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August 2011

ChartWatchers

JOIN THE STOCKCHARTS ANSWER NETWORK (s.c.a.n.) TODAY!

by Chip Anderson

Hello Fellow ChartWatchers! Last week, we hosted over 300 enthusiastic StockCharts.com members here in Seattle for ChartCon 2011.  John, Arthur and myself cannot say enough about the great people we met.  Thanks again to everyone that participated.  Here's a link to more reviews and photos of the event. One of the key goals of ChartCon was to build a sense of community amoung the participants. That began happening almost immediately during the first day and continued throughout the conference.  As part of that process, we announced a new resource for all StockCharts Read More 

ChartWatchers

IN AN EMOTIONAL MARKET, LET SENTIMENT BE YOUR GUIDE

by Tom Bowley

If the stock market were a mental health patient, it would have been committed by now.  Major trend changes are occurring at points of wild volatility and extreme fear.  I've written many times in the past about my favorite sentiment indicator - the equity only put call ratio (EOPCR).  I take a different approach in measuring relative complacency and fear by using short-term and long-term moving averages of the EOPCR and expressing that difference using the PPO oscillator (thanks Chip!).  When the market sells off with the velocity it displayed recently, multiple Read More 

ChartWatchers

THE BEGINNING OF A BEAR MARKET?

by Richard Rhodes

The recent volatility is enough to make one step back, put your money aside - and reassess. In fact, this is what both institutional and individual investors have done over the past 3-weeks as money withdrawn from funds has significantly increased - even more so than at the March-2009 panic low. Perhaps this is part and parcel of the "death of equities" genre that is needed for the next bull market to begin; but for nowthe pullout appears prescient. Technically speaking on the S&P 500 index, we should point out that two of our longer-term moving averages were violated in bearish Read More 

ChartWatchers

LONG-TERM SELL SIGNALS

by Carl Swenlin

On 8/2/2011 our mechanical Thrust/Trend Model generated a medium-term NEUTRAL signal for the S&P 500 Index just in time to avoid the market break on 8/4. (Neutral means to be market neutral -- in cash or fully hedged.) After the breakdown we believed we had entered a bear market, but we had to wait for the long-term component of the Trend Model to generate a mechanical SELL signal to make it "official", which it did as of 8/17/2011. A long-term sell signal is generated when the 50-EMA of a price index crosses down through the 200-EMA Read More 

ChartWatchers

Consumer Discretionary Sector Moves from Leader to Laggard

by Arthur Hill

Selling pressure since July 1st pushed the Consumer Discretionary SPDR (XLY) from a market leader to a market laggard. These Sector PerfCharts show the performance for the nine sector SPDRs relative to the S&P 500. The percentage change shown is the relative change, which equals the percent change in SPY less the percent change in the sector SPDR. If XLY is down 16.99% and SPY is down 16.13%, relative performance for XLY would be -.86% (-16.99 less -16.13 = -.86). Sectors with positive bars are outperforming SPY, while sectors with negative bars are underperforming. The first Read More 

ChartWatchers

GERMANY LEADS GLOBAL STOCKS LOWER

by John Murphy

A 5% drop in German stocks is contributing to heavy selling in Europe which has spread to the U.S. Chart 1 shows the German DAX falling 5.3% to make it Europe's biggest loser. Most other European stocks are down 4%. Chart 2 EAFE Index iShares (EFA) gapping 5% lower after meeting resistance at its March low. Chart 3 shows Emerging Market iShares (EEM) gapping lower as well. Not surprisingly, U.S. stocks are following foreign markets lower. It certainly looks like the recent short-term bounce has run its course. Money coming out of stocks is moving into gold and Treasuries. Most other Read More 

ChartWatchers

JUNK BONDS TUMBLE WITH STOCKS

by John Murphy

With global stocks and commodities in a rout, most U.S. bonds are surging again. Chart 1 shows the T-Bond 20+Year iShares (TLT) continuing its recent surge (as bond yields tumble to the lowest level in a year). The only exception is high yield corporates. Chart 2 shows the Lehman High Yield Bond ETF (JNK) falling more than 2% and breaking its 200-day moving average. We've pointed out several times in the past that junk bonds are more closely tied to stocks than to bonds. Right now, junk bonds are following stocks lower. Read More 

ChartWatchers

THE BEAUTY LIES IN THE RELATIVE TRADE...

by Richard Rhodes

Last week, and so far this week the stock market has traded rather dismal to be sure, with the S&P 500 trading lower in 8 of the past 9 trading sessions. However, regardless of this weakness, we've begun to see slow, but sure movements beneath the surface that warrant our trading attention. To wit, the S&P Energy sector appears ready to resume its upward trend against the S&P Consumer Discretionary sector. In other words, Energy is expected to outperform Consumer Discretionary. As for our chart target: we could very well see the ratio trade upwards of 2.3 to 2.4 in the months Read More 

ChartWatchers

DEJA VU - 2011 IS LOOKING A LOT LIKE 2004

by Tom Bowley

If you recall, stocks were mired in an ugly bear market from 2000 through 2002.  At the end of that bear market, however, the S&P 500 staged a huge advance, running specifically from 789 in March of 2003 to 1163 by March 2004.  After that big climb, there were several scary points during the ensuing decline.  Take a look at what transpired back then:   The key points were as follows: (1) In March 2004, a swift selloff took the S&P 500 below its 50 day SMA with a lot of force and the 50 day SMA rolled over.(2) A reversal was seen 2-3 weeks later in Read More 

ChartWatchers

FINDING VOLUME

by Carl Swenlin

READER COMMENT: I have written to you before regarding your comments on volume ("where is the volume?”) which imply that volume "confirms" a move.  To me, like many others, volume no longer means anything, or at least not what it used to mean.  See the recent speech by Andrew Haldane at the International Economic Association Sixteenth World Congress, Beijing, China, 8 July 2011, courtesy of the  the Bank of England; the speech addresses trading volumes here and Europe in the last decade, with special reference to the Flash Crash.   Q: Where is the volume? Read More 

ChartWatchers

CHARTSTYLES ARE A POWERFUL, UNDERUSED FEATURE OF STOCKCHARTS

by Chip Anderson

Hello Fellow ChartWatchers! ChartStyles are basically "templates" of charts. They contain everything about the chart except the ticker symbol. Members of our Basic and Extra services can save multiple ChartStyles into their accounts for quick access later. Consider the following example: Let's say that you have been reading the newspaper and a story on Amazon (ticker symbol: AMZN) catches your eye. You'd like to do some research on AMZN's price movements - what's the best way to start? Step One is to just go to StockCharts.com, enter AMZN in the Quick Chart box and click Read More 

ChartWatchers

A Dow Theory Non-Confirmation and Sell Signal

by Arthur Hill

Based on the writings of Charles Dow, Dow Theory utilizes the Dow Industrials and Dow Transports to generate buy and sell signals for the broader market. The market trend is up when both forge higher highs. The market trend is down when both forge lower lows. A non-confirmation is present when only one forges a higher high or lower low. The first chart shows the Dow Industrials within a clear uptrend from late August to early May. This uptrend started to falter when the Average failed to exceed its prior high and formed a lower high in July. A clear trend reversal occurred this week as Read More