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August 2013

ChartWatchers

The Best Chart You've Never Heard Of

by Chip Anderson

Hello Fellow ChartWatchers! Three consecutive down days at the end of the week confirmed that August is going to be a rough month for stocks.  A couple of quick clicks on our Interactive PerfChart tool show that all of the major market averages moved lower this week by between 1.6% (Nasdaq) and 2.30% (Russell 2000).  A couple more clicks on our S&P Sector PerfChart show that Utilities was the weakest sector losing over 4% for the week while Technology stocks got the week's "Least Terrible" award for only losing 0.5%. (For those of you following along at home, be Read More 

ChartWatchers

Lower Interest Rates May Prove to be Headwind for US Dollar

by Richard Rhodes

The capital market starting to trend once again. The 10-year note yield has risen rather swiftly in recent months, which has caused both the stock market and the US dollar to trade in a sideways movement. In each case, we believe it to be a distribution phase that will lead to lower prices in the months ahead. If we had a crystal ball, then we would simply note that the 10-year note yield risk-reward profile is setting up towards lower rates given the upside "head & shoulders" bottom target is on the verge of being achieved. This may not happen immediately, as a period of distribution Read More 

ChartWatchers

The Friendly Giant Wakes Up

by Greg Schnell

Canada had a popular TV show called The Friendly Giant.  When Suncor merged with Petro Canada in March 2009 it become Canada's energy giant. It is the largest oil company on the $TSX by market cap and one of the top 5 companies in Canada as well. Here is the live link. Suncor.  It has been trading in a sideways range for 2 years. However, on a down week for the US index and an up week for Canada, something was going on.With the gold miners breaking to the upside, Canada's energy sector and Canadian banks going sideways,the undercurrents are swift here. It emerged Read More 

ChartWatchers

Bond Yield Resumes Uptrend

by John Murphy

The uptrend that started in bond yields during May is resuming. Chart 1 shows the 10-Year Treasury Note Yield ($TNX) hitting a new recovery high today. That resumes the uptrend in bond yields. The weekly bars in Chart 2 show that the TNX is now trading at the highest level in two years. That confirms the upside breakout in the TNX that occurred during June when it exceeded its early 2012 high (see circle). The monthly bars in Chart 3 show the TNX also testing a falling resistance line extending back to its 2007 peak. A decisive close above that falling trendline would leave little doubt Read More 

ChartWatchers

Russell 2000 ETF Starts Correction within Bigger Uptrend

by Arthur Hill

The Russell 2000 ETF (IWM) moved sharply lower this week to start a short-term downtrend, but this is still considered just correction within a bigger uptrend. There are simply no signs of a major top at this moment. Tops often form with major reversal patterns or consolidation, a bearish divergence in the Advance-Decline Line or relative weakness in the key offensive sectors. These factors were not present when the market peaked in early August. A correction at this point is hardly surprising given the run up from mid November to early August. The Russell 2000 ETF surged some 40% from Read More 

ChartWatchers

Bonds (TLT) Break Important Support

by Carl Swenlin

This week let's take a look at bonds because rising rates are capturing broad attention. We use the 20+ Year T-Bonds ETF (TLT) as the surrogate for long bond timing. As of 5/20/2013 TLT is on a Trend Model NEUTRAL signal, which means that the model has been out of bonds but not short. The LT Trend Model, which informs our long-term outlook, is on a Sell signal as of 5/29/2013, so our long-term posture is  bearish. The weekly chart shows a support zone between 105 and 106, and TLT has violated that zone in a move that is Read More 

ChartWatchers

Announcing StockCharts ChartPacks - "Plug-Ins" for StockCharts Members

by Chip Anderson

Hello Fellow ChartWatchers! Today I am thrilled to announce a big change in how people can configure and use StockCharts to understand the markets and make better investing decisions.  StockCharts Members can now add pre-created collections of SharpCharts, ChartLists and ChartStyles to their account with just a couple of clicks by installing a StockCharts ChartPack.  Think of ChartPacks as optional "Plug-Ins" or "Add-Ons" for StockCharts Extra and PRO accounts. The StockCharts Essentials ChartPack Today we are releasing our very first ChartPack - the "StockCharts Read More 

ChartWatchers

Dow Transports Confirm New Record in the Industrials

by John Murphy

The Dow Industrials and Transports are hitting new record highs together once again. That's a sign of an ongoing bull market. [Dow Theory holds that an upside breakout in either one needs to be confirmed by a similar breakout in the other]. Chart 1 shows the Dow Industrials trading at a new record today. Today's action in the transports is even more impressive. Chart 2 shows the Dow Transports climbing 3% to also trade at a new record. The upside action in the transports is also encouraging, since they're considered to be an economically-sensitive stock group. That's especially true of Read More 

ChartWatchers

$COPPER Moves Above, One More Time

by Greg Schnell

$COPPER is one of our best indicators of economic activity. It is usually early in bull markets and very weak when markets top.We all know that $COPPER has been under pressure for a long time. I like to use a dashboard of world mining leaders to confirm moves in $COPPER.Here is the chart live link. $COPPER So almost all of these stocks that seem to be correlated to $COPPER have moved above the 10 WMA. We need to see this hold and actually make a solid push above.We can also see $COPPER will face resistance at the $3.30 level.But currently, it looks like things are starting to Read More 

ChartWatchers

Software Stocks Lagging

by Tom Bowley

Most areas of the stock market have enjoyed the past few months, especially since the lows of June 24th.  Don't count software as one of those groups, however.  At first glance, this might seem like an area of the market to avoid because of poor relative strength over the past couple years.  Check out this relative chart showing software lagging the S&P 500 since late 2011: So why might this be an industry group worth considering?  Well, first consider that technology is regaining relative strength.  A couple months ago, I featured an equal weighted technology Read More 

ChartWatchers

Rydex Ratio: Investors Not Committing to Rally

by Carl Swenlin

The Rydex Cash FLow Ratio is one of the sentiment indicators we track, and currently it is showing that investors are unusually reluctant to commit money to the current rally. The Rydex Cash Flow Ratio gives an improved view of sentiment extremes by using cumulative cash flow (CCFL) into Rydex mutual funds rather than using the totals of assets in those funds (which we use for the Rydex Asset Ratio). It is calculated by dividing Money Market plus Bear Funds CCFL by Bull Funds plus Sector Funds CCFL. After reaching the bullish edge of the Ratio scale at the May market top, we can see Read More 

ChartWatchers

Key Breadth Indicators Confirm Underlying Strength

by Arthur Hill

The major stock indices recorded 52-week highs this week and these highs were confirmed by the breadth indicators for the S&P 1500. Note that the S&P 500, S&P MidCap 400, S&P SmallCap 600, Nasdaq 100 and Dow Industrials recorded fresh 52-week highs this week. When the major indices hit 52-week highs, I always check key breadth indicators for confirmation. Failure to confirm suggests that the stock market is not hitting on all cylinders. New highs in key breadth indicators, on the other hand, reflect broad underlying strength that validates the overall uptrend. I like to Read More