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May 2015

ChartWatchers

Transports and Utilities are Holding Market Back

by John Murphy

I've been writing about the continuing discrepancy between three Dow Averages. But things may be starting to improve. Chart 1 shows the Dow Industrials closing at a three-month high and just shy of its early March peak. [The S&P 500 ended at a record close]. All of this is good. Volume, however, didn't pick up much which shows a certain lack of enthusiasm. I've been suggesting that the industrials are being held back by much weaker action in transportation and utility stocks. Chart 2 shows the Dow Transports trading below its 200-day moving average and near the bottom of its 2015 Read More 

ChartWatchers

Sector P/E Ratios Fall Into Two Groups

by Chip Anderson

Hello Fellow ChartWatchers! Last time I reviewed our PE Ratio symbols for several major indexes (!PEDOW,!PESPX, !PEOEX, and !PENDX) and promised that this time around I'd show you the PE Ratio symbols we have for the nine S&P Sectors.  Promise fulfilled! (click for live version) This chart contains P/E lines for 6 of the 9 S&P sectors.  You can see their symbols in the legend of the chart.   Note that I added these indexes to this chart using the "Price (Same Scale)" _overlay_ instead of the "Price" indicator.  That ensures Read More 

ChartWatchers

Natural Gas ($NATGAS) Buyers Are Showing Up In May

by Greg Schnell

Natural Gas ($NATGAS) has had a flickering pilot light since February 2014.  During November, 2014, Natural Gas finally got back above the 200 DMA only to lure in buyers and then starting falling. By February it had lost 40% so this is always a market that having a stop in is essential. As we head into Air Conditioning season, this can be a good time in the market for Natural Gas. Chart 1 On the lower part of Chart 1, I show the correlation of Natural Gas to the US Dollar ($USD). They correlate poorly. So it would appear it does not Read More 

ChartWatchers

Trend Model Joins PMO with BUY Signal on Gold

by Erin Swenlin

As of 5/16/2015 Gold is on a Trend Model BUY signal. The 20-EMA crossed above the 50-EMA triggering the new intermediate-term Trend Model to initiate a BUY signal. The long-term Trend Model, which informs our long-term outlook, is on a SELL signal as of 2/15/2013, so our long-term posture is bearish. The long-term Trend Model is dependent on the location of the 50-EMA and 200-EMA. Simply put, when the 50-EMA is above the 200-EMA it's in a "bull market" and when the 50-EMA is below the 200-EMA it's in a "bear market". Gold is teasing us. Wednesday it nearly Read More 

ChartWatchers

Consumer Electronics Need A Wake Up Call

by Tom Bowley

Over the past month, the Consumer Electronics Index ($DJUSCE) has fallen close to 9%, which ranks it as the third worst performing industry group.  Only gambling stocks (-12.64%) and business training & employment agencies (-15.68%) - two consumer discretionary industry groups - have performed worse.  Normally, I tend to steer clear of underperforming areas of the market, but many times in a rotating bull market they can provide some of the best opportunities.  Earlier in 2015, I wrote about two areas of technology that were lagging badly - computer services and Read More 

ChartWatchers

Weakening Dollar Boosts Large-cap Stocks

by Arthur Hill

The falling Dollar is boosting large-caps and they are outperforming small-caps. This makes sense because large-caps are typically multinational companies that derive a good portion of their revenue abroad. The Financial Times estimates that companies in the S&P 500 generate around 40% of their revenues abroad. These foreign earnings must be converted to Dollars and a strong Dollar translates into lower earnings. A weaker Dollar, on the other hand, helps the bottom line for companies that generate revenues abroad.  Chartists can see this relationship in action by comparing Read More 

ChartWatchers

Index P/E Charts Can Show You If the Market is Too Expensive Right Now

by Chip Anderson

Hello Fellow ChartWatchers! Is the market too expensive right now?  Our P/E ratios for the various market indexes can show you the answer to that question.  Currently, we have P/E values for the following indexes: The Dow (!PEDOW) The S&P 500 (!PESPX) The S&P 100 (!PEOEX) The Nasdaq 100 (!PENDX) These symbols are updated on a daily basis after the market closes.  Basically, we add up all the prices (i.e., closing values) for each stock in those groups and then we divide that total by the total of the TTM Earnings value for each of those stocks.  We Read More 

ChartWatchers

Do Earnings Really Matter?

by John Hopkins

And the answer isYou bet! Why do earnings reports matter? Because it gives investors a quarterly snapshot of how a company is performing and what they can look forward to down the road. And when you stop to think about it, when you filter out everything else out there going on day to day, just about the only thing investors care about is a company's bottom line. All of us have seen instances where a company comes out with earnings that blow away expectations only to see the stock tank after hours. But that usually happens when, a)The market has already priced in blow out numbers Read More 

ChartWatchers

Are Bonds About To Take A Major Dive?

by Greg Schnell

The long bond price looks to be at a level of major reversal. Diving into the chart, we can see that the PPO is at another one of the extreme levels in the entire 30 year bond run. The extreme reading on the MACD is not as clear a signal because the MACD will form higher waves as the price moves higher. The PPO is a percentage oscillator. It shows us when there is an extreme percentage price move. So a 4% move on the PPO is significant throughout the time frame of the chart. The bond price bottomed out in 2014 after a nice divergence showed up on both the PPO and the Read More 

ChartWatchers

Ultra-Short Term Spikes Bullish

by Erin Swenlin

Last week was not only an interesting for price, ultra-short-term indicators finally woke up. With indicators staying mostly mum this week, it was exciting to see movement in the shorter-term. Below is a chart of our ultra-short-term indicators taken from the DP Chart Gallery (available free here). When observing our ultra-short-term indicator chart, we look for climactic movement, that is, spikes in one direction or the other. In the case of the chart below, on Thursday we saw spikes on the Climactic Volume Indicator (CVI) and Participation Index - DOWN. You will also notice in the Read More 

ChartWatchers

Place Your Wagers Please

by Tom Bowley

It's Kentucky Derby Day so of course!  Oops, wrong blog!  :-) We know that the stock market goes through periods of consolidation and rotation.  Groups that lead for a period of time eventually fall out of favor as new groups emerge as leaders.  Then we rinse and repeat.  So the question is whether it's time for the Dow Jones U.S. Gambling Index ($DJUSCA) to "repeat" because they are thoroughly rinsed, downright soaked, at this point.  On March 7, 2014, the DJUSCA hit an all-time high at 1096.46.  From that point through Friday's close, the Read More 

ChartWatchers

The Noose Tightens for the Finance SPDR

by Arthur Hill

The Finance SPDR (XLF) has become the most boring of the nine sector SPDRs over the last five weeks. Boring today does not mean it will be boring tomorrow though. The chart below shows the Finance SPDR (XLF) surging to new highs in December, bouncing around in January-February and then moving into a narrowing range. The pink shaded area shows the Bollinger Bands in area format and the distance between the bands is the narrowest in years. We can quantify this by adding the BandWidth indicator, which is at its lowest level in years as well. The low Bandwidth tells us that volatility is Read More