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May 2013

ChartWatchers

Sector Check

by Carl Swenlin

The S&P 500 component stocks are divided into nine sectors. All the stocks are used, and each stock is only used once. Those sector indexes are typically tracked using the nine SPDRs, which are essentially ETFs that whereby the sectors can be traded. We thought it would be a good idea to take a quick look at charts of those nine sectors. This article is a bit "chart intensive", but the idea is to demonstrate how you can gather information about a lot of stocks by reviewing their charts. The following charts are taken from one of our chart books. In the first group we Read More 

ChartWatchers

Dollar Index Nears Three-Year High, Plunging Yen Has Hurt Gold

by John Murphy

The chart below shows the U.S. Dollar Indexchallenging its mid-2012 high near 84. An upside breakout through that prior peak (which appears likely) would put the dollar at the highest level since mid-2010. The dollar has become the world's strongest currency. One of the reasons for the stronger greenback is the fact that the U.S. economy is now the strongest among developed markets. Another is chatter that the Fed is planning to cut back on bond purchases (quantitative easing) sooner rather than later. That's in contrast to other central bankers who are accelerating their easing Read More 

ChartWatchers

PerfCharts Show the Tectonic Shift from Defense to Offense

by Arthur Hill

There were concerns a month ago when the defensive sectors were leading the market, but this changed as the offensive sectors took control over the past month. The defensive sectors include healthcare, consumer staples and utilities. The offensive sectors include technology, consumer discretionary, industrials and financials. Chartists can use PerfCharts with different date ranges to spot shifts in sector rotation. The first PerfChart shows the percentage change for the nine sector SPDRs from mid March to mid April. Chartists can set a past date range by right clicking on the date slider Read More 

ChartWatchers

The "Great Rotation" Has Begun

by Richard Rhodes

The Great Rotation is in its early stages. For those initiated to this concept, it is simply that rising interest rates will cause asset allocators to sell bonds and buy stocks. And we shall posit that it shall become more pronounced in the weeks and months ahead as interest rates are on the verge of rising faster than many believe at this point.Technically speaking, this is due to the 10-year note yield developing weekly "head & shoulders" bottom forming on the weekly chart. We'll mention that a bullish monthly key reversal to the upside is also forming, but the basis of this sharp Read More 

ChartWatchers

Technology Turning a Corner

by Tom Bowley

So much for "Go away in May"!   I've written in the past that this is VERY misleading information that's routinely provided to the investing public.  For example, the month of May is one of the best months of the year to invest in small caps.  The Russell 2000 has an annualized return of more than 14% during May since 1988.  The NASDAQ's annualized return in May since 1971 is close to its annualized return throughout the year.  Only on the S&P 500 do we see below average returns during May - and most of that weakness has generally been seen in the middle Read More 

ChartWatchers

Long-Term Breakout

by Carl Swenlin

While we tend to focus more on the short and intermediate term, we notice that there is a lot going on in the long term time frame. Most obvious is the breakout above the top of a long-term trading range. The breakout is decisive (more than three percent), so the technical assumption is that it is unlikely that prices will fall back below the line of resistance, which is now support. After a breakout we expect prices to correct back toward the point of breakout. We can see that the index is approaching the top of a rising trend channel, and, when that is reached, it would be a logical Read More 

ChartWatchers

Our Spring Special is Now In Effect! Here's the Deal...

by Chip Anderson

Hello Fellow ChartWatchers! Today we started our Spring Special for 2013.  As long-time ChartWatchers know, it is important to take advantage of our specials when we hold them in order to minimize your charting costs.  That is true regardless of whether or not your account is about to expire.  I hate hearing from people that miss out on our specials because they didn't think that they could participate. The deal is simple - while the special is running, all of our long-term subscriptions include an additional month of service beyond what they normally provide:  7 Read More 

ChartWatchers

Technology SPDR Resumes Uptrend

by John Murphy

Thursday, April 25th I wrote about the technololgy sector being one of the markets weakest groups this year. That may finally be changing for the better. The chart below shows the Technology Sector SPDR (XLK) exceeding its early April high to reach the highest level in six months. The XLK/SPX relative strength ratio (gray area) has also turned up. That's the first sign of upside leadership coming from the technology this year. Thursday's message suggested that an upturn in Apple (the sector's biggest stock) from an oversold condition would be a big help to the sector. It also showed Read More 

ChartWatchers

Earnings Really Do Matter

by Tom Bowley

Every quarter, my goal is to identify the absolute best stocks that I can find from both a technical and fundamental standpoint.  I am a firm believer that stocks beating expectations, raising guidance, trading extraordinarily high amounts of volume and printing bullish candlesticks have much better odds of trading higher than stocks that don't fit this category.  For me, once the stocks are identified, it becomes a game of patience and discipline, identifying high reward to risk entry points.  Great earnings do NOT necessarily mean you simply run out and buy a stock.  Read More 

ChartWatchers

A Meaningful 3 Week Pattern in $COPPER

by Greg Schnell

On a huge macro scale, we are trying to break out of a consolidation range. 13 year. Breaking out on Dow, SP500, Nasdaq, $RUT.  Unfortunately, the rest of the globe has not been confirming.But the 2 days since the Fed announcement since they removed the upside limit on intervention has really changed the shape of the market.This was a major week for the markets.Here was a view from April 24. Notice by right clicking on the Perf Chart you can bring up the cycle tool and slide the yellow line, left to right!!!!!! (That 's a new feature!) Compare that to now Read More 

ChartWatchers

Oil Service About to Play "Catch-Up"

by Richard Rhodes

The current S&P 500 rally to new all-time highs may very well be the beginning of a "bubble-like" move to much higher levels in the weeks and months ahead. However, make no mistake, there is a great deal of risk in being long many stocks at this juncture, but there are sectors/industries that haven't participatedand very well may be ready to do so given the trading patterns of the past two weeks.One such sector and/or industry is the energy sector (XLE), and in particular the oil service group (OIH). Technically speaking, when we look at the relative OIH/SPY ratio, we find it at Read More 

ChartWatchers

Testing Our New Economic Indicators

by Chip Anderson

Hello Fellow ChartWatchers! As I mentioned last time, we've recently started adding key economic datasets to our database so that you can chart them with our SharpCharts charting tool.  This week, we added the weekly Unemployment Indexes including the Initial Jobless Claims number.  The symbol for that index is $$UNEMPCIN. $$UNEMPCIN behaves inversely to the stock market - when the market is doing well, initial jobless claims are falling and vice versa.  We can see this directly by charting the inverse index - $ONE:$$UNEMPCIN and overlaying that with the S&P 500 Read More 

ChartWatchers

Consumer Discretionary and Retail Continue to Lead the Market

by Arthur Hill

The Equal-weight Consumer Discretionary ETF (RCD) and the Retail SPDR (XRT) hit 52-week highs in price and relative strength this week. New highs and relative strength in these two groups is very positive for the market overall. As its name suggests, the consumer discretionary sector is the most economically sensitive sector. Retailers feature prominently in this sector and retail spending accounts for some 2/3 of GDP. If performance of these two ETFs is indicative of consumer spending, then the economy and broader market are in good shape. Neither shows absolute or relative weakness for Read More 

ChartWatchers

Precious Metals Sentiment

by Carl Swenlin

With the recent volatility in gold and silver prices, it would be nice to get an idea of what kind of sentiment is being generated. Measures of sentiment tell us if there is too much optimism or pessimism in a particular market. There are a number of sentiment trackers for stocks, but very few are readily available for precious metals. One that we track is the premium or discount on shares of Central Fund of Canada (CEF). Central Fund of Canada (CEF) is a closed-end mutual fund that owns gold and silver exclusively -- the metals, not stocks -- at a ratio of about 48 oz. of silver to 1 Read More