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July 2014

ChartWatchers

Rolling with the Changes - RRG Charts Come to StockCharts!

by Chip Anderson

Hello Fellow ChartWatchers! Long-time members know that I am always thrilled whenever I can start my article with the phrase "Today I am thrilled to announce".  And that phrase has been used so much in 2014 that it is starting to lose all meaning.  As I mentioned in recent newsletters, we have added so many important new things to the website this year, but this week I do have something really special for you Relative Rotation Graph (RRG) Charts Now Available! Today I am thrilled to announce that Relative Rotation Graph (RRG) charts are now available on StockCharts.com Read More 

ChartWatchers

Now Is The Time For The XLY To Breakout

by Greg Schnell

The Consumer Discretionary Sector SPDR (XLY) is a very important barometer in the US investing landscape. It sits on the edge of a breakout to new highs. July / August is typically the time frame that investors start to rotate into the discretionary stocks to position for the back to school stock up event and the massive Christmas shopping season. With the midst of earnings season upon us, option expiry yesterday and a few of the long trends showing weakness, it is an important time for the cyclicals to show strength. First of all a real quick check of the month long Read More 

ChartWatchers

Mortgage Finance At Major Support

by Tom Bowley

Financial stocks have lagged throughout 2014 and are showing signs of slowing momentum.  That's keeping hope alive for the bears.  The XLF (ETF tracking financial stocks) has a clear long-term negative divergence in play on its MACD as you can see from the chart below: Most of the strength, however, has been concentrated in REITs, the defensive area of financials.  That's not exactly where I'd like to see the strength centered, but it is what it is.  One area of financials - mortgage finance ($DJUSMF) - has been lagging very badly as that industry group has dropped Read More 

ChartWatchers

Small Caps Continue to Lag Behind

by John Murphy

One of the nagging concerns about the current market rally is the lack of participation by small cap stocks. This week's action was another example of that troubling trend. The Russell 2000 Small Cap Index lost -0.72% this week (versus a +0.54 gain by the S&P 500 Large Cap Index). In a strong uptrend, small caps should be rising with large caps. Chart 4 shows the early July top in the Russell 2000 failing to overcome its early March peak and losing 4.5% since then. The RUT/SPX relative strength ratio (below the chart) shows how badly small caps have lagged behind. Since March 4, small Read More 

ChartWatchers

Narrowing Yield Spread Weighs on Regional Banks

by Arthur Hill

The Regional Bank SPDR (KRE) failed to hold its flag breakout and then broke support with a sharp decline this week. It would now appear that KRE formed a rising wedge that peaked below the January high. This week's wedge break signals a continuation of the prior decline and projects a move below the May low. This week's high and the trend line break to mark a resistance zone in the 40-40.5 area. With the upswing reversed, chartists can also consider a larger bearish pattern taking shape. Combined with a relatively equal high in January, a large head-and-shoulders reversal pattern could be Read More 

ChartWatchers

Is The Euro Carrying Critical Information For Commodities Direction?

by Greg Schnell

This week was an important week on a lot of the commodity charts. Most of them surged up to major long term resistance lines with a few of them breaking through. But it is the Euro Currency Charts that look critical right here. If major support should fail on the Euro ($XEU) , that would indicate a rise in the US Dollar ($USD). A major push in the $USD usually has downward pressure on commodity prices.  Lets look Monthly, Weekly and Daily to see the full picture.We can see on the Monthly, the Euro recently peaked out at a key long term support resistance area. After pushing up Read More 

ChartWatchers

What to Expect in the Second Half of 2014

by Chip Anderson

Hello Fellow ChartWatchers! 2014 has already been full of surprises both in the markets and here at StockCharts.com.  From a market perspective it has been yet another great year to be a technician assuming that you trusted the charts and not the talking heads and experts.   "The market is too high!"  "It's overdue for a pullback!"  "It is prudent to be on the sidelines in this environment."  Did you listen?  Or did you watch your charts instead?  Check out what this chart has been saying so far in 2014: First Read More 

ChartWatchers

Assessing The First Half of 2014

by Tom Bowley

It's been quite confusing for several reasons, a few of which are discussed below. Historically, the S&P 500 nearly always struggles during the balance of a calendar year in which January performance is weak.  In January 2014, the S&P 500 fell 3.56%, ranking it in the bottom quartile of all Januarys since 1950.  That rarely bodes well for equity performance over the next 11 months, yet the S&P 500 has risen in every calendar month since January and is up roughly 200 points and more than 11% since the end of January.  History has misled us - at least through June Read More 

ChartWatchers

Consumer Discretionary and Tech Join the Leadership Circle

by Arthur Hill

Relative weakness in the consumer discretionary sector was a concern a month ago, but not anymore. The first PerfChart shows the Consumer Discretionary SPDR (XLY), the Technology SPDR (XLK), the Energy SPDR (XLE) and the HealthCare SPDR (XLV) leading since June 3rd. XLY really came to life this past week with a new 52-week high and a gain that was greater than that of the S&P 500.  It is quite positive to see these two sectors leading the stock market. The consumer discretionary sector is the most economically sensitive sector and relative strength here is a Read More