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August 2015

ChartWatchers

Text Book Rollover Continues in US Markets with Dow Industrials Leading the Way

by Chip Anderson

Hello Fellow ChartWatchers! The US markets continue to s-l-o-w-l-y roll over with the Dow Industrials leading the way.  Despite the fact that $INDU moved 100 points higher this week, the intermediate to long-term trend is clearly down.  Lots of people talked about the "Death Cross" that occurred on the Dow's daily chart on Monday when the 50-day simple moving average moved below the 200-day average, but that should come as no surprise to any reasonably-attentive ChartWatchers.  Here's why: When a market rolls over slowly like this, the first Read More 

ChartWatchers

Bond ETF's Are Building Strength

by Greg Schnell

A few weeks ago on the July 16th webinar, I talked about the bond markets and the chart view was looking bullish to get long TLT. Well, that actually played out nicely. But now the MACD looks like it wants to roll over. The SCTR has just pushed above 75.  I like to look and see if there is support showing up in other areas of the Bond market rather than just the long bonds represented by the TLT. When I originally talked about the TLT, the rest of the bond ETF's were not as bullish. This is a screenshot from my ETF ChartList of ETF's with an SCTR above 70 Read More 

ChartWatchers

How to Avoid Getting Slaughtered

by John Hopkins

There are differing opinions on whether or not it makes sense to hold stocks into earnings reports. One camp argues that you stand to make a big score if a company beats its numbers. Another camp - the one I'm in - says it's way too risky because you can never predict how the market will respond to an earnings report. I have two very specific examples that support both sides of the argument. First up is Amazon that beat expectations handily in its most recent earnings report and you can see in the chart below that the stock was nicely rewarded: Next up is Read More 

ChartWatchers

Small Caps Bounce At Two Key Support Levels

by Tom Bowley

Bears are awaiting price breakdowns in key areas of the market, but thus far they remain highly disappointed.  Last week they had their chance to take down the small cap universe on two fronts and both failed.  This isn't meant to say that the bulls are out of the woods, but at least for now, support has won out.  Multi-month price support held mid-week last week as bullish hammer, then engulfing candlesticks printed.  Take a look: The reversing candles were important on a number of technical levels, one of which is that they saved the Read More 

ChartWatchers

Are Signs of Accumulation Emerging in SPY?

by Arthur Hill

The S&P 500 SPDR remains largely range-bound since March, but a pair of potentially bullish patterns emerged and signs of accumulation are appearing. First, note that SPY hit new 52-week highs in May and July, and the overall trend is still up. The ETF is trading within 2% of its July high, but also in the middle of the tightest range in decades. Chartists must, therefore, look inside this range for clues on the next directional move.  For the first pattern, note that an inverse head-and-shoulders pattern could be taking shape since late May. With an overall uptrend, the inverse Read More 

ChartWatchers

DecisionPoint Sentiment Charts Illustrate Bulls are Backing Down

by Erin Swenlin

There are many sources that DecisionPoint uses to develop the DP Sentiment charts. You'll find two of them in the free DecisionPoint Gallery: American Association of Individual Investors (AAII) Sentiment and Rydex Asset Ratio. I'm going to review the AAII, National Association of Active Investment Managers (NAAIM) and Rydex Cashflow charts from the DecisionPoint Market Indicator ChartPack and DecisionPoint Rydex Funds ChartPack  (available for download to Extra and above members). With market action and indicators sliding into neutral, sentiment charts are Read More 

ChartWatchers

Acting on Impulse with Elder Impulse Bars

by Chip Anderson

Hello Fellow ChartWatchers! It was a fairly positive week for the markets last week following a big down move during the week before.  For the month of July, the Nasdaq was the big winner rising 2.3% and the Russell 2000 was the loser falling 1.4%. (Click the chart for a live version) As you can see on the weekly chart above, after a long run up, the S&P 500 is now moving sideways in a range between 2050 and 2125 (green lines).  The horizontal "Volume by Price" histogram bars show us that volume has now been concentrated within that range as well.  Because the index Read More 

ChartWatchers

Emerging Market Currencies Pull Stocks Lower

by John Murphy

Emerging market assets are suffering from the dual threat of rising U.S. interest rates and a stronger dollar. The most direct result is seen in EM currencies. The green line in Chart 9 shows the Wisdom Tree Emerging Currency Fund (CEW) falling to the lowest level in five years. [The CEW includes a basket of emerging currencies]. That's a side effect of a rising dollar and weakening commodity prices (especially in Brazil and Russia). That's important because weaker EM currencies usually coincide with weaker EM stocks. The red line in Chart 1 shows a correlation between Emerging Markets Read More 

ChartWatchers

Earnings Season Shows Mixed Market Reaction

by John Hopkins

We are deep into earnings season at this point. There have been enough companies reporting so far to make an assessment of what the market thinks of the overall earnings picture as July comes to an end. You can read all kinds of articles and opinions of analysts as to what the market thinks but from my perspective it all comes down to what the charts are telling me. Take a look at the chart on the S&P below. I like to look at the S&P because it represents a good sampling of companies in different sectors. Also, according to Zachs, as of July 29, 263 of the 500 companies in the Read More 

ChartWatchers

Are We Primed For An October-Like Selloff?

by Tom Bowley

I don't think so.  I'm always a bit leery of August and September because of the historical tendency for the stock market to struggle during the late summer season.  Throughout the current  6+ year bull market, the Aug-Sept period has racked up gains four out of six times.  But since the turn of the century, we've seen four separate 8%+ selloffs in this late summer bearish period, with the most recent being 2011.  So are we setting up for another late summer swoon?  Well, one of the key ingredients in any bull market is leadership from aggressive areas of the Read More 

ChartWatchers

Will Retail Run Up Into Christmas

by Greg Schnell

This time of year is on my calendar to start hunting the best in retail for Christmas. Everyone following momentum has seen the Consumer Cyclicals ETF (XLY) continue to be a top performer. I like to migrate my attention into retail like footwear, teen apparel, and toys to see who the strong ones are. Amazon (AMZN) dominates the broadline retailers with three stellar quarters of outperformance. None of the other Broadline Retailers have jumped up to compete in the Revenue Run to Christmas. But there are some interesting companies running in the other industry groups already. For Read More 

ChartWatchers

S&P 500 Hasn't Done this in over 20 Years

by Arthur Hill

The S&P 500 is locked in a 100 point trading range (2040-2140) since March because of a serious split in sector performance. At less than 5% this is the narrowest range in several years. Note that Bollinger Bandwidth on the weekly chart reached a 20+ year low in July. This means the Bollinger Bands are at their narrowest in over 20 years. How's that for a contraction. John Bollinger theorized that a volatility expansion often follows a volatility contraction. Chartists, therefore, should prepare for significant move in the coming weeks or months. I'll highlight the key levels to watch Read More