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June 2012

ChartWatchers

FALLING BOND YIELDS WEIGH ON STOCKS

by John Murphy

My Tuesday message showed falling commodity prices weighing on stock values. The same is true with Treasury bond yields which have fallen to record lows. Falling bond yields are symptomatic of economic weakness. Chart 1 compares the yield on the 10-Year T-Note (green bars) to the S&P 500 since the start of 2011. There's a positive visual correlation between the two markets, which is confirmed by the 60-day Correlation Coefficient (below chart). The current correlation is a very high .92. Falling bond yields during the first half of 2011 led to a stock market correction over the Read More 

ChartWatchers

MIXED SIGNALS

by Carl Swenlin

I have been expecting another short decline to finish out the right shoulders of a reverse head and shoulders pattern, but once again the Mr. Market said: "Expect whatever you like. I don't care." My problem is that, being a person who likes things to be nice and neat, I wanted the right shoulder to be more even with the left shoulder. But no. What we have is a formation that is very lopsided, but I think it is close enough to be considered a completed reverse head and shoulders pattern. The neckline has been penetrated, so the minimum upside target is about 1430. Read More 

ChartWatchers

IWM Battles Broken Support and Relative Weakness

by Arthur Hill

The Russell 2000 ETF (IWM) got a bounce at the end of the week, but remains in a trading range since the June 6th gap. There are two dynamics at work on this chart. First, the medium-term trend is down after the ETF broke neckline support from a head-and-shoulders pattern. Broken support turned into resistance, which held in late May and early June. A convincing break back above this level is needed to negate the head-and-shoulders breakdown. The second dynamic is the short-term uptrend. This is a counter-trend bounce with a bigger downtrend. IWM formed an island reversal in early June Read More 

ChartWatchers

TOP 10 STOCKCHARTS.COM "NOOKS" WITH GREAT FREE CONTENT THAT YOU MIGHT NOT KNOW ABOUT

by Chip Anderson

TOP TEN STOCKCHARTS.COM "NOOKS" THAT YOU MIGHT BE MISSING - Every day we hear from people that have just discovered a great little nook of our website that they didn't know about.  While we love hearing from people when they make these discoveries, it is always a little frustrating because it means that there are probably lots of other people out there that haven't fully toured the website yet.  In an effort to speed up the discovery process, here are 10 great 100% free "nooks" that everyone should know about: The old archives for our ChartWatchers Read More 

ChartWatchers

BEAR SIGNALS ABOUND BUT DO NOT GO INTO HIBERNATION!

by Chip Anderson

Hello Fellow ChartWatchers! The bears are out and pulling the market lower.  All of our market commentators will discuss the latest technical developments below (including some potential "safe havens" that may benefit from the current market moves) so we decided to give you an extra-long, extended version of John Murphy's commentary in this week's newsletter.  It starts in the next section. Before I clear out of the way for John, I did want to mention two things: First off, our Summer Special is now in effect.  If you are thinking about joining StockCharts.com as a Read More 

ChartWatchers

SERIOUS WARNING FLAGS FOR US STOCKS - EXTENDED COVERAGE

by John Murphy

BOND YIELDS AND COMMODITIES HIT NEW LOWS Everywhere I look I see more serious warning flags for the U.S. stock market. Two of them are coming from recent breakdowns in bond yields and commodity prices. The chart below shows the 10-Year T-Note Yield (green line) and CRB Index (brown line) falling to new lows. Bond yields are now at the lowest levels in sixty years. Over the past few years, a positive correlation has existed between commodity prices, bond yields, and stock prices. That relationship weakened during the first quarter, but now appears to be re-asserting itself. Falling Read More 

ChartWatchers

BONDS SOAR AS TLT MAKES NEW HIGH

by Carl Swenlin

To be honest, the actual "soaring" for bonds began last July when bonds began an advance of about 33% in two months. After a five-month period of consolidation, another up leg advanced prices about 18% off the bottom of the trading range, making a total advance of about 41% since last July. This surge was a big surprise to most people, including us, because we wondered why anybody would want to lend money to a country so deep in debt and which was borrowing 42 cents of every dollar it spent. The answer is that the U.S. is the least pathetic of the world's debtor nations. I Read More 

ChartWatchers

THE GOLD SHARE/GOLD FUTURES RATIO BUY SIGNAL

by Richard Rhodes

Over the past week, we've seen gold shares gain sponsorship without the physical gold metal rising. Perhaps this was the "canary in the coal mine" as they say, but gold prices roared ahead yesterday from a low of $1545 to a high of $1632 before closing at $1627. This put in place a rather bullish key reversal higher from major support between $1500-to-$1550. We find this rather positive for further gains, which many would equate to some level of European/US/Chinese liquidity measures. But what we find more interesting is the fact that the Gold Share/Gold Futures Ratio (GDX/$GOLD) nearly Read More 

ChartWatchers

BOND TRADERS GET IT RIGHT - AGAIN!

by Tom Bowley

All traders must decide whether to invest their dollars aggressively or conservatively.  It's a basic principle, yet following the flow of such dollars can provide us valuable clues about the likely direction of the stock market.  For me, it's a simple case of tracking the 10 year treasury yield vs. the S&P 500.  Before I show you any charts, it's important to understand the relationship of the PRICE of treasuries and their corresponding YIELD.  When treasuries are bought, it makes sense that the PRICE will move higher.  But because the coupon rate is fixed Read More 

ChartWatchers

CONSUMER DISCRETIONARY SPDR GETS SQUASHED

by Arthur Hill

After a failure at broken support, the Consumer Discretionary SPDR (XLY) looks set for a move towards a Fibonacci cluster. The chart below shows XLY breaking support and becoming oversold in mid May. The ETF then bounced back to broken support and this area turned into resistance. It is not uncommon to see such a “throwback” bounce, especially after becoming oversold. This bounce alleviated oversold conditions and this week’s decline signals a continuation of the May decline.  With a continuation signaled, it is time to start thinking about potential supports and downside targets Read More