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September 2011

ChartWatchers

THE "WHAT-WHAT" CHARTS AND HOW TO USE THEM

by Chip Anderson

Hello Fellow ChartWatchers! With headlines like "Rally in Trouble?", "Start of Correction?" and "VIX Stalls" you'd think that our technical analysts were trying to tell you something Regardless of what John, Arthur, Carl and the rest of the gang is hinting at, things could not be more bullish here at StockCharts with regards to a great crop of new features that that can help you get even more value for your online charting dollar. Things like our new Market Summary page layout and our ChartCon DVD pre-sale are covered later on in the "Site News" section of this newsletter.  So Read More 

ChartWatchers

VIX STALLS AT PREVIOUS RESISTANCE LEVEL

by John Murphy

Two Thursdays ago (September 1) I wrote about the CBOE Volatility (VIX) having reached previous resistance formed during the spring of 2010 near 48. The chart below shows that the VIX has backed off from that overhead barrier which has helped stabilize the stock market (green arrow). In fact, the only time that the VIX moved significantly above the area around 48 was during the 2008 market meltdown when it reached 90. So this is an important test of whether the market is just in a normal downside correction or something more serious. Needless to say, a VIX close above 48 would have very Read More 

ChartWatchers

ANOTHER ROUND OF TARP FOR THE BELEAGUERED FINANCIALS

by Tom Bowley

I'm not buying this rally - not yet anyway.  This past Sunday night, I calculated max pain for the ETFs that track our major indices.  After staring at the numbers, I wondered "can they do it again"?  By "they", I meant the market makers.  You see, a month ago while I was in Seattle at StockCharts' ChartCon conference, an astute member of ours pointed out mid-week (August 10th) that max pain was WAY above current prices.  In options lingo, this simply meant there was a TON of net in-the-money put premium on the table just as EXTREME pessimism was kicking in.  Read More 

ChartWatchers

CURRENT S&P 500 RALLY IN TROUBLE?

by Richard Rhodes

Over the past 6-weeks, we've seen the S&P 500 trade in a large sideways pattern between 1220 and 1100; we find this eerily reminiscent of a bearish pattern that will resolve itself to new lows. Certainly this is our viewpoint; and we believe the supporting technicals in the US Dollar Index ($USD)confirm our belief. Quite simply, the USD rises when there is "stress" in the world as market participants move towards safety. Over the past year or more, USD has been in a downtrend, but that downtrend now appears to be over. Note the wide girth bullish wedge coupled with the breakout above Read More 

ChartWatchers

GOLD DOUBLE TOP: START OF CORRECTION?

by Carl Swenlin

In the last month or so gold has formed a double top that could be the start of a much needed correction for the metal. Specifically the chart below shows an Adam & Eve double top. The first top is sharp and spiky, and the second is more rounded, depicting a labored attempt to reach the previous highs. A neckline is drawn across the July price low, showing the support level that needs to be penetrated in order for the formation to "execute" (trigger expectations of lower prices). If it does execute, the minimum downside target would be about 1600. This target is estimated Read More 

ChartWatchers

UTILITIES ARE STRONGEST SECTOR OVER LAST 50 DAYS

by Arthur Hill

The S&P 500 peaked in early July and declined sharply into early August. There has been a rebound from this low, but all sectors are still down since July 8th – except one. The Utilities SPDR (XLU) is the only sector SPDR showing a gain since July 8th. The first PertChart shows absolute performance for the nine sectors and the S&P 500 over the last 50 days. The S&P 500 is down 8.51% and the rest of the sectors are down from 2.84% (Consumer Staples) to 16.53% (Finance). The Utilities SPDR (XLU), which is the highest yielding SPDR, is up .65% since July 8th. It ain’t much, but Read More 

ChartWatchers

EUROPEAN RALLY PROBABLY OVER

by John Murphy

EUROPEAN STOCKS FALL  This morning's weak employment report is having a negative impact on global stock markets. European stocks are down 3%. Chart 1 shows the German DAXto be the weakest of the three after having achieved a feeble rally over the last month. Chart 2 shows the French CAC Index failing at 3300 resistance. Chart 3 shows the London Times Index (FTSE) falling back below its mid-August peak at 5377. All three charts strongly suggest that the short-term rally in Europe has probably ended. Have a great Read More 

ChartWatchers

BEAR MARKET RULES APPLY

by Carl Swenlin

It is a concept that we stress on a periodic basis, and we got another illustration this week. Technical indicators must be interpreted within the context of the overall market trend. On August 17 the S&P 500 Index 50-EMA crossed down through the 200-EMA, declairing by our definition that the long-term trend was down and that we were in a bear market. When this happens, we remind ourselves that "bear market rules apply," and that we should expect negative outcomes more often than positive ones. As of yesterday many of our short-term indicators were overbought and topping -- the Read More 

ChartWatchers

MORE BEAR MARKET SIGNS EMERGE

by Tom Bowley

Wednesday at noon, the Dow Jones and NASDAQ were both testing critical resistance.  Here's an excerpt from my daily Market Chatter mailed out close to noon EST on Wednesday: "We certainly don't like the action thus far today. A rather significant reversal is possibly underway at major price resistance. The NASDAQ is showing a shooting star doji with the upper tail just beyond the 2600-2608 price resistance we've discussed. The earlier high was 2611 with the NASDAQ at 2584 at last check. A finish there today would be bearish short-term.The Dow Jones is also testing very Read More 

ChartWatchers

GEMS FROM S.C.A.N. - HOW OTHER USERS CAN HELP YOU USE STOCKCHARTS BETTER

by Chip Anderson

Hello Fellow ChartWatchers! Last month, we announced the opening of a new User-to-User help website called "s.c.a.n." - the StockCharts Answer Network.  Hopefully, you've had a chance to check it out - if not, I strongly encourage you to do so. s.c.a.n. has been a huge success so far.  Almost 150 different questions have been asked and over 360 different answers have been given - as you can see, the s.c.a.n. community is ANXIOUS to help! Remember, anyone can browse s.c.a.n. for free just by visiting the s.c.a.n. website.  Here's just a sample of some of the Read More 

ChartWatchers

EURO TRUST FORGES OUTSIDE REVERSAL WEEK

by Arthur Hill

The Euro Currency Trust (FXE) opened strong on Monday, but moved lower throughout the week and closed near its low for forge an outside reversal. An outside reversal occurs when the high is above the prior high and the low is below the prior low. A close below the prior open reinforces the reversal. While the overall trend remains up, chartists should watch support from the May-July lows for a potential trend reversal. The chart below shows FXE forming a big outside reversal in early May and then stalling the next 3-4 months. The May-July lows mark support at 139. A move below these Read More