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October 2014

ChartWatchers

GOLD: Support Fails

by Carl Swenlin

We have been watching gold for a possible triple bottom, a base for the next strong rally. Earlier this month gold bounced off an important support line, offering hope to gold bulls that the third bottom in the series would be successful. However, the price of gold has slipped badly in the last two weeks, and on Friday the triple bottom support line failed to hold. The weekly chart shows the big picture. While the triple bottom looked tempting, the consolidation of the last year was a negative continuation pattern, meaning that it would most likely resolve downward Read More 

ChartWatchers

Answering Our Top Two Questions

by Chip Anderson

Hello Fellow ChartWatchers! Friday's rally changed last week's Dow candlestick from a big filled candle into more of a big Hammer (although not a perfect one).  After Friday's rally, the Dow finished the week down 1% as did the S&P 500 Large Caps.  The big winner for the week was the Russell 2000 which was up over 2.75%(!).  For more on this and the longer-term meaning of these moves, check out what John, Art, Greg, Carl and Tom have to say below. I'm going to spend some time today answering the two most common questions people ask us during our very successful Read More 

ChartWatchers

CRB Index is Testing Major Support

by John Murphy

Today's message takes a look at commodity prices because they've been the focus of a lot of attention of late. That's because falling commodity prices are deflationary in nature, which is something central bankers are trying to stop. The weekly bars in Chart 1 show the CRB Index of nineteen commodities threatening a support line drawn under its 2012/2013 lows. Crude oil weakness has been a big drag on the commodity index (black bars). Despite a midweek bounce in crude, signs of a major bottom are still lacking. One of the main catalysts behind the commodity drop has been a rising dollar Read More 

ChartWatchers

Weakness Confirms Earlier Bearish Signals

by Tom Bowley

Make no mistake about it, volume has exploded and stock prices have fallen and lost key support levels.  That combination is bearish in and of itself.  But the part that really bothers me is that intermarket warning signs have been flashing for months so this high volume market drop confirms that we're likely in for more weakness before the stock market improves. One warning sign that I began discussing several months ago was the relative weakness in small cap stocks.  The Russell 2000 topped in early March and did not follow the other major indices to fresh new highs over Read More 

ChartWatchers

DIA Forges Island Reversal off Support Zone (video)

by Arthur Hill

The Dow Diamonds (DIA) showed signs of a selling climax last week and forged an island reversal to end the week. First, let's look at the indicators to suggest that we had a selling climax or capitulation of sorts. A selling climax involves a very sharp decline with extremely high volume. Price-wise, DIA fell over 8% from high to low, 10-period RSI moved below 30 and the 10-day Slope indicator hit -1. These indicators confirm that DIA fell sharply in a short period of time. Volume-wise, the Volume Oscillator (5,100,1) surged above 100 and this means the 5-day average of volume was over Read More 

ChartWatchers

The Nuclear Option Rolls Over

by Greg Schnell

In this world of crosscurrents and 10% pullbacks, The Nuclear ETF (NLR) was no different. It has made about a 10% pullback off the highs. But unlike the S&P 500 ($SPX), the NLR made it's highs in March not September. So while this looks the same it feels different. We have broken down through the support level and have competed a rounded top or double top. This is an important chart to watch right now. Why now? Well, it closed back above the support level from the topping structure. All the weekly indicators are sitting at important levels like the MACD at 0 Read More 

ChartWatchers

Important Cycle Low Due Soon

by Carl Swenlin

Fair warning! If you read this article and get hooked on cycle analysis, you will rue the day. If we look at price charts, we can clearly see that prices move up and down in cycles, but trying to use this tool can be frustrating beyond words. There are certainly others who are better at it than I, but I have kept an eye on cycles throughout the years. In the last few years I have pretty much ignored cycles, because they have more or less disappeared under the mountain of money printed by the Fed, but I noticed that they seem to have reappeared since the February price low. So, while I have Read More 

ChartWatchers

PMO Analysis Identifies Short-Term Extremely Oversold Conditions

by Erin Swenlin

The Price Momentum Oscillator (PMO) is a measure of internal strength and momentum. You can read more about the PMO in ChartSchool. Every stock, index, ETF, mutual fund has a PMO value each day. It can be rising or falling, have a crossover BUY signal (or not) generated by the PMO crossing above its 10-EMA, and finally, it can have a value above or below zero. We calculate PMO Analysis charts based on those criteria. Note that you can only generate a PMO Analysis chart for an index or sector ETF because is comprised of a group of stocks. Since we are looking at percentages, we calculate Read More 

ChartWatchers

Nikkei Tries to Hold Breakout

by Greg Schnell

I have been very interested to watch the Japanese Equity Market ($NIKK) to see if it can hold the breakout from the 25 year trend line. First of all, here is a long chart. Why does this matter? When a long trend line breaks it is usually very important. Lets zoom in on the last year: If this breakout fails, it usually will be a meaningful plunge down instead. We can see it closed back at the trend line on Friday. If the $NIKK can break out it will be powerful. The fact that the Yen closed near the lows but was an outside day is interesting. If the Yen started to Read More 

ChartWatchers

Small Cap Head and Shoulders Top?

by John Murphy

A debate is going on within the technical community as to whether or not the Russell 2000 Small Cap Index is in danger of completing a "head and shoulders top". A case can certainly made for it, although it would be an unusual one. The daily bars in Chart 1 show Russell 2000 iShares forming two smaller peaks (shoulders) during January and late August. In between those two lower "shoulders" a "double top" was formed between March and early July. While it might not qualify as a textbook "H&S" top, the bearish warning is still valid. At the moment, the Russell 2000 iShares (IWM) are Read More 

ChartWatchers

Next Up: Earnings Season

by Tom Bowley

The Fed is winding down its asset purchase program and the historically weak month of September is now behind us.  So what's in store next?  Earnings season.  The stock market sends us signals all the time and given the recent performance of certain sectors and industry groups, we can surmise where to look for positive earnings surprises.  One of the best looking areas of the market technically right now is investment services ($DJUSSB).  Off the early August lows, the DJUSSB rose sharply (approximately 13%) over the next 6-7 weeks.  During this same period Read More 

ChartWatchers

Two Valuable Gems from Arthur and Greg

by Chip Anderson

Hello Fellow ChartWatchers! It was definitely a roller coaster ride for stocks this week.  The bears were firmly in control on Wednesday but then the Bulls roared back Friday on the strength of the US Employment numbers.  A quick glance at the Market Cap PerfChart shows that Large Caps were the big "winner" last week while Mid-Caps lost twice as much. All this squabbling shows up clearly on the broader index charts as well.  Have you checked out the charts in Arthur Hill’s free “Market in a Nutshell” ChartPack recently? Read More 

ChartWatchers

SPY Forges 3-Stick Reversal at Key Retracement (video)

by Arthur Hill

The S&P 500 SPDR (SPY) appears to be putting in another higher low that could signal the resumption of the long-term uptrend. First and foremost the long-term trend is up because SPY recorded a 52-week high less than three weeks ago. In addition, the charts shows a clear progression of rising peaks and rising troughs. Under this assumption, declines are viewed as corrections within the long-term uptrend. A reversal of this decline would end the correction and argue for a move to new highs.  The chart below shows the ETF becoming oversold as CCI moved below Read More