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February 2013

ChartWatchers

Overlaying Indexes Using the Same Vertical Scale

by Chip Anderson

Hello Fellow ChartWatchers! Overlaid charts are a very powerful feature of StockCharts.com.  Most people are familiar with using the "Price" Indicator with the "Behind Price" Position setting to create an overlaid chart.  (If you aren't, be sure to read this article for more.)  But overlaid charts can also be tricky to interpret if you are not careful.  Consider the following chart: Which of these two Bullish Percent Indexes has the higher value?  Looking at the chart, you'd say that both of them are currently about equal since both lines Read More 

ChartWatchers

2013 Sector Leaders are Energy and Financials

by John Murphy

SECTOR LEADERS YEAR TO DATE Chart 1 plots relative strength ratios of the energy, financial, and industrial sectors versus the S&P 500 (the black zero line). Those three sectors have been the top performers year to date. Technology has been the weakest (on a relative basis). Let's start by taking a closer look at the two top sectors -- energy and financials. ENERY ETFS ARE BREAKING OUT TO THE UPSIDE The weekly bars in Chart 2 show the Energy Sector SPDR (XLE) breaking out of a bullish "symmetrical triangle" (see circle). [A symmetrical triangle is defined by two Read More 

ChartWatchers

Reasons to be Concerned with the Tech Sector

by Greg Schnell

This weekend, I want to talk about the technology sector. Some of the major tops of the market have been spotted on the $NDX before the market breaks down.Here's the chart. It has a lot of data on it. I would encourage you to click on this link $NDX to see a larger version. Let's start at the top. Lower Valleys on the RSI seem to be one of the consistent themes among the recent tops. Well, we clearly are seeing that here. 3 months  after the RSI has put major lows in, we are trending up, but I think everyone could Read More 

ChartWatchers

Six Important Short-Term Warning Signs for This Market

by Tom Bowley

I remain bullish for 2013 and believe we could see 1700-1800 on the S&P 500 before the year is over.  But I can't deny the short-term warning signs that are showing up everywhere.  Let's take the issues one at a time. 1.  Historical Tailwinds Have Ended Since 1950, the months of November, December and January have been the three best consecutive months for the S&P 500 and have accounted for roughly 50% of all of this benchmark index's gains during this period.  That period just ended.  Unfortunately, February has carried an annualized return of Read More 

ChartWatchers

Gold Now Approaching Critical Support

by Carl Swenlin

Downward pressure in gold prices continued as very large funds liquidated substantial portions of their positions in the gold ETF (GLD). (See article.) Naturally, we need to look at the charts to give this story some context. (Charts were made before the close.) The daily chart shows that price has reached the bottom of the declining trend channel, the top of which is drawn from the October high. This was something we thought likely because price failed to reach the top of the channel before it started down again. Another important event that happened today was that the 50-EMA crossed Read More 

ChartWatchers

QQQ Hesitates, but the ETF is not Lost Just Yet

by Arthur Hill

The Nasdaq 100 ETF (QQQ) just can’t seem to find its mojo this year, but the 2013 trend is still up and the bulls still have the edge, albeit a slight edge. First, note that QQQ has been trending higher since mid November. A three month uptrend means the medium-term trend is up, which establishes the path of least resistance. Second, QQQ stalled the first six weeks of the year and the Bollinger Bands narrowed significantly in early February. A Bollinger Band squeeze signals a volatility contraction that can lead to a volatility expansion. *LINEBR** It Read More 

ChartWatchers

THE MOVE SEEN AROUND THE WORLD

by Greg Schnell

Starting in the summer, some of the global stock markets started to move higher. Once Mario Draghi suggested he would do whatever it takes to save the euro, the European markets have been on a tear higher.This is the first monthly close that all 18 global markets I track are above the 20 Month MA. Why is that level significant? Because when the entire world got above the 20 Month MA in 2003 it confirmed the global push higher and lasted 4 years. In 2009 it did it again but it only lasted into 2010 when the Shanghai started weakening. Here we sit in 2013 with all the global markets pushing Read More 

ChartWatchers

ENERGY'S RALLYING, WHAT'S NEXT?

by Tom Bowley

Energy apparently has more fuel in the tank.  After underperforming the past couple years, it has rocketed higher to start 2013 and was the leading sector during what was a VERY solid January.  As a student of history, that January strength bodes well for the stock market during the balance of 2013.  Expect all-time highs on the S&P 500 later this year and those future gains are likely to be accompanied by a rapidly rising energy group.  In my last article, I showed a chart of the oil services index ($OSX) that reflected relative breakouts that were just barely Read More 

ChartWatchers

FUTURES INDEXES VERSUS ETFs

by Carl Swenlin

READER QUESTION: I am always curious why you elect to use a surrogate of a market to provide a technical analysis.  The one I have a concern with is using UUP to analyze a H&S formation and mention violation of support.  However, the actual dollar chart shows that support still holds. CARL'S ANSWER: The first reason is that we don't have access to spot prices on commodities because of the expense of getting a data feed from the commodities exchanges. What we have available are futures-based indexes, such as $USD (Dollar Index), $USB (30-Year T-Bond), and $WTIC (Crude Read More 

ChartWatchers

FALLING DOLLAR BOOSTS COMMODITIES

by John Murphy

My Thursday message showed the Power Shares Dollar Index Bullish Fund (UUP) on the verge of a technical breakdown. The weekly bars in Chart 1 show the cash version of the Dollar Index. It too has a bearish look by showing the US Dollar Index threatening to fall below a "neckline" drawn under its 2012 lows. That would signal a drop in the $USD to it 2011 lows. [Thursday's message showed most of the dollar weakness coming from rising European currencies]. One asset class that would benefit from a falling dollar is commodities. That partially explains why commodities ended the week on a Read More 

ChartWatchers

CURRENCY WAR

by Richard Rhodes

There has been quite a bit of banter recently about a "currency war" developing given the Japanese Yen has fallen dramatically against the USD - roughly -15% in the past 11-weeks. This is a rather major move for a currency; and it is such that it is providing cover for Japanese exporters against those in Europe and the US as well as other emerging markets. Remember, the US continues to print money via QE-4, while Europe has simply said it "has what it takes, and believe us - it is enough. Japan on the other hand, simply said they would raise their inflation target from 1.0% to 2.0%, and Read More 

ChartWatchers

I DIDN'T KNOW STOCKCHARTS.COM DID THAT!

by Chip Anderson

Hello Fellow ChartWatchers! The Dow moved above 14,000 yesterday at 11:04am.  How do I know the exact time that happened? I know because StockCharts tweeted about it the instant it happened.  Did you know we automatically tweet about a wide variety of significant technical signals, automatically alerting anyone who watches our Twitter feed?  It is just one of dozens of improvements we made to the website over the course of 2012.  Here are some other improvements you might not know about: Unadjusted Data - Just add an underscore to the Read More 

ChartWatchers

DOW MAKES A ROUND TRIP WITH 100% GAIN

by Arthur Hill

With a 150-point gain to end the week, the Dow Industrials closed above the next big number (14000) and hit a significant milestone. There is usually nothing special about round numbers, such as 14000, but this number is special because the Dow failed at 14000 in 2007. The financial crisis and subsequent swoon in financial stocks helped push the senior average below 7000 in early 2009. Friday’s advance allowed the Dow to complete a six year round trip. What a long strange trip it’s been. The chart below shows the Dow falling 50% and then requiring a 100% advance to make up for this Read More