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December 2013

ChartWatchers

2013 - The Year in Technicals

by Chip Anderson

Hello Fellow ChartWatchers! Well, 2013 is almost over - this is the last ChartWatchers newsletter until 2014 - and I thought now would be a good time to review some of the key technical developments during the past year. Things got off to a good start as stocks surged higher in early January when the "Fiscal Cliff" situation in Washington appeared to be resolved.  That sent small-caps into record territory where they stayed for essentially the entire rest of the year.  Small-caps outperformed large-caps during much of 2013 - a situation that was under reported by many Read More 

ChartWatchers

Prices Relative to Moving Averages

by Carl Swenlin

When a stock is above a moving average it is considered bullish, and the stock can be considered to be in a rising trend for that time frame. A good way to determine the market's condition (overbought/oversold) across a range of time frames is to analyze the percentage of stocks above their 20, 50, and 200 period exponential moving averages (EMAs). The following chart shows these percentages for the stocks in the S&P 500 Index. The most obvious features are the negative divergences that persist in all time frames. In this case the divergences show that as the market moves higher Read More 

ChartWatchers

Possible Upside Target for 10-Year Bond Yield is 3.75%

by John Murphy

Wednesday's Fed announcement that it would finally begin a modest tapering of bond purchases in January gave a slight boost to bond yields during the second half of the week. The daily bars in Chart 1 show the 10-Year Treasury Note Yield (TNX) backing off Friday from its September peak near 3%. Bond yields had already risen since October in anticipation of a possible Fed move. This week's muted reaction in bond yields, however, doesn't diminish odds that bond yields will probably be heading higher during 2014. That's due partially to reduced bond purchases. But it's also due to improving Read More 

ChartWatchers

Consumer Stocks Saying This Bull Market Is Sustainable

by Tom Bowley

It's quite easy to look at the S&P 500 and see if it's rallying or not.  But not every rally is created equal.  Many rallies carry significant warning signs that should have you running for cover.  Others simply invite you to jump on the train.Consumer stocks are telling us to jump on the train and ride this thing out.  As the S&P 500 closed at yet another record high on Friday, most "under the surface" signs remain quite bullish and suggest to me that this bull market still has legs.  Check out the following chart comparing the S&P 500, the XLY vs Read More 

ChartWatchers

Tech Stocks Take Charge as 2014 Approaches

by Arthur Hill

Key industry group ETFs within the technology sector are leading the market. This shows a healthy appetite for risk and bodes well for the economy. The PerfChart below shows one-month performance for the S&P 500 ETF (SPY) and six tech-related ETFs. The Nasdaq 100 ETF and the Nasdaq 100 Equal-Weight ETF (QQEW) are outperforming SPY by a two to one margin. The Biotech iShares (IBB), which represents some of the riskiest stocks in the market, is outperforming the broader market by 3 to 1. The Semiconductor SPDR (XSD), which represents the cyclical semiconductor group, is also Read More 

ChartWatchers

A Peak Inside Santa's Grab Bag for StockCharts' Users

by Chip Anderson

Hello Fellow ChartWatchers! Happy Holidays and Merry Christmas to you and yours from your good friends at StockCharts!   I have several important announcements I'm dying to tell you about but first a quick reminder that John, Arthur, Greg, Carl, Richard and Tom are all have articles later in this newsletter that provide perspective on this frustrating market.  You can read those articles first if you want and then come back here later.  Go ahead, I'll wait Are you back?  Terrific!  Here are several key things that will be happening at StockCharts Read More 

ChartWatchers

Don't Forget Historical Tendencies

by Tom Bowley

When I map out my trading strategies,  I consider fundamentals, especially quarterly earnings reports, but I FOCUS on technical indicators.  The study of price action helps to determine future price action, but note that it doesn't guarantee it.  The basic premise of trading is to set up the odds as best you can in your favor and manage the risk you take in order to achieve your trading objectives, whatever they might be.In a recent article, I discussed the market's tendency to move higher from the October 27th close to the January 19th close.  Take a look at this Read More 

ChartWatchers

US Dollar Bear Market

by Richard Rhodes

In the fundamental economic forum, the balance of economic data has been "positive" as of late with the exception of the housing market. And this data has engendered a belief that the Fed shall begin topullback on its bond-buying campaign - which shall simply be US Dollar positive. We don't believe so, for what is now being called the first world "synchronous expansion" since 2007 suggests that the relative nature of trading equities puts the European and Asian markets in a position to "out perform" in the years ahead. Hence, money shall leave the US for riskier markets if the viewpoint Read More 

ChartWatchers

Stocks Bounce Off Chart Support

by John Murphy

Friday's announcement that U.S. payrolls rose by 203,000 during November with the unemployment rate falling to 7% (the lowest level in five years) topped a week of encouraging economic news. Stocks rose strongly on that report, which suggests that good news is finally being recognized as good news. Recently, it seemed like every sign of economic strength raised concerns that it increased the odds for earlier Fed "tapering" of its monthly bond purchases which would push bond yields higher. Bond yields did jump initially on Friday before ending unchanged on the day. It should be remembered Read More 

ChartWatchers

The Energy Components Have A Great Month

by Greg Schnell

In the forest of information, sometimes the trends don't jump out easily.Rolling through my dashboard charts, I noticed the energy group was on a real roll for the last month.First of all, the big picture in crude oil is at technicians dream time and price. While dreamy may seem strong, look at the chart.The 5 year pennant for crude oil broke to the upside in July. The decision point at the apex of a pennant is pretty important.Should the centre line of the apex fail to hold, this would be considered a continuation pattern lower. The cycle arcs at the bottom have a pretty good track Read More 

ChartWatchers

Gold: A Chance for a Bottom

by Carl Swenlin

After making a bear market low in June, gold rallied about 20%. Then from the August top, price headed back down for a possible retest of the June low. There is a good chance that the retest will fail, sending bear market prices to lower levels, but there is also a good chance that a double bottom will form, possibly setting the base for a new bull market in gold. Price is currently pushing into the apex of a falling wedge formation. If it breaks up through the top of the wedge, which is the technical expectation, that would be the first step in forming the bullish double bottom Read More 

ChartWatchers

The January Effect Gets Earlier and Earlier

by Arthur Hill

The "January effect" refers to the propensity for stocks to outperform in January and for small-caps to outperform large-caps in January. According to this theory, stocks tend to rise more in January than most other months and small-caps tend to rise even more. Chartists looking to test these theories can put our new seasonality tool to work. As mentioned by Chip in ChartWatchers on November 23rd, the new seasonality tool gives StockCharts users the power to measure seasonal tendencies for any symbol. Chartists can even measure "relative" seasonality and compare the performance of one Read More