ChartWatchers Newsletter logo

October 2011

ChartWatchers

OUR STORY SO FAR...

by Chip Anderson

Hello Fellow ChartWatchers! "Distance not only gives nostalgia, but perspective, and maybe objectivity." - Robert Mogan Perspective.  Do you have it?  Have you lost it?  How do you gain it back? One of the best ways to gain perspective on the stock market is to use long-term market indicators.  One of the best long-term market indicators I know of is the Bullish Percent Index ($BPNYA). The Bullish Percent Index is the percentage of tradeable NYSE-listed stocks that currently have a "bullish" signal on the right edge of their Point and Figure chart.  Click here Read More 

ChartWatchers

INTERMARKET TRENDS CONFIRM CHART SIGNALS

by John Murphy

Last Thursday I showed some traditional charts that suggested stocks and commodities were due for a rally. In the case of stocks, a lot of global stock and U.S. stock indexes had reached important support at their mid-2010 lows and were in oversold territory. In addition, I suggested that the S&P 500 had completed the fifth wave in a five-wave decline. That suggested to me that the stock market may have put in an October bottom which should pave the way for a fourth quarter rebound. I also showed the CRB Index testing two important support lines going back a year. I suggested that was Read More 

ChartWatchers

TECHNOLOGY AND CONSUMER DISCRETIONARY LEADING RALLY INTO EARNINGS

by Tom Bowley

The market has spoken.  If you're looking for nice earnings surprises for the third quarter, or perhaps raised guidance on a forward-looking basis, look no further than the technology and consumer discretionary sectors.  This past week, we saw a very positive earnings report from Google (GOOG), while commodity player Alcoa (AA) and behemoth financial JP Morgan (JPM) both came up short of expectations.  Given the way that the various sectors have been trading, you might expect more of the same over the next few weeks.  While the overall market may seem directionless Read More 

ChartWatchers

STOCKCHARTS.COM DEALS YOU MIGHT NOT KNOW ABOUT

by Chip Anderson

DEALS, DEALS, DEALS - Here is a list of all the ways you can save money at StockCharts.  Right now.  No waiting.  No hassel.  Real money.  Just do these things and start saving. Non-Members can subscribe to any of our charting services and get a 10-day free trial to test things out. Ex-Members can resubscribe to any of our charting services and get 10 additional days for free. All Members now get the "StockCharts Market Message with John Murphy" for free. Basic and Extra members get real-time data for US stocks without having to pay Read More 

ChartWatchers

RYDEX CASH FLOW RATIO OVERSOLD

by Carl Swenlin

One of the ways we have of measuring sentiment is by tracking cash flow into and out of Rydex mutual funds through the use of our Rydex Cash Flow Ratio. The Ratio is calculated by dividing cumulative cash flow (CCFL) of Bear funds plus Money Market funds by the CCFL of Bull funds. We display the results on a reverse scale chart so that high Ratio readings coincide with price lows. The chart below shows that at the October price lows the Ratio went lower than any time since the 1999 correction. Recent Ratio lows were more extreme than two previous bear market lows, and extremes like that Read More 

ChartWatchers

US DOLLAR INDEX TEST BREAKOUT WITH THROWBACK

by Arthur Hill

The US Dollar Index ($USD) was hit hard this week with a 2.2% decline. Weakness in the Dollar buoyed oil and stocks, which have been negatively correlated with the greenback. Dollar weakness and Euro strength is also associated with the risk-on trade. Despite this week’s decline, the bigger trend is still up and support is close at hand. The first chart shows weekly prices with a Double Bottom breakout in September $USD broke resistance with a strong surge that was confirmed by RSI, which broke to its highest level in a year.   The second chart shows more details with a daily Read More 

ChartWatchers

WHAT NON-MEMBERS NEED TO KNOW, WELCOME "THE CANADIAN TECHNICIAN!"

by Chip Anderson

THINGS NON-MEMBERS ASK ABOUT - Yes, we do have monthly charts.   Yes, we do allow you to create charts that are longer than 3 years.  Yes, you can see the data that makes up each chart.  Yes, our charts can be automatically updated.  Yes, you can scan just the charts in your portfolio.  Yes, we do have 15-minute bar charts.  Yes, we do provide free real-time data for US stocks.  Yes, you can see an example of the Market Message here.  ChartLists are groups of saved charts that you want to review later.  Having more than one ChartList lets you Read More 

ChartWatchers

UTILITIES THRIVE ON FALLING RATES AND RISING VIX

by John Murphy

Utilities have emerged as the year's strongest sector. The chart below shows the Utilities Sector SPDR (XLU) trading near a new 52-week high while the S&P 500 (solid line) is closer to a new lows. The rising XLU:SPX relative strength ratio (below chart) also shows the superior performance of utilities this year. That's not surprising since utilities are a defensive stock group that usually attracts money during a market downturn (as do staples and healthcare). But there's another dynamic driving money into utilities -- falling bond yields. The falling green line shows the 10-Year Read More 

ChartWatchers

HAS GOLD REACHED ITS PEAK?

by Richard Rhodes

The month of September has not been kind to Gold; and the question before everyone is whether or not gold has seen its highs for an intermediate period or whether a brief pause before higher highs are forged. We are of the opinion of the former rather than the latter, but we remain gold bulls – but from probably lower levels than most are looking for at this juncture in the cycle. From a technical perspective, we should note that Gold has forged a “monthly bearish key reversal” pattern to the downside. Now, monthly reversals tend to much more important than daily or weekly varieties and Read More 

ChartWatchers

WEEKLY MACDs REMAIN QUITE BEARISH

by Tom Bowley

The weekly moving average convergence divergence (MACD) has always been a favorite indicator of mine. It provides a "big picture" outlook of the market and helps me take a step back from the day to day swings of the market. With the Volatility Index (VIX) in the stratosphere and closing close to 43 on Friday, the whipsaw action is quite unnerving. Taking a step back and looking at the big picture helps to ease some of that daily stress and makes it easier to focus on an appropriate trading strategy. I realize the MACD is only one indicator, and it won't always be right, but it does Read More 

ChartWatchers

THE THREE MOST COMMON SUPPORT QUESTIONS AT STOCKCHARTS

by Chip Anderson

Hello Fellow ChartWatchers! Simpler is usually better and that is definitely true when you are looking for a chart to put the month of September into perspective.  Voila! Members can click the chart to see a live version. The Dow finished September over 6% lower than the previous month.  That's the 5th straight month $INDU has moved down - and it did so on above average volume.  MACD momentum is still headed down having just crossed its signal line.  Don't get fooled by all the over-analysis going on these days in the main stream financial press, the Read More 

ChartWatchers

GOLD MINING STOCKS VERSUS GOLD

by Carl Swenlin

QUESTION: Carl, I have read a lot of articles recently indicating gold miner stocks should go up and outpace gold. So far nothing but a drop in goldminers. Would it be possible for you to show charts of GDX and GDXJ with your comments on one of your daily posts? Thank you for a great website. ANSWER: Back in the day before precious metals ETFs, gold mining stocks were considered a convenient surrogate for exposure to precious metals. The XAU (Gold & Silver Mining Index) is composed of large-cap members of this group. First let's compare a long-term chart of the XAU with one of gold Read More 

ChartWatchers

TECHNOLOGY SPDR FAILS AT KEY RETRACEMENT

by Arthur Hill

After hitting resistance at a key retracement this month, the Technology ETF (XLK) fell with what looks like a continuation of the bigger downtrend. First, notice that the ETF formed a massive Triple Top that extends from January to July. XLK became oversold with the July-August breakdown and then retraced 61.80% with the bounce back to the 25.25 area. Even though XLK moved back above broken support, a 61.80% retracement is normal for a counter trend bounce. This advance looks like a Rising Channel on the daily chart and a Rising Flag on the weekly chart. These are also typical for Read More