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March 2013

ChartWatchers

New Newsletter Format, New Faster Servers and New Award!

by Chip Anderson

Hello Fellow ChartWatchers! We're starting to get "Spring Cleaning Fever" here at StockCharts.  Can you tell? Exhibit #1:  This!  This new newsletter design!  What do you think of it?  We reworked things to make the newsletter more readable, more printable and more informative overall.  In addition, we'll be converting all of our old newsletters into this new format and putting them in a huge archive section of our site for posterity.  Watch for that in the next month or so. Exhibit #2: Did you notice the speed-up in our servers last week? Read More 

ChartWatchers

The MACD Reset

by Tom Bowley

Personally, I love the MACD.  It's one of my favorite technical tools when trading.  It's not perfect - nothing is - but it does provide us a snapshot of momentum of a stock or index.  The MACD is nothing more than the difference between two exponential moving averages, with the standard being the 12 period and 26 period EMAs.  I follow this standard MACD. As a refresher, here's a daily 6 month chart of Apple (AAPL) with the standard 12 day and 26 day EMAs reflected on the chart:  That is a static look at AAPL's MACD as of Friday's close.  By Read More 

ChartWatchers

Bullish Consolidation Suggests Sharp Rise for Crude Oil

by Richard Rhodes

The stock market's uninterrupted gains in recent months is giving rise to talk of a bubble, and perhaps this is the case within the scope of time. It is still far too soon to determine this, although further gains will cause us to consider sharply higher prices within the context of anemic economic growth. With this said, we are watching the Crude Oil futures market rather closely, for on a monthly basis - a bullish pennant pattern is forming that projects sharply higher pricesto new highs above the $150/barrel level. This would come as a surprise to many, but the fact of the matter is Read More 

ChartWatchers

U.S. Dollar Appears To Be Bottoming

by John Murphy

The monthly bars in Chart 1 plot the U.S. Dollar Index since 2001. Two major trends are seen on the chart. The first is the major downtrend in the dollar between 2002 and 2008. During 2008, the USD broke its six-year down trendline which ended its bear market. Since then, the USD has trended sideways in what appears to be a major bottoming pattern (see parallel lines). To complete that bullish pattern, the USD would have to clear its 2009-2010 highs. Although that hasn't happened yet, it isn't too soon to consider the possible implications of the dollar becoming the world's strongest Read More 

ChartWatchers

Municipal Bonds Hit A Pothole...

by Greg Schnell

Strolling through the the mid month charts, I came across this ETF.This ETF represents Municipal Bonds.  MYI It has only moved below its 40 WMA twice in the last 5 years. Till this week. It marks the third time.In 2007 it marked a drop early in the year and could not stay above the black line.It tried twice in 2008 to get back above but failed in June and July. It was important.In late 2010, it plummeted below the line, while the stock market went on a final run into April before correcting 20% in 2011.This fund has shown more red in the last 3 months than at any time in Read More 

ChartWatchers

QQQ Forms Bullish Continuation Pattern after Gap

by Arthur Hill

The Nasdaq 100 ETF (QQQ) and the Technology SPDR (XLK) have been underperforming the broader market, but both remain in uptrends since mid November and are holding their March gaps. Relative weakness stems from Apple, which is the biggest component for both ETFs. Microsoft, which accounts for over 7% of each ETF, has also been underperforming the broader market for several months. The first chart shows XLK breaking above resistance at 30 with a gap-surge in early March. This breakout is holding with broken resistance and the gap marking a support zone. A move below 29.75 would fill the Read More 

ChartWatchers

Advance-Decline Lines Confirm New Price Highs

by Carl Swenlin

There are negative divergences on a lot of indicators we track (price makes a new high, but the indicators makes a lower high), but the advance-decline lines for breadth and volume are actually confirming the recent new price highs. This is reassuring but, it does not guarantee that even higher prices are coming. As Yogi Berra once said, "You can see a lot by just looking," and there is a lot to see on the following chart which shows the S&P 500 Index advance-decline lines for breadth and volume. I have annotated some of the variations of divergences and confirmations which can Read More 

ChartWatchers

Wailing and Gnashing of Teeth in the Gold Market

by Richard Rhodes

The past two trading weeks in the gold market has been rather dramatic:  a sharp decline followed by a sharp rally and then a recent test of the lows. The end result - quite a bit of wailing and gnashing of teeth. And, we think the wailing shall become louder before gold finally bottoms and turns higher towards new all-time highs. Quite simply, gold is in the process of providing those longs accumulated over the past 2-years with losses, and a resultant "puke point" lies ahead. Technically speaking, we are looking for a test of the rising 150-week moving average at $1539 - much in Read More 

ChartWatchers

NDX Exhaustion Divergence

by Carl Swenlin

Textbook dIvergences occur when an indicator fails to keep up with price. For example, a positive divergence is when price makes a lower bottom, but the indicator makes a higher bottom. A negative divergence is when price makes a higher top, but the indicator makes a lower top. In each case the divergence signals a possible price reversal. I call them "textbook" divergences because they are the kind that are typically referenced in any discussion, but there is another kind of divergence, which I will call an "exhaustion divergence," that is extremely useful but rarely mentioned Read More 

ChartWatchers

LONG-TERM INDICATORS ARE ROLLING OVER

by John Murphy

A lot of traders and investors are waiting for the bull market in gold to resume. They may have a very long wait. That's because a lot of traditional chart, technical, and intermarket signs are now working against gold. Let's start with a long-term look. The monthly bars in Chart 1 show the major bull move in gold that lasted from 2001 to 2011. The rising trendline drawn on the log chart is still intact. [A log price scale measures percentage price changes and is better for long-term trendline analysis]. But the two indicators shown on the chart aren't. The orange line overlaid on the Read More 

ChartWatchers

Searching for Answers in Orlando

by Chip Anderson

Hello Fellow ChartWatchers! Last weekend I had a great time giving our SCU 101 seminar to a room full of people at the Dolphin Hotel in Orlando.  One of the questions that came up during that seminar was "What does the solid black candlestick mean?  I've looked all over your site and I can't find anything that talks about what the different candlestick colors mean." OK, that is a very good question.  It's also a question that our support team sees quite often from other users.  And it is an important question that everyone needs to know the answer to.   I was Read More 

ChartWatchers

DEFENSIVE SECTORS SHOWING RELATIVE STRENGTH

by Tom Bowley

In my last article, I laid out several arguments why it would make sense to be more cautious as you approach the stock market.  I'm bullish for the balance of 2013 - at least as of now - but the short-term has definitely turned more dicey.  One of the ways that I evaluate the strength of a move to the upside in the S&P 500 is by looking to see what areas of the market are leading the charge.  As of Friday's close, healthcare and consumer staples were the two best performing sectors of 2013, indicative of a market that is tired.   The good news is that Read More 

ChartWatchers

Dollar Breakout Could Foreshadow a Return to Risk-Off

by Arthur Hill

The Dollar Bullish ETF (UUP) extended its advance with a break above the mid November high this week and a fresh six month high. UUP is at levels not seen since August 2012 and this surge could weigh on stocks because the Dollar and stock market have been negatively correlated the last three years. A rising Dollar could also signal a return to a risk-off environment. On the chart below, it looks like UUP formed a higher low around 21.50 and the February breakout signals a continuation of an uptrend that has been in place since August 2011. The yellow area marks the next target zone in the Read More