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February 2015

ChartWatchers

Too Much Information Running Through My Brain

by Chip Anderson

Hello Fellow ChartWatchers! The markets all moved higher this week with the Dow setting a new all-time high on Friday and the Nasdaq moving to within spitting distance of 5000.  Since the start of 2015, the Nasdaq has been on a tear, gaining over 4.6%.  Here's a link to our Major Averages PerfChart that shows YTD performance so far.  For more on the markets, skip on down to John Murphy's and Arthur Hill's commentary.  I'm going to spend the rest of this article talking about how to get the most out of all the market commentary we put out each week. Read More 

ChartWatchers

Nasdaq Nears Test of 2000 High

by John Murphy

The monthly bars in the chart below shows the Nasdaq Composite ending the week just 177 points (3.5%) from its March 2000 intra-day high at 5132. [It's only 93 points (1.9%) from its 2000 closing high at 5048]. There's little doubt that it will reach that major milestone in short order. The question is what will happen when it gets there. It's not unusual for a major index to encounter some profit-taking when it reaches a major previous peak. But I doubt it will mark a major top. Although it's currently the only U.S. stock index that hasn't hit a record, that doesn't mean that it Read More 

ChartWatchers

Defensive Stocks Lagging Although One Group Poised For Rebound

by Tom Bowley

We've seen a very nice rally in U.S. equities during February, erasing all of January's losses with most of our major indices now breaking out to all-time highs.  The NASDAQ has been leading the charge and that indicates that we're in a "risk on" environment, which is bullish for equities.  Confirming that bullish environment is the relative performance of consumer discretionary stocks (XLY) vs. consumer staples stocks (XLP).  In my last article, I provided a chart of the XLY showing the breakout that occurred in early February.  Home construction ($DJUSHB) was a leader Read More 

ChartWatchers

Ebay (EBAY) Wears Out The Buyers And The Sellers At This Auction

by Greg Schnell

There is a relatively new song "Its all about the base" that jingles in my head every time I see these big broad trading ranges set up. Ebay is destined to be a classic technical analysis story when it breaks out from this consolidation. FireEye (FEYE) just broke out of one for a recent example. On September 30th, 2014, Ebay Inc. (EBAY) announced that they were going to split out Paypal into a separate company under a new IPO. I couldn't find a date for the IPO, but the stock has been waiting for something. The only thing that paces back and forth more is a momma bear Read More 

ChartWatchers

Adding a Systematic Touch with P&F Charts

by Arthur Hill

Chartists looking to filter small price movements and add a systematic touch to their analysis can turn to Point & Figure charts. Chart 1 shows a 60-minute P&F chart for the **S&P 500** and each box is five points. With a traditional 3-box reversal setting, this means a move greater than 15 points is needed to reverse a column. Note that the X-Columns represent rising prices and the O-Columns represent falling prices. Even though this P&F chart is based on intraday prices (60 minute), it **extends back to mid October and captures the medium-term trend quite well**. Before Read More 

ChartWatchers

Utilities Sector Failing

by Erin Swenlin

On Friday's DecisionPoint Alert Report, the Utilities SPDR (XLU) went on a Neutral signal. It's sister, the equal-weight Rydex version (RYU) remains on a BUY signal. It appears that it will flip next week to a Neutral signal as well. We see that Intermediate-Term Trend Model generated the Neutral signal on XLU when the 20-EMA crossed below the 50-EMA. It didn't generate a SELL signal because the 50-EMA is above the 200-EMA. When the 50-EMA is above the 200-EMA we consider XLU to be in a "bull market". Price has been flirting with rising bottoms support drawn from the August 2014 low but Read More 

ChartWatchers

London Calling, Part Deux

by Chip Anderson

Hello Fellow ChartWatchers! Friday's jobs report threw things for a bit of a loop as the markets all moved lower on the final day of the week.  But all-in-all it was a positive week for every major average with the DJIA leading the way up over 3.8%.  Later in this newsletter, John Murphy will explain the implications of Friday's jobs report on the bond market and then Arthur and Greg will look at the sector consequences.  On the other hand, I need to use the rest of my article to tell you about our latest major announcement London Read More 

ChartWatchers

The Sectors Had Major Trend Changes This Week

by Greg Schnell

The Utility sector has had major changes in the relative performance this week. It wasn't just Friday as there appears to be another major event that changed the focus. First of all, let me describe the chart. When each of these are trending higher, Utilities are performing better than the other sector being compared to in each ratio. When these graphs start breaking trend lines, it is helpful to see the changes in the market. In the last week, this sector really started to let go. But the peak coincides with another major event that Read More 

ChartWatchers

Strong Jobs Report Push Rates Higher

by John Murphy

A strong jobs report on Friday pushed interest rates sharply higher all across the yield curve. The daily bars in Chart 1 show the 10-Year Treasury Note yield jumping to the highest close in a month. [Bond prices fell sharply as a result]. Short-term rates jumped even more. Chart 2 shows the 2-Year Treasury Yield jumping to a monthly high as well. That big jump in rates helped banks and brokers have a strong day, but caused heavy selling in rate-sensitive groups like REITs and utilities. Higher rates and a stronger dollar also hurt gold. The stock market ended the day on the downside after Read More 

ChartWatchers

Consumer Discretionary Stocks Fuel Rally

by Tom Bowley

There's been much said and written about rapidly-declining crude oil prices ($WTIC).  But one thing makes perfect sense to me.  When American consumers save TONS of money when filling up at the pump, they tend to spend it elsewhere.  It's simply what we like to do - SPEND!  So it's not too surprising to me that many consumer discretionary companies are beginning to see huge benefits in terms of price appreciation.  First, check out the breakout on Friday on the XLY: The Federal Reserve, for the past several years, has been flooding the market Read More 

ChartWatchers

Three Relative Performance Indicators Turn Up for XLB

by Arthur Hill

The Materials SPDR (XLB) sprang to life on the price chart and three relative strength indicators broke out. On the price chart, XLB surged in October-November and then consolidated in December-January with a big triangle. Trading was certainly choppy within the triangle, but the ETF finally made a decisive break above the December-January highs. This breakouts signals a continuation of the Oct-Nov advance and projects a move to new highs. Chartists can mark first support near broken resistance (49) and long-term support in the 46.5-47 area. Within the group, note that Air Read More