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July 2012

ChartWatchers

ON DATA ACCURACY AT STOCKCHARTS.COM

by Chip Anderson

Hello Fellow ChartWatchers! At StockCharts.com, we go to great lengths to make sure that our indicator values are calculated correctly as discussed in that article.  Here's a repeat article from 2010 that talks about how we work hard to make sure that the data used in those calculations is as accurate as possible.  Enjoy. - Chip On Data Accuracy at StockCharts.com First off, I want to talk about the differences between intraday data and daily data with respect to accuracy.  The key thing to keep in mind here is that after the stock markets close, the daily Read More 

ChartWatchers

DIVERGENCES PROVIDE ADVANCED WARNINGS

by Tom Bowley

I know many traders view the MACD to be a lagging indicator and technically it is.  After all, the calculation of the MACD uses historical price data so how could it not be a lagging indicator?  Well, I can only tell you that I use the MACD for advanced calls quite a bit.  Recently, when crude oil was plummetting, it flashed a long-term positive divergence and VOILA! prices rebounded.  You can check out my last article to see the lower crude oil prices accompanied by a higher MACD reading.  The interesting part is whether the positive divergence means the selling Read More 

ChartWatchers

TRADING ENVIRONMENT FOR ENERGY STOCKS LOOKS GOOD

by Richard Rhodes

The current market environment is rather difficult to be sure; but the moving of the chess pieces underneath the market surface is what interests us at present. We are focused upon the Energy Sector (XLE) in general, and the Oil Services Group (OSX) in particular. To this end, we find OSX moving higher in absolute terms, but also poised to move higher in relative terms versus Crude Oil ($WTIC) and the S&P 500 ($SPX). Thus, we want to be overweight either the stocks that make up the OSX (SLB, BHI, NBR and others) or the Oil Services ETF (OIH). Looking at the technicals in Read More 

ChartWatchers

AAII INVESTOR SENTIMENT SHOWS A LOT OF BEARS

by Carl Swenlin

Last week the Rydex Ratio was displaying very bullish sentiment, and that is still the case. In rather stark contrast AAII Investor Sentiment* (American Association of Individual Investors) reflects very bearish sentiment this week, with 22% bulls and 42% bears. The ratio of bears to bulls is 0.53. These are levels typically seen at market bottoms, not during price advances. Looking at the chart we can see that the percentage of bulls is much lower in the last three months than it was during the first quarter. And even though the market has been rallying for about seven weeks Read More 

ChartWatchers

AUSTRALIAN DOLLAR RALLIES

by John Murphy

Currency trends often us something about the mood of global traders, and which way they're starting to lean. In the ongoing battle between "risk-on" and "risk-off" trades, one of the markets worth keeping an eye on is the Australian Dollar. For a number of reasons, global traders buy the Aussie when they're turning more optimistic on global stocks and commodities. That's why the recent upturn in the Aussie Dollar may be a sign of a bit more optimism among global traders. Chart 1 plots the Australian Dollar (XAD) against the U.S. Dollar over the last eighteen months. The XAD has been Read More 

ChartWatchers

DEFENSIVE SECTORS STILL OUTPERFORMING OFFENSIVE SECTORS

by Arthur Hill

The first chart shows the S&P Sector PerfChart for the one month time frame (22 trading days) and the second chart shows the three month timeframe (64 trading days). Note that these PerfCharts show relative performance, which is the amount the SPDR is outperforming or underperforming the S&P 500. SPDRs in positive territory are leading and outperforming, while SPDRs in negative territory are lagging and underperforming. Both PerfCharts show the same picture: the offensive sectors are underperforming and the defensive sectors are outperforming. The offensive sectors include Read More 

ChartWatchers

TRY THE DARK SIDE FOR A CHANGE

by Chip Anderson

Hello Fellow ChartWatchers! I'm pleased to announce that we have just added 4 new color schemes to our charting workbench.  These schemes are specifically designed for people that like light colored charts on black backgrounds.  Our older "Night" color scheme is one of our more popular schemes but it has gotten a little long in the tooth over the years.  These new "Dark" color schemes bring our support for black-based charts more up-to-date.  Here's what they look like: The new schemes are called (from left to right) - Dark Gray, Dark Green, Dark Amber, and Dark Read More 

ChartWatchers

CRUDE OIL SIGNALS POTENTIAL BOTTOM

by Tom Bowley

Reasonably bullish signs have emerged, the latest being that crude oil prices (finally!) found support at 2 year lows near $76-$77 per barrel.  Not only was price support tested, but slowing momentum was obvious in the form of a long-term positive divergence.  It's always nice to see corroborating technicals align bullishly and that's exactly what we saw with crude oil prices.  Take a look: After a long-term positive divergence prints on a daily chart, I look for a test of the 50 day SMA.  Many times this coincides with a centerline test, or MACD Read More 

ChartWatchers

GOLD A "CAGED" ANIMAL

by Richard Rhodes

Gold prices are trapped we are afraid; and they are trapped between the $1584 and $1646 levels - of which the lower boundary is the 20-month moving average; while the upper boundary is the 30-week moving average. We expect Gold prices shall break higher given the bullish consolidation forming; and given the Gold/Silver is showing signs of being overbought. All "good bull markets" in Gold are led by Silverwhich is another story for another day. Our upside target for Gold prices is simply to "new highs" and let the market take it from there. That said, if Read More 

ChartWatchers

SENTIMENT CLIMAX

by Carl Swenlin

The Wall Street Sentiment Survey* is unique in that the poll is taken on Friday after the market closes, and it asks participants for their forecast for the following week. This differs from other polls that take opinions through the week during periods when the market is active and changing. Last week's survey results (June 29 cutoff) were surprisingly one sided with 80% bulls versus 20% bears. Sentiment indicators are contrarian, so with that many bulls, there was a pretty good chance that prices would close down this week, which they did, thanks to Read More 

ChartWatchers

CORN LEADS AG MARKETS HIGHER

by John Murphy

Agricultural commodities have been on a tear over the last month. Chart 1 shows the Power Shares Agricultural Fund (DBA) in a parabolic rise since mid-June. Most of that surge is coming from grain markets as the result of drought conditions in the midwest. Corn, wheat, and soybean prices have seen especially big gains. Chart 2 shows the Corn Fund (CORN) surging to the highest level in ten months. Notice the big jump in volume in both agricultural ETFs. One stock group that is starting to benefit from surging grain prices is fertilizer stocks. Farmers will need to buy more fertiilzer to Read More 

ChartWatchers

Networking and Semiconductor ETFs Fail at June Highs

by Arthur Hill

Relative weakness in the **Networking iShares (IGN)** and the **Market Vectors Semiconductor ETF (SMH)** weighed on the technology sector this week. The chart below shows SMH breaking down in May and then bouncing back to broken support in mid June. While SPY moved above its mid June high, SMH did not and showed relative weakness. The support break held and resistance has been affirmed at 33 with the decline on Thursday-Friday. The indicator window shows the SMH:SPY ratio peaking in February and moving to a new low today. Semis represent a key technology group and a cyclical industry Read More