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February 2012

ChartWatchers

SILVER RIPE FOR TRADING AGAIN

by Richard Rhodes

With all the press centering in upon Gold gains recently +10%, Silver has risen by +19% - thereby outperforming the yellow metal by +9%. Silver - the poor man's good; now looks rather ripe for trading once again. This is as it should be in a metals bull market - silver should always outperform gold. And the manner in which the technicals are shaping up in both absolute and relative terms - we should see both gold and silver move to new highs and not return to the lows forged on 12/30/11 at $1567 and $27.88 respectively.In our opinion, we shall be playing silver form the long side, for the Read More 

ChartWatchers

ENERGY SHARES START TO SHOW RELATIVE STRENGTH

by John Murphy

Energy shares were this week's strongest market sector. That's the first time we've seen relative strength by the energy sector in three months. Chart 1 shows the Energy Sector SPDR (XLE) trading at the highest level in seven months. [A "golden cross" has also been formed by the 50-day average rising above the 200-day (gold circle)]. The line along the bottom is the XLE/SPX ratio, and shows it breaking a three-month down trendline. That's a sign that money is starting to move into this sector more aggressively. Chart 2 shows the Market Vectors Oil Services ETF (OIH) very close to breaking Read More 

ChartWatchers

THE BULLISH MOVE IN GOLD ISN'T OVER

by Tom Bowley

It takes time and patience for continuation patterns to play out.  Many traders grow frustrated, especially after the stealth move higher ends because of the time involved for continuation patterns to form.  The current bull market in gold has lasted more than a decade and there are few technical signs of it ending now.  First, let's take a look at a 12 year weekly chart to step back and grasp the overall picture: You can see from the blue circles above that every "stealth" move higher has been followed by a longer than usual consolidation period.  And that makes Read More 

ChartWatchers

Consumer Discretionary and Technology Lead Sectors in StockCharts Technical Rank

by Arthur Hill

Of the nine sector SPDRs, the Consumer Discretionary SPDR (XLY) and the Technology SPDR (XLK) have the highest StockCharts Technical Rank (SCTR). The SCTR for the Industrials SPDR (XLI) is in a close third. High SCTR scores indicate that these sectors show excellent relative strength and market leadership. The first chart shows the Consumer Discretionary SPDR (XLY) breaking above its 2011 highs in January and extending further in February. While the advance is getting overextended, this key sector is by no means weak. Broken resistance turns into the first support zone around 41. The Read More 

ChartWatchers

STOCKS ARE FAIRLY VALUED

by Carl Swenlin

News headlines are usually more confusing than helpful, especially when trying to determine if stocks are overvalued, fairly valued, ot undervalued. At any given time there will be those who simultaneously claim that stocks overvalued and undervalued. Of course, they all have their own methodologies, which (surprise, surprise) support their point of view. We have always asserted that the most consistent and even-handed way to value stocks is based on their GAAP P/E (price to earnings ratio) relative to the normal historical range. The real P/E for the S&P 500 is based on "as Read More 

ChartWatchers

JURY DUTY, CRYSTAL BALLS AND BLACKJACK

by Carl Swenlin

(THIS WEEK'S DECISION POINT ARTICLE WAS WRITTEN BY GUEST WRITER ERIN SWENLIN HEIM) As many of you are aware, I've been doing my duty as a citizen of this great country by serving on a jury.  It has been interesting, to say the least.  The trial is still not over, but I hope to be back full time sometime next week. After my fellow jurors found out I was a stock market analyst, I began getting questions like, “What is the market going to do?”, “Can you tell me what stock I should buy?”, “What is up with Greece?”, etc. For those of you who have had the pleasure, you Read More 

ChartWatchers

STOCKCHARTS ADVANCED SCAN LIBRARY NOW OPEN

by Chip Anderson

Hello Fellow ChartWatchers, Today I'm please to announce the grand opening of our Advanced Scan Library.  We've collected some of the best scans available and posted them in this new ChartSchool area for everyone to see.  We have a big collections of Sample Scans that will teach you how to use our Advanced Scanning tools.  A difference section contains all of our Predefined Scan criteria on one page for you to review.  We also have a collection of Published Scans that have appeared in other publications.  Finally, we have some User-Contributed Scans that our Read More 

ChartWatchers

CLOSELY CORRELATED WITH US MARKET

by John Murphy

My market message from Thurs, Jan 26th, argued for the inclusion of Canada in a foreign stock portfolio. I'm going to expand on Canada's unique role in the global intermarket picture in this message. In my view, Canada is unique for at least three reasons. First, it's very highly correlated to the U.S. stock market. That shouldn't be a surprise because Canada is the biggest trading partner with the U.S. It also means, however, that the two markets need to be charted together to ensure that they're sending the same messages. Another reason why Canada is important is because it's highly Read More 

ChartWatchers

STARTING OFF WITH A BANG

by Richard Rhodes

The 2012 trading year has begun with a "bang" to be sure. In terms of the S&P 500, we find that 16 of the 23 trading sessions have traded to the upside, with no losing session down more than -8 points or -0.6%. This is rather "one-sided", and it gives rise to thoughts that a correction must be forthcoming. Really, how could a rather sharp correction not take place given the European fiscal and debt crisis and the slowing the Chinese economy. There are so many negatives in front of everyone, there can't be any way the market should trade higher. However, one must try and understand the Read More 

ChartWatchers

THE JANUARY EFFECT

by Tom Bowley

Two weeks ago, I wrote that equities were very overbought and quite complacent.  While we didn't see any selling of substance, the market did struggle to move up - that is, until Friday's Nonfarm Payrolls hit the wires.  What a blowout number it was! Let's revisit that EOPCR chart to get a fresh update: Relative complacency doesn't have quite the track record in marking tops as relative pessimism does in marking bottoms.  Nonetheless, it's still a solid indicator and one that everyone should track frequently. There are lots of positive signals that Read More 

ChartWatchers

SPY CHALLENGES 2011 RESISTANCE WITH BIG WEEK

by Arthur Hill

With a string of positive economic reports lifting stocks this week, the S&P 500 ETF (SPY) closed higher for the fifth consecutive week. Friday was a big reporting day with Factory Orders showing strength, IWM Services indicating expansion and the employment rate coming down. These positive reports should not come as a surprise because stocks, which are a leading indicator, are up sharply since early October. The chart below shows SPY challenging its 2011 highs around 135, a level that marked resistance from April to July. SPY failed at this level last summer and declined rather Read More