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October 2013

ChartWatchers

Loss of Faith in the US Dollar

by Richard Rhodes

The US Congress came through at the 11th hour once again as many expected they would in opening the government and raising the debt ceiling, but only for a short while really. However, the decision to "kick the can down the road" is causing the US Dollar to experience a great deal of "indigestion." Our premise is that the current US government dysfunction is bearish for the USD from a fundamental point-of-view; and it is also backed up from a technical point-of-view. Technically speaking, the trend has turned bearish this summer when the USD broke below the 180-day moving average fulcrum Read More 

ChartWatchers

The $TSX Soars Above Resistance With A Global Tide

by Greg Schnell

Commodity countries have been trying to find a bid for a while.This week, Toronto closed at 2 year highs, well above resistance.This is the first close above 13000 in 2 years.The link is here. $TSX Here is a chart of other major indexes breaking out. Live link for the global breakout. India has pushed above 4 similar highs this year. Australia broke out in September with Germany and France. Korea moved above in October. Italy and Spain (not shown) have also broken out to the upside. The All World Vanguard fund shown at the bottom has broken out. Two Read More 

ChartWatchers

Gaps Created By Earnings Surprises

by Tom Bowley

I've mentioned it before, but I'll say it again.  I LOVE trading stocks (in bull markets) that gap higher on better-than-expected revenues and earnings and very strong volume as it's a sign of great management execution and investor accumulation.  That combination is difficult to beat when owning stocks as it's proven to generate not only short-term outperformers, but also long-term winners.  I'm more interest in the former though - short-term outperformers.  That's what trading is all about - beating the benchmark S&P 500.  I'll get back to trading gaps in a Read More 

ChartWatchers

Financials Lead Stock Market to New Highs

by Arthur Hill

Stocks went on a tear the last two weeks with all indices and sectors moving higher. In the past week, we saw fresh 52-week highs in the Russell 2000 (small-caps), Nasdaq (techs) and the S&P 500 (broader market). These new highs affirm the long-term uptrends in stocks and we have yet to see any divergences among the major stock indices. Among the sectors, the Technology SPDR, Finance SPDR, Consumer Discretionary SPDR, Energy SPDR and Healthcare SPDR recorded new highs this week. Outside of the Google-led move in technology, I was most impressed with the performance of financials over Read More 

ChartWatchers

Where Are You on Your Technical Investing Journey?

by Chip Anderson

Hello Fellow ChartWatchers! Whether you realize it or not, all ChartWatchers are on a journey of self-improvement.  We are all trying to become better stock market investors.  As users of StockCharts, our journeys have many similar paths and common milestones.  See if you recognize the steps that I have described below.  As you read through them, ask yourself "Where am I right now on this path and what is my next step?" Stage I - Discovery & Experimenting with SharpCharts At some point, you discovered StockCharts.com.  It may have been via a Read More 

ChartWatchers

U.S. Dollar Index Falls to Two-Year Low

by John Murphy

The U.S. dollar continues to weaken. Chart 1 shows the PowerShares US Dollar Bullish Fund (UUP) falling to the lowest level since the third quarter of 2011. One of the side-effects of a falling dollar is that it gives a boost to gold. And it's doing just that. Chart 2 shows the SPDR Gold Trust (GLD) gapping 3% higher today. In so doing, it is rising above a falling trendline drawn drawn over its August/September peaks. The 14-day RSI line (top of chart) is about to rise above 50 for the first time in two months. And the daily MACD lines (bottom of chart) appear poised to turn positive for Read More 

ChartWatchers

Persistent Bull

by Carl Swenlin

A month ago the market seemed to be setting up for an intermediate-term correction. On the month-old chart below we can see a bearish rising wedge accompanied by negative divergences in price, breadth, and volume. Our comments at the time: "We expect the SPX to correct down to the rising trend line drawn from the November 2012 price low. The condition of the intermediate-term indicators suggests that that support may not hold this time around." Referring to the most recent chart below, as it turns out, we were right to the extent that the SPX corrected down to the rising Read More 

ChartWatchers

Don't Fall for "Visual Coincidences" on Overlaid Charts

by Chip Anderson

Hello Fellow ChartWatchers! We have several bearish-sounding articles for you this week as several of the major markets continue moving lower.  The Dow has been down 9 of the past 12 trading days and its chart reflects that decline.  However all is not lost.  There are still some positive developments if you know where to look.  Check out this PerfChart of the major markets for that same period of time: The Nasdaq and the Russell 2000 are bucking that large-cap downtrend in a very significant way.  Will that trend continue?  If so, for Read More 

ChartWatchers

Time For Earnings Season

by Tom Bowley

As a trader, this is my favorite time of each quarter.  I love it when earnings begin to roll out because the increased volatility generally sets up excellent trading opportunities.  In early April, I wrote about the strong earnings report that Nike (NKE) enjoyed in March and I highlighted a strong reward to risk entry point.  For a refresher, take a look: NKE posted better than expected revenues and earnings, then buyers bid the shares up immediately on massive volume.  I don't like to chase these moves, but once I see the accumulation, I wait for a pullback to Read More 

ChartWatchers

U.S. Stocks Weaken Versus Foreign Stocks

by John Murphy

My last message discussed how money was starting to rotate out of an over-extended U.S. stock market into foreign stocks which are trying to catch up to the U.S. market. This message will build on that theme by using ratio (or relative strength analysis). Chart 1 plots a ratio of the S&P 500 versus the EAFE iShares (EFA) over the last year. The EAFE represents developed foreign stocks in Europe, Australasis, and the Far East. After rising between January and June, the U.S./EAFE ratio peaked in July and has fallen since then. [The peak in the ratio coincided with peak in the U.S Read More 

ChartWatchers

The Commodities Try To Find Support

by Greg Schnell

The global expansion has been tepid at best. One of the indicators I like to look at is the commodities demand.The easiest way to check that is to compare the commodities to the 10 Week MA. Here is the Commodities Dashboard I like to scan. Click here for a live version.You can see we had a nice uptrend since the June lows. One of the most difficult parts of this market has been the continuous start stop of the commodities cycle.Here we see gold and $WTIC (West Texas Crude) falling below the 10 week. Lumber and Copper remain above as does the $TSX.We need to see renewed Read More 

ChartWatchers

Rydex Ratio in the Danger Zone

by Carl Swenlin

The Rydex Ratio has reached a level where it is telling us that sentiment is too bullish, and that stock prices are vulnerable. The Rydex Ratio gives a view of sentiment extremes using using the totals of assets in Rydex mutual funds. It is calculated by dividing Money Market Assets plus Bear Funds Assets by Bull Funds Assets. We display the indicator with the scale reversed so that interpretation can be more intuitive. The unique feature of the Ratio is that it measures sentiment based upon where people are actually deploying real money, not just an opinion poll. Currently Read More 

ChartWatchers

Relative Strength in Small-caps Supports the Current Bull Market

by Arthur Hill

The Russell 2000 ($RUT) and the Nasdaq ($COMPQ) are leading the relative performance game and this is positive for the stock market. The Russell 2000 represents small-caps and the Nasdaq represents the technology sector. Together, these two represent risk appetite because their stocks have higher betas, which translates into higher volatility. The appetite for risk is strong when these two lead and weak when these two lag. Also note that small-caps are less diversified and more dependent on the domestic economy. This makes small-caps the proverbial canaries in the economic coalmine Read More