ChartWatchers Newsletter logo

July 2013

ChartWatchers

Crude Oil Reaches 15-Month High

by John Murphy

Chart 1 shows Light Crude Oil trading at the highest level in fifteen months. My July 5 message showed crude oil trading higher in an attempt to close the gap between it and higher priced brent crude. As of today, crude is only a dollar away from its European counterpart. With oil prices on the rise, investors appear to be showing new interest in energy stocks. My July 8 message showed the Market Vectors Oil Services ETF (OIH) moving up toward its 2013 highs. Chart 2 show the OIH very close to challenging its May peak. Its relative strength ratio (gray area) has also started to climb Read More 

ChartWatchers

Is This The ValleyView Lookout Or Mount Everest Base Camp?

by Greg Schnell

Notice the price action on the $VIX. The peaks and valleys are 100% apart!The monthly options expiration date has marked a significant turning point for the $VIX every month for at least 8 months.I have marked the OE day with a black dashed line. The circles represent 2 major turns that were not associated with OE. So being aware of the price action coming into and leaving the OE date can be very important for short term traders.Currently we appear to be near recent lows. We also have made 3 higher lows in a row. We'll see if that trend changes in the next few weeks.Globally Read More 

ChartWatchers

Transports Lagging Amid Signs of Slowing Momentum

by Tom Bowley

Transportation stocks helped lead the market rally from October 2012 through March 2013, but since that time it's been a struggle on a relative basis.  Check out this relative chart: Relative support resides near the 3.80 level in the chart above - a relative close beneath this level could be an additional warning sign. The biggest problem for transports, however, is the sign of slowing momentum on the longer-term weekly chart.  The last two breakouts in transports have occurred with MACDs much lower.  While this guarantees us nothing, it certainly suggests Read More 

ChartWatchers

New All-Time Highs for NASDAQ Composite coming?

by Richard Rhodes

The NASDAQ Composite is a "forgotten index", as it led the tech bubble higher into the 2000 high. Now, it is the NASDAQ 100 that garners all the attention given it consists mainly of Apple (AAPL) and Google (GOOG). But that aside, the Composite is on a bullish run that looks to hit new highs in the years ahead as the long-term bullish triangle breakout remains in force. However, in the interim - a rather sharp and nasty correction is anticipated. Technically speaking, prices have now rallied again into long-term trendline resistance connecting the 1990 and 1992 lows, and as in previous Read More 

ChartWatchers

Short-Term UP Participation Wanes

by Carl Swenlin

DecisionPoint.com has a unique market indicator that measures very short-term participation of stocks in a given index. The Participation Index (PI) is a dynamic, price-based measure of the percentage of stocks that are literally pushing the short-term price envelope -- not just advancing or declining, but actually meeting or exceeding the edge of the envelope. Actually, there are two Participation Indexes -- the PI-UP and PI-DOWN. Readings of 60 or greater are generally considered climactic. (Note on the chart below that the PI-DOWN scale is reversed in order to present a more Read More 

ChartWatchers

Small-caps Lead the Way and Outperform Large-caps

by Arthur Hill

The Russell 2000 ($RUT) is leading the market higher with a breakout on July 8th and a series of 52-week highs the last two weeks. This key small-cap index was one of the first of the major indices to break above its May high. Even though the index is looking a little overbought after a 10+ percent move the last 18 days, the breakout is clearly holding and bullish until proven otherwise. Should we see a pullback, broken resistance in the 1000 area turns into the first support zone to watch. The late June low marks long-term support. The indicator window shows the price relative ($RUT:$OEX Read More 

ChartWatchers

Sorted PerfCharts Give Additional Sector Perspective

by Chip Anderson

Hello Fellow ChartWatchers! In case you haven't noticed, the Financial sector has been dominating the market for over a year now with the Consumer Cyclicals not far behind.  How do I know?  I used our S&P Sector Performance chart.  Here's how you can do that analysis for yourself: 1.) Click on the "S&P Sector Performance" chart link located on our Home page (just below the collection of ticker symbols in the middle of the page). 2.) After the PerfChart appears, click the grey "S&P 500" button in the upper, left corner of the chart.  This will convert the Read More 

ChartWatchers

WTI CRUDE IS CATCHING UP TO BRENT

by John Murphy

The price of West Texas Intermediate Crude oil (the U.S. benchmark) has exploded over the last week. The lower line in the chart below shows the August light crude oil contract having broken out to the highest level in 14 months. Today's rise puts August crude at 103.12, which is $4.34 below the price of European brent crude (which ended at 107.46). Both varieties of crude usually trade around the same price. U.S. crude has been much weaker than brent over the last two years, owing to supply bottlenecks in the the U.S. With those having been relieved, the U.S. oil market is Read More 

ChartWatchers

British Pound and Euro Poised for Sharp Decline

by Richard Rhodes

This past week, the monetary policy world shook once again as the Bank of England and the European Central Bank provided the markets with "dovish" comments regarding leaving o/n funding rates low "for an extended period of time." This was clearly reminiscent of the Fed's proclamation some years ago; and served to buttress a move into risk assets. Whether or not this is the case this time is up for debate, and will be known in the fullness of time. However, what we do believe to be true is that the British Pound Sterling and Euro are embarking upon declines that will carry them very Read More 

ChartWatchers

The Snap Of The $USD

by Greg Schnell

I noticed the British Pound took an absolute thumping this week. It moved almost 5 cents to the $USD. But more importantly, the USD has moved above the long term trend line. As the largest currency in the world, that would suggest money continues to move to the $USD.  For safety, for the best opportunity for return or for trend following, the money is going to the USD. Click here to see the live $USD Chart. We will move the dotted line over if it closes the month here. Lastly Read More 

ChartWatchers

S&P 500 Warning Signs Emerging for Summer - Again

by Tom Bowley

In the very near-term, it's difficult to predict which way the S&P 500 is heading.  Recently, we saw the Volatility Index ($VIX) spike to nearly 22 and the multi-month uptrend line on the S&P 500 was violated.  Take a quick look: The biggest technical issue wasn't necessarily the VIX rising to 22 as we saw it move above that level in late December 2012.  Instead, breaking that 5-6 month trendline that already had four successful tests was the bigger story.  In my view, it changed the "cloudy" outlook for equities from a short-term concern to a more Read More 

ChartWatchers

Customizing CandleGlance Charts

by Chip Anderson

Hello Fellow ChartWatchers! The big news at the moment is the big move in bonds ($TNX is at highest point since mid-2011) and gold ($GOLD is at lowest point since mid-2010).  Several of the other commentators will have more to say about those developments below.  As for me, I've got another big improvement to announce for people that like to look at lots of charts. Customizable CandleGlance Charts Now Available! We've just released a new feature that allows members to customize their CandleGlance charts.  This is similar to the Customizable GalleryView feature Read More 

ChartWatchers

Another Breakdown for Bonds

by Carl Swenlin

Last week TLT, our bond market surrogate, made a new low, then bounced up to the resistance of the declining tops line drawn from the May top. It turned down on Wednesday, we thought beginning a move to test the recent low, but today TLT didn't bother to retest the low. It gapped down below the support and kept heading south. The situation is more obvious on the weekly chart. A massive top has been forming over the last two years, and price is headed toward support at 105. We are tempted to say that it is all over for bonds, but we can see that bond prices are nothing if not Read More 

ChartWatchers

The Case for $1000 Gold

by Arthur Hill

Gold is medium-term oversold and ripe for a bounce, but the long-term trend remains down with a target in the $1000 area. There are two big moves defined by two sets of retracement lines on this chart. The first extends from the 2001 low to the 2011 high (±250 to ±1900). A normal 50-61.80% retracement of this advance would extend to the 900-1100 area. There is also potential support in the 1000 area from broken resistance and the February 2010 low (orange shading). Thus, 1000 is the long-term target for gold at this point. Medium-term, gold is oversold after a plunge from 1800 to 1200 Read More