MARKET'S HAD A FIVE WAVE ADVANCE

by John Murphy

Determining Elliott Wave counts can be very subjective. One way to make it little easier is to employ a "ZigZag"overlay on the price chart. [The ZigZag is located in the same Overlays menu that includes moving averages]. The idea of the ZigZag overlay is to apply a percentage filter on market trends. The default setting is 5% which means that only price moves of at least 5% are shown. Anything smaller than 5% is ignored. You can change the percentage filter to make the lines more or less sensitive. I increased the ZigZag filter to 7% in Chart 1 to show the two 7% corrections from last Read More 

ChartWatchers

NYSE COMPOSITE IN CORRECTIVE MODE

by Richard Rhodes

Since the end of April, the broader market as defined by the NYSE Composite Index has been in a corrective mode. However, the question remains as to whether this corrective process will continue in the weeks and months ahead, or will it come to a halt with the materialization of higher highs. We stand on the side of a correction in the months ahead. To this end, the NYSE monthly chart illustrates a simple, yet elegant reason for the corrective process to continue: the 50-month and 12-month moving averages are converging. In the past when this has occurred - note the 2004 convergence - Read More 

ChartWatchers

POSSIBLE MARKET TOP

by Carl Swenlin

A reader recently called me a perma-bull, which is amusing, since by nature I'm usually disposed toward bearishness. I will, however, remain bullish until our mechanical timing model switches from a buy. The model will be bullish until the 20-EMA for the S&P 500 crosses down through the 50-EMA. We can see on the chart below that those moving averages are converging, but there is plenty of room before a crossover will take place. While the model provides discipline, we are still permitted to look at indicator charts and speculate about the future. For example, on the chart Read More 

ChartWatchers

Gold Miners ETF Bounces off Major Support Level

by Arthur Hill

After getting slammed with a 10+ percent decline in May, the Gold Miners ETF (GDX) hit support and bounced over the last few days. As the chart below shows, this is no ordinary support level for GDX. Support in the 53 area stems from broken resistance and at least two reaction lows (October-January). There is also a reaction low around 55 in mid March. The ETF is finding some buying interest at support with a bounce the last few days. The black box highlights the last seven daily candlesticks. The first two are **spinning tops**, which affirm support. There was a mini-breakout with the Read More 

ChartWatchers

CELEBRATING 12 YEARS OF CHARTING WITH OUR SPRING SPECIAL!

by Chip Anderson

Hello Fellow ChartWatchers! Believe it or not, StockCharts.com was founded 12 years ago on May 15th, 1999.  To celebrate, we are running our Spring Special from now until the end of May.  What is our "Spring Special"?  I'm so glad you asked From now until the end of May, if you place an order for 6 months of any service, we'll give you a 7th month for free.  If you place a 12 month order, we'll give you 2 additional months for free! As old-timers know, the best time to subscribe or renew an existing account is now, during one of our Read More 

ChartWatchers

THE TALE OF TWO MARKETS

by Tom Bowley

It was a little more than one year ago - in April 2010 - that I began warning about a potential top approaching.  We now know what happened in May and June of that year.  Well, the warning signs are mounting again and, barring technical changes, we could be in for a very rough summer. Where does the market stand?  Well, tell me if you're looking short-term or longer-term and I'll give you two different answers. Let's start short-term.  When I look at a six month chart of the NASDAQ, I see nothing but bullish signs.  There was a very bullish continuation Read More 

ChartWatchers

DROP IN BOND YIELDS MAY BE WARNING FOR STOCKS

by John Murphy

Bonds have benefited from the plunge in commodities. Several bond ETFs have rallied to the highest levels in months. Rising bond prices are pushing bond yields lower. And that may be a warning for stocks. That's because bond yields (which are a barometer of economic strength) have been positively correlated to stocks.  The chart below, for example, shows the S&P 500 bars and the 10-Year T-Note Yield (green line) moving up together until April. Since mid-April, however, bond yields started dropping and have now fallen to the lowest level in five months. That divergence between Read More 

ChartWatchers

CITIGROUP 10-FOR-1 REVERSE SPLIT

by Carl Swenlin

On Monday, May 9, Citigroup (C) stock will undergo a 10-for-1 reverse split. What this means is that 10 shares of C will be merged into one share, and holders of C will own one-tenth as many shares, but each share will be worth ten times the value of pre-split shares. Most people understand the concept, but many do not realize that a reverse split is essentially a negative event. Let's take a look at the Citigroup monthly bar chart. Ugh! In about two years it went from an all-time high of 51.54 to what was probably an all-time low of 97 cents. In the two years since the low it has not Read More 

ChartWatchers

OIH Breaks Support as it Leads XLE Lower

by Arthur Hill

The Oil Service HOLDRS (OIH) is leading the energy sector lower with a break below the March lows. There are two bearish patterns working on the OIH price chart. First, OIH hit resistance in the 162.5-167.5 area with three reaction highs and then broke below support with a sharp decline this week. Even though a picture perfect triple top or head-and-shoulders pattern did not emerge, the essence of a distribution and breakdown is clearly there. Second, the ETF broke the third of three fan lines with this week’s decline. These successive breaks affirm an increase in selling pressure leading Read More