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April 2015

ChartWatchers

Getting the Point of Point & Figure Charts

by Chip Anderson

Hello Fellow ChartWatchers! Over the past couple of weeks, we been revamping our Point & Figure charting tool.  The new version was released last week.  It has several key improvements including: You can now add up to 6 chart overlays per chart You can save your settings as the "Default" P&F settings and they will be used for all new P&F charts you create The parameter boxes for the various Scaling options now only appear when the corresponding Scaling option is chosen Price Objectives are controlled by the "Price Objective" dropdown Read More 

ChartWatchers

Cycle Chart from Last Week's DecisionPoint LIVE! Webinar

by Erin Swenlin

Carl presented his chart that illustrates typical market cycles at our DecisionPoint LIVE! Webinar last Wednesday (Here is a link to that broadcast). (P.S. Don't miss the next episode! Watch for the link on the homepage this week under "What's New"') As Carl said during the webinar, I should have a picture of him to accompany this chart with his hands thrown up in the air, eyes watering and his tousled hair sticking straight out from pulling on it while attempting to create the chart! Cycle analysis like technical analysis Read More 

ChartWatchers

Chinese ETFs Drop 5% on Friday

by John Murphy

Chinese stocks have been on a tear over the last year. Mainland stocks are up 25% just this year. They were probably due for a pullback and they got one on Friday. Chinese authorities tightened rules on margin selling (and made it easier to do short selling). But they did it after the Chinese stock market had closed. That explains why the Shanghai market showed gains on Friday. The selling was reflected in Chinese ETFs which trade all day. Chart 1 shows the CSI 300 China A-Shares Fund (which tracks stocks in Shanghai and Shenzen) tumbling 5% in heavy trading. The ASHR, however, still Read More 

ChartWatchers

Decisive to a Fault

by John Hopkins

As traders we are faced with multiple decisions each day. This could include deciding when to enter a trade, deciding if what we see on a chart is valid, deciding what a reasonable price target might be and deciding where to place a stop loss in case a trade goes against us. And these are just a few examples, let alone having to be ready to quickly change strategies without much warning if necessary. The decision making process is made much easier if we feel confident with our work. For example, if I am confident in my technical analysis skills, it gives me an advantage over those who Read More 

ChartWatchers

Are Banks Topping or Pausing Before Next Rally?

by Tom Bowley

I know looking at one industry group is taking a very small sample of the entire stock market, but throughout much of history the stock market has performed strongest when financial stocks, especially banks, at least go along for the ride.  Let me show you a long-term chart of the S&P 500 and break down its performance based on bank performance relative to the S&P 500.  Check this out: Generally, the S&P 500 tends to perform best when we see leadership from banks.  Banks don't need to be the "leader" but they need to at least perform as well as the overall Read More 

ChartWatchers

Separating the Short Term Island from the Long Term Trend

by Arthur Hill

With a gap up and a gap down, the S&P 500 SPDR (SPY) formed an island reversal over the last four days. This is short-term bearish, but not enough to affect the longer trend, which is still up. To emphasize the short-term nature of this reversal, I am going to start with a 30 minute bar chart. The Raff Regression Channel defines the short-term uptrend extending up from April 1st to April 16th. SPY gapped up on April 15th, held this gap for two days, and then gapped down on April 17th. The blue zone represents a price island above both gaps. Traders establishing long positions on the Read More 

ChartWatchers

Finding Diamonds In The Rough - The Four C's - Clarity, Canada, China, Commodities

by Greg Schnell

It has been a very interesting week for Canada, China, Commodities and job cuts. Friday morning had the non-farm payrolls number come in about 1/2 of what was expected by economists which was well below estimates for the first time in a while. Now we have reached some critical points on the relative strength charts that are pointing to better 'off shore' results for investors. This payroll data might be a clue to why this is happening. These hints have been showing up for a while now in the Shanghai market along with Australia, Japan and Europe. But if you're a Read More 

ChartWatchers

Why Look At Other Stocks? Using SCTRs to Narrow Your Search for Winning Stocks

by Chip Anderson

Hello Fellow ChartWatchers! The other day I was out with my Dad and he said "Boy, the market has been really volatile recently hasn't it?"   And I said "Umm, not really. Where did you hear that?"  "All the cable news channels are talking about it."  And then, in my whiniest voice, I said "D-a-a-a-d.  I've told you again and again to be skeptical of those programs."  He knew I was joking but there was some truth to it also.  I pulled out my computer, brought up StockCharts and showed him this specific PerfChart: (Click Read More 

ChartWatchers

China Leads Emerging Market Rally

by John Murphy

Emerging markets usually do better when Treasury yields are dropping along with the dollar. Which may help explain why emerging markets were among the world's strongest stocks this week. The red daily bars in the first chart show Emerging Markets iShares (EEM) ending the week at a new four-month high. It's also trying to clear its 200-day average. The rising green line is the WisdomTree Emerging Markets Currency Fund (CEW). It started rising with the EEM in mid-March. That suggests that a weaker U.S. dollar is part of the reason for money flows into emerging assets. [Higher U.S. rates, and Read More 

ChartWatchers

Technical Analysis Skills Wasted

by John Hopkins

Trading stocks is never for the faint of heart. It requires great skill and discipline to consistently succeed. For those who believe technical analysis is an important part of trading, learning to read and interpret charts is a very important part of the equation. Understanding technical analysis alone does not guarantee positive results. In fact, one could argue that some traders spend too much time trying to perfect their chart reading skills while ignoring everything else that must be considered in order to make a successful trade. For example, you might be superb at identifying key Read More 

ChartWatchers

DecisionPoint Intraday ChartPack - A Must Have

by Erin Swenlin

I use this ChartPack during every trading day. It is absolutely invaluable and a "must-have" for any of you who tend to find yourself glued to StockCharts when the market is open. The beauty of this ChartPack, it is only one ChartList, so for any of you that are running short on List space, this one won't really cut into your space like some of our more indicator rich ChartPacks. The DecisionPoint Intraday ChartPack can be downloaded quite easily from "Your Account" page. For more detail on downloading and installing a DecisionPoint ChartPack, you can read the blog Read More 

ChartWatchers

Negative Divergence Hampers Electrical Components & Equipment Stocks

by Tom Bowley

Two months ago, there weren't many better looking industry groups than the Dow Jones US Electrical Components & Equipment Index ($DJUSEC).  The breakout above price resistance was clear, but after a continuing advance of another 10% into mid-March, the DJUSEC ran into technical issues.  Take a look at the daily chart: The 272 price resistance was formidable as we had seen several tops at or near this level before finally making the breakout to begin February.  Now fast forward to check out the technical problems in mid-March.  A long-term negative divergence had Read More 

ChartWatchers

Why is Price Action So Important?

by Arthur Hill

Technical analysis cuts to the chase by showing us the only thing that matters: price. Even those using fundamental analysis can benefit from technical analysis because we only make money when prices move in the desired direction. Here are four ways technical analysis can improve your investment returns.    1. All known information is already priced into the market or a stock's price. If you have read about it or heard it on the news, everyone else has as well and has already reacted. There is, therefore, little to be gained by acting on the news. Price represents the sum total Read More