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September 2012

ChartWatchers

DOLLAR PLUNGE GIVES BIG BOOST TO COMMODITIES

by John Murphy

The Fed announced that it will purchase $40 billion a month in mortgage backed securities which adds to its holdings of long-term securities and ushers in another round of quantitative easing (QE3). The markets have all reacted in predictable fashion. The dollar and bond prices are falling while commodities and stocks are rising. Chart 1 shows the PowerShares Dollar Index Bullish Fund (UUP) threatening to fall below its spring lows. As is normally the case, the falling dollar is giving a strong boost to commodities. Chart 2 shows the DB Commodities Tracking Index Fund (DBC) climbing to Read More 

ChartWatchers

QE3 SENDS SHORTS SCURRYING

by Tom Bowley

Living in the Washington DC area, I'm not sure which was more exciting - QE3 or RG3!   The market was set up for higher prices as traders anticipated more quantitative easing.  Fed Chairman Bernanke did not disappoint.  By providing a third round of quantatative easing, the Fed aims to stimulate our sagging economy and boost employment.  Traders saw an opportunity and endorsed the plan by buying equities and commodities and bailing out of the dollar and treasuries.    When QE1 was announced in 2008, the treasury market was caught off guard and rates fell Read More 

ChartWatchers

ENJOY LOW RATES WHILE THEY LAST....

by Richard Rhodes

Well, finally the past economic/political week has passed, and we find ourselves starting down the barrel of QE-3. There is no need to go into the particulars of QE-3, but suffice to say that the Fed is buying mortgage-agency debt rather than adding to their Treasury debt holdings. This put downward pressure upon agency debt yields of course, but then it also provided for a rally in both the 10-year note yield as well as the 30-year bond. Our interest lies in rally in the 30-year bond, for it would appear that the long bear market of a decline in yields is "over", which in our mind is a Read More 

ChartWatchers

Create Your Very Own Personal Bullish Percent Index

by Chip Anderson

Hello Fellow ChartWatchers! The Fed spoke and the markets took off.  StockCharts.com was one of the best places to watch as stocks surged in the wake of the Fed's QE3 announcement.  You can read more about how it affected things from the rest of the columnists in this week's newsletter.  As for myself, I'm going to talk about how you can now create and chart your own personal Bullish Percent Index with StockCharts.com. MY OWN "SMALL CAP" BPI In case you haven't heard, Bullish Percent Indexes are one of the best ways to measure the strength of a group of stocks Read More 

ChartWatchers

Quantitative Easing and the S&P 500 Since 2008

by Arthur Hill

Stocks surged on Thursday after the Fed announced another round of quantitative easing, and extended their gains on Friday. Obviously, the stock market is pleased with the announcement. The chart below shows the S&P 500 since September 2008 and the yellow areas mark the beginning-end of the prior quantitative easing programs. Even though two QE cycles are not enough to establish a trend, notice that the stock market rallied during the prior two QE periods and fell sharply when they ended (red arrows). Of course, the S&P 500 was up substantially before these declines and ripe for a Read More 

ChartWatchers

OUR NEW ALERTS FEATURE CAN HELP YOU MONITOR YOUR OPEN POSITIONS

by Chip Anderson

Hello Fellow ChartWatchers! Last month we added a feature that many of you have been asking for for a long time - custom technical alerts!  Today I want to spend some time showing you how they work and one of the best ways they can be used to help you make better investing decisions. First off, let's review the typical process for investing with technical analysis: Use custom technical scans to search for stocks that have a chart setup that you are interested in trading. Use SharpCharts with your custom indicator settings to find the best scan result(s) and determine Read More 

ChartWatchers

VOLUME INDICATORS GIVE WARNING SIGNS

by John Murphy

My Tuesday message expressed the view that if a stock correction were to start, this would be a logical spot for that to happen. That's because several market indexes are testing spring highs, which is a normal spot for chartwatchers to take some profits. I also warned that light volume during the latest price advance during August showed lack of bullish enthusiasm on the part of traders (who may be be paring their bullish bets as the market nears the dangerous month of September). Light volume during a price advance is a warning signal. The volume bars at the bottom of Chart 1 shows Read More 

ChartWatchers

THE GOLD RUSH IS ON

by Tom Bowley

Before I take a look at the bigger picture, there were a couple rather bullish signs on the one year chart for gold the past few weeks.  Take a look:   After testing descending triangle support (you'll see that in the 5 year chart below) in mid-May, gold began its ascent.  Higher lows continued to print and the reaction high near 1640 in early June served as solid price resistance for the last few months.  But you can see the subtle improvement in technicals in late July and early August (blue circles).  The first blue circle highlights the 20 day EMA Read More 

ChartWatchers

CANADIAN MINING STOCKS READY TO ROLL OVER

by Greg Schnell

The Canadian mining stocks appear ready to roll over. It is quite surprising that they've not been able to rally given the recent weakness in the US Dollar. With the move down in the US dollar, we would've expected the value of the metals and the associated miners to move up but that just isn't happening.  Check out this chart to see what I mean: This hardly looks like a bull run off the June lows.  While the weekly bars have moved a little higher, they have not moved up enough to turn the Elder Impulse System from blue to green, nor has the Full Stochastic line Read More 

ChartWatchers

NAAIM SENTIMENT AND SEASONALITY URGE CAUTION

by Carl Swenlin

The National Association of Active Investment Managers (NAAIM) weekly poll* shows that they are 83% long. This qualifies as an extreme level of optimism, and should cause concern. On the following chart we can see that readings above 80% are not a magic number or an automatic sell signal; however, when sentiment reaches that level, we should begin looking for at least a brief correction. (Note that we have not identified every reading over 80% but have placed markers to provide points of reference.) This spike of optimism comes as we are entering the Read More 

ChartWatchers

NET NEW HIGHS WEAKEN BUT REMAIN POSITIVE AND BULLISH OVERALL

by Arthur Hill

Even though the S&P 1500 Index ($EIS) is trading near its spring highs and within a few percent of a 52-week high, Net New Highs have shown less strength since early July and divergences have formed. Keep in mind that less strength is not the same as weakness. New highs are still outpacing new lows, just at a lesser rate. The chart below shows US Net New Highs ($USHL) in the indicator window, the cumulative Net New Highs line in the main window and the S&P 1500 Index. $USHL equals NYSE and Nasdaq new highs less NYSE and Nasdaq new lows. Think of it as new highs and new lows for Read More