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July 2015

ChartWatchers

20-Year Treasuries ETF (TLT) Forms a Bullish Reversal Pattern

by Erin Swenlin

With the new Intermediate-Term Trend Model (ITTM) BUY signal on TLT and the breakout for the second time above the March low, I decided it was definitely time to abort the bearish Adam and Eve double-top pattern that I have been watching in earnest. Instead, I'm now seeing a rounded bottom; also known as a saucer bottom; it is a reversal chart pattern representing a long period of consolidation that turns from a bearish bias to a bullish bias (ChartSchool article on Rounded Bottoms located here). The Price Momentum Oscillator (PMO) has also been making a case to move bullish on Read More 

ChartWatchers

When Big Cap Tech Gaps Big

by Greg Schnell

Google broke out to new all time highs this morning after announcing earnings yesterday. The real problem for investors is after a huge move, what should investors do? I want to look at previous examples and end the article with the Google chart. Let's look at Netflix (NFLX). All of the gaps up after earnings are marked in pink. This chart is particularly volatile. But you can also see on the SCTR when it surges to become a top performer, it usually hangs in there for a while. Amazon (AMZN) had been losing its ability to Read More 

ChartWatchers

Google Leads the Internet Higher

by John Murphy

(Note: This article was originally published Thursday afternoon.) The Internet group has been leading the technology sector higher this week. The standout performer in that group is Google. The chart below shows Google (GOOGL) surging through its spring high to the highest level since last October. Interesingly, the stock has been a relative underperformer, as shown its falling relative strength line (above chart). The good news is that the stock's RS line has just broken a falling resistance line extending back to February 2014. Good absolute performance by the stock (upside Read More 

ChartWatchers

Why You Really Should Watch our Webinars

by Chip Anderson

Hello Fellow ChartWatchers! The stock market moved higher this week on good earnings news - but it is too early to conclude that the Bull are firmly back in charge.  Why?  One word - breadth.  Breadth and momentum.  OK, sorry, two, two words - breadth, momentum and seasonality.  THREE!  Three words - breadth, momentum and seasonality.   There.  Phew.   (If you don't get that Monty Python reference, click here.) But seriously, there are still big concerns about the internal strength of the markets right now including those three Read More 

ChartWatchers

Not Every Trade can be a Winner - But there are ways to Protect

by John Hopkins

As traders, all of us hope that each new position we take on becomes a winner. Realistically, we all know that some trades will turn out to be losers. In fact, one could argue that there are really three things that are certain in life; death, taxes and losing trades! There are way too many reasons to list why some trades turn into losses but a few of the most common include: -Improper analysis -Unexpected events -Missed earnings -Sudden downgrades -Failure to take profits In looking at those above it's hard to fault someone for an out of the blue event or a sudden Read More 

ChartWatchers

Internet Index Soars

by Tom Bowley

There's a reason we watch chart patterns.  Earlier this week in a DITC blog article, the internet index ($DJUSNS) finally cleared 900 resistance after failing at that level on a few occasions the past 18 months.  This latest attempt was different, however.  Many times it gets quite frustrating as continuation patterns develop.  The "I need to make money right now" crowd gets very impatient and loses faith in sectors or industry groups as they underperform for periods of time as money rotates within the market.  Those who use technical patterns simply bide their Read More 

ChartWatchers

Bulls-Eyes Are Great, but First Get the Arrow onto the Target

by Carl Swenlin

If you've ever practiced archery, you know that your ultimate objective is to put the arrow in the bulls-eye, but just putting it on the target still feels pretty good. While we aim at perfection, we'll happily settle for competence. If you are good enough to stay on the target, you'll score some points, and the odds are good that you'll even hit some bulls-eyes. When I was just beginning my studies in technical analysis, a friend and I were working independently to develop a magic bullet for investing. I had come up with an indicator that I believed predicted the direction and duration Read More 

ChartWatchers

Staring Into Asia, Specifically India

by Greg Schnell

The news from the Shanghai market has been expected for while. Parabolic rises seldom descend in a controlled manner. Lately, this dominates the Asian news feeds about markets. However, some of their neighbours are doing quite well. South Korea is doing well, but India is doing a little better currently. India has the world's best numbers from a demographic perspective so I'll spend the article today focused on India. Let's look at the market from India through the Bombay Stock Exchange ($BSE). Starting at the top, shown in purple, is the relative strength line of the $BSE Read More 

ChartWatchers

Home Construction ETF Leads and Holds Breakout

by Arthur Hill

The mixed performance of ten key industry group ETFs reflects the flat performance in the S&P 500 since early May. Note that the S&P 500 is virtually unchanged since April 30. As the PerfChart below shows, six of the industry group ETFs are up and four are down. The Biotech SPDR (XBI) is the clear leader with a 21% gain in two months, but I am most interested in the Retail SPDR (XRT), Home Construction iShares (ITB) and Regional Bank SPDR (KRE). These three are up and showing leadership recently. ITB is the third best performer with a 6+ percent gain.  Read More 

ChartWatchers

Higher Yields Mean Lower Utility Prices

by Tom Bowley

Utility stocks benefited as much as any sector during the unprecedented drop in treasury yields.  Those who seek income were forced out of treasuries the past several years because of historically low treasury yields and they found a home in utilities.  The problem now is that treasuries are being sold hand over fist and the rising 10 year treasury yield ($TNX) is making utility stocks less and less attractive.  This relationship can be seen quite clearly in the following chart: We have a break in the downtrend channel of the 10 year treasury yield and Read More