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December 2011

ChartWatchers

DRUG BREAKOUTS - ABBOTT LABS MAY BE NEXT

by John Murphy

The chart below shows the three strongest drug stocks in the PPH this year. All three have recently achieved upside breakouts. They include Bristol Myers (blue line), Pfizer (red line), and Eli Lilly (green line). The black line is the PPH. As you can see, the three drug leaders have outperformed the group as a whole. That makes them the strongest stocks in the strongest industry in one of the market's strongest sectors. BMY is the strongest of the three (+34% for the year) and is trading at the highest level in ten years. Pfizer (+28% for the year) is breaking out to the highest level in Read More 

ChartWatchers

LONG-BOND YIELD: HOW LOW CAN IT GO?

by Carl Swenlin

The 30-year bond yield has dropped below three percent many times this year, dropping as low as 2.694% in October. It has been trending up since then, but today it looks as if the October low could be retested. On the daily bar chart below we can see that the rising bottoms line has been penetrated at the time this intraday snapshot was taken. This is not a decisive break, but it is a logical one, since the triangle formation is a continuation pattern, and a continuation of the larger down trend should be expected. To determine if the October low has historical Read More 

ChartWatchers

2012 MARKET OUTLOOK

by Tom Bowley

I always find myself turning my attention to "next year" in the stock market as we enter the December holiday season.  On many fronts, 2011 has been the most challenging year in equities that I've ever seen.  Sure, the losses in 2008 and the fear that accompanied those losses were worse, but there were many signs in 2007 and 2008 that told us a weak market was dead ahead.  2011 has been particularly difficult because many technical signs have changed mid-stream.  For a week or two, it appears we have one type of market only to find the next week it's completely Read More 

ChartWatchers

RETAIL SPDR COULD HOLD THE KEY IN 2012

by Arthur Hill

The Retail SPDR (XRT) remains one of the strongest ETFs in the market. As a core part of the consumer discretionary sector, retail is one of the most important industry groups and Christmas is perhaps the most important season. A lot is riding on the consumer this holiday season. The chart below shows XRT bouncing off support in the 42.5 area and working its way back above 50. A rising channel has taken shape with support marked at 47.50. The bulls are in good shape as long as prices hold this rising channel. A move below 47.5 would break channel support and argue for a continuation of Read More 

ChartWatchers

AVERAGE TRUE RANGE COMPARISON SHOWS STOCKCHARTS IS ABOVE AVERAGE

by Chip Anderson

Hello Fellow ChartWatchers! First off I wanted to make sure you knew that our Holiday Special is now underway!  Long time members will tell you that if you are a StockCharts fan, the best time to join or renew is during our Holiday Sale Special.  If you renew right now for 12 months, we'll give you 2 additional months for free.  If your account expires within the next 6 months, now is definitely the time to renew.  If you have been thinking about becoming a StockCharts member, now is the time to join. Members: To renew, login and then click the "Your Read More 

ChartWatchers

"SCOOTERS" INVADE STOCKCHARTS!

by Chip Anderson

ANNOUNCING SCTRs, AN IMPORTANT NEW TOOL FOR CHART WATCHERS - Stock ranking systems are nothing new.  Investors Business Daily has had their well-known RS Rank system in place for years.  Today, we are announcing our own stock ranking system called the StockCharts Technical Rank (SCTR) - "Scooters" for short. Like all ranking systems, SCTRs take a predefined universe of stocks (initially the S&P 500) and calculate a score for each stock.  The stocks are then sorted based on that score and assigned a rank - a number between 0 an 100 based on their position in the sorted Read More 

ChartWatchers

STOCK RALLY STALLS AT 200-DAY AVERAGE - EURO DROP ON FRIDAY MAY EXPLAIN WHY - COMMODITIES BOUNCE REMAINS BELOW RESISTANCE

by John Murphy

STOCK RALLY STALLS AT 200-DAY AVERAGE This past week's impressive stock rally ran into some profit-taking on Friday just shy of 200-day moving averages. Charts 1 and 2 show the S&P 500 and the Nasdaq Composite closing near the their daily lows after nearing that important resistance barrier. The daily stochastic lines below Chart 1 turned up from a short-term oversold reading (below 20) which helped support this week's strong rebound. The two lines, however, are already nearing overbought territory over 80. Needless to say, those market indexes need to clear their 200-day lines if Read More 

ChartWatchers

DOLLAR STARTING DOUBLE TOP?

by Carl Swenlin

The US Dollar Index appears to be setting up for a medium-term double top. This week it broke down through a short-term rising trend line drawn from the October low after reaching a level equal to the October top. The PMO made a lower top, creating a negative divergence. The 20-EMA crossed up through the 50-EMA in early September, generating a Trend Model BUY signal. The 50-EMA crossed up through the 200-EMA signaling that The Dollar Index is now in a long-term bull market. Since the EMAs are in a bullish configuration, it is less likely that a full bearish outcome will Read More 

ChartWatchers

SILVER POISED TO OUTPERFORM AGAIN

by Richard Rhodes

Last week, the world's stock markets cheered the coordinated central bank efforts to supply dollar liquidity to the world banking system via lower than market rates. This clearly resulted in a "risk-on" trade across the board, and we expect more to follow in the weeks ahead as the ECB lower rates, and China moves quickly to halt its declining economy. Our interest in this new round of money printing and stimulus stands in the precious metals again such as gold, silver and platinum. We can make a very bullish case for each at this point, but we'll focus on the "high-beta" Read More 

ChartWatchers

DEFENSIVE SECTORS HITTING RESISTANCE BUT REMAIN RELATIVE LEADERS

by Tom Bowley

With one week left to go, the S&P 500 was on the verge of its worst November in the last sixty years.  Then the Fed and other central bankers came to the rescue of global markets last week and everything was just peachy again (sarcasm intended).  November turned out to be a flat month with the S&P 500 falling approximately 0.5%.  If you're on the short side of the market, Ben Bernanke is likely your biggest enemy.  Despite the huge rally last week, technical obstacles remain.  Key price resistance is now evident on all three of the defensive sectors.  Read More 

ChartWatchers

QQQ Forms Island Reversal with Big Move

by Arthur Hill

While gaps are not what they used to be, there were a few island reversals on the charts this week. The chart below shows the Nasdaq 100 ETF (QQQ) with a large island reversal over the last three weeks. A bullish island reversal forms with a gap down, a consolidation and then a gap up. The two gaps match, which makes the price data in between appear detached – like an island. Traders establishing short positions between the gaps are trapped on the island with losses. The chart above shows QQQ with a bullish island reversal. The ETF gapped down on November 21st, consolidated and then Read More