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October 2015

ChartWatchers

S&P 500 Hits Two Month High

by John Murphy

U.S. stocks continued the rally that started in late September. On Thursday, the Dow Industrials gained 217 points (1.2%) to extend its rally. The first chart below shows the S&P 500 gaining an even stronger 1.5%. More importantly, the SPX closed at 2023 which exceeded its mid-September intra-day peak at 2020. That put the SPX at a new two month high. The Nasdaq was even stronger.  The middle chart shows the Nasdaq Composite gaining 1.8%, and closing above its 50-day average for the first time since before the market slide in August. The fact that small caps did even better is a Read More 

ChartWatchers

The Importance Of Support And Resistance Will Come Into Focus Very Soon

by Greg Schnell

The Technical Analyst community is very mixed at this junction on the charts. Many of the senior professionals are suggesting a long-term bottom has been put in on October 1 and a race to higher highs is underway. Others have their indicators turning down and believe we have started a new bear market. I am in the camp with a new long-term bear market based on my indicators and I am watching for how the market behaves as we approach resistance up above these levels. This weekly chart of the $SPX shows the market approaching the 40 WMA from the bottom side and the horizontal resistance Read More 

ChartWatchers

Seasonality Favors Precious Metals And Travel Stocks In November

by Tom Bowley

In prior months, I've used the seasonality tool here at StockCharts.com to identify industry groups poised to perform well.  In September, internet ($DJUSNS), footwear ($DJUSFT), recreational services ($DJUSRQ), and reinsurance ($DJUSIU) stocks were shown to outperform the benchmark S&P 500 and all four either held their own on a relative basis or significantly outperformed.  The only group that had shown previous historical strength in September that failed to keep up with the benchmark was the mining group ($DJUSMG). In October, internet again was tabbed Read More 

ChartWatchers

When it Comes to Earnings, Patience is Required

by John Hopkins

The earnings season is in high gear now with some very visible companies already reporting their numbers and thousands more about to report over the course of the next several weeks. Already we've seen example of stocks that have performed well after reporting and others that have taken it on the chin for coming up short. We've also seen examples of stocks that have gotten clobbered by warning their earnings could come up short. The biggest example of late was Walmart which fell 10% in one day, its worst performance ever, when it revealed future earnings would be affected negatively due Read More 

ChartWatchers

Energy and Utilities Spark Interest

by Erin Swenlin

Energy and Utilities have both recently sparked my curiosity. It started with the Energy sector on our DecisionPoint Daily/Market Summary which flipped from Intermediate-Term Trend Model SELL signals to BUY signals. After that, I received a Technical Alert from a scan I have that notifies me when the 50/200-EMAs have a cross over. Recall that when the 50-EMA is above the 200-EMA it is in a "bull market" according to the Long-Term Trend Model which would be on a BUY signal while the 50-EMA is above the 200-EMA. Back to my story, I received the Alert via email that XLU, the Utilities SPDR Read More 

ChartWatchers

A Tale of Two Consumer Discretionary Sectors

by Arthur Hill

Large caps continue to outperform "other" caps and this has created a performance discrepancy within the consumer discretionary sector. I am highlighting this sector because it is the most economically sensitive sector and includes many domestically focused industry groups, including retail, restaurant, media and home construction.  The first chart shows the Equal-Weight Consumer Discretionary ETF (RCD) for an idea of how the "average" stock in the consumer discretionary sector is performing. The ETF broke down in August, tested broken support in mid-September and surged back to this Read More 

ChartWatchers

Testing Process Continues

by John Murphy

The stock market continues to test underlying support levels formed during the summer. The first chart (below) shows the Dow Industrials holding chart support along the 16,000 level. The second chart shows the Nasdaq Composite holding support along its August 25 closing low at 4500.  The last chart shows the S&P 500 testing its August intra-day low. The testing process is likely to continue well into the month of October. So far, those support levels are holding. However, all three stock indexes remain below their mid-September peak and falling 50-day averages. Sooner or later Read More 

ChartWatchers

I'm Not Convinced By Friday's Rally. Are You?

by Chip Anderson

Hello Fellow ChartWatchers! Friday's market action is causing quite a buzz in the financial analysis world.  After the "meh" US jobs report came out Friday morning, stocks gapped down sharply at the open but then rallied throughout the day and finished up roughly 1.5% (depending on which index you use to track things).  The optimists out there are proclaiming that "The Bull Market is Back!"  I think that sentiment is very premature.  Here's why: 1.) We are still well under the 50- and 200-day moving averages.   Here's a chart of the Dow Read More 

ChartWatchers

For Fundamentalists, the Bull Market Resumes. For Technicians, This Is A Very Important Chapter

by Greg Schnell

Friday was one of those hugely volatile days where the market plummeted on the bad news of the jobs data and then turned to soar for the upcoming earnings season. It was almost identical to the reversal in October 2011. For the blog watchers of the Commodities Countdown webinar on September 17th, the 34-minute mark discusses what I was watching for to make a bullish reversal. Commodities Countdown September 17, 2015. A big bullish reversal after undercutting the previous lows is what we were hoping for. Earlier in the week, we tested the intraday low of August 25th. The Read More 

ChartWatchers

Crude Oil's Relationship With The XLE

by Tom Bowley

If you believe that crude oil ($WTIC) is dirt cheap and the primary trend from here will be higher, then one simple trading strategy is to own the XLE (Energy Select Sector SPDR).  Over the years, the correlation between the two is strong - and perhaps obvious.  Since the 2000-2002 bear market ended, the XLE has really one suffered through two bad years.  The first began in mid-2008 and we're currently in the second, which began in mid-2014.  While many analysts are calling for years of cheaper crude oil, the past suggests this is nothing more than a fantasy Read More 

ChartWatchers

Nasdaq 100: Hero to Zero

by Erin Swenlin

For many weeks, the DP Scoreboard for the Nasdaq 100 was the most positive in comparison to the S&P 500, S&P 100 and Dow Industrials. In fact, back when the NDX was in the lead with the most bullish signals, the others were grappling with more bearish signals. The "tables" (pun intended) have turned and the NDX is most negative. One might point out that the NDX is not in a long-term bear market. That bullish signal will likely disappear early next week. The only way for the NDX to avoid a 50/200-EMA crossover is getting price back above them. That would Read More 

ChartWatchers

Now that the Fed is out of the way, let Earning's Season begin!

by John Hopkins

The much weaker than expected jobs report this past Friday put a kibosh on any intention the Fed might have had to raise interest rates during the month of October. In fact, barring a major improvement in the economic outlook, it's doubtful the Fed will be raising rates anytime during 2015. You can see in the following chart that government bond yields began to fall immediately after the Fed's most recent rate decision where they decided to stand pat. And that continued on Friday when the market absorbed the weak jobs numbers with the yield on the ten year Treasury Note matching the low Read More 

ChartWatchers

Is RSI Foreshadowing a Tradable Low in the Oil & Gas Equipment & Services SPDR?

by Arthur Hill

The Oil & Gas Equip & Services SPDR (XES) perked up on Friday with a massive engulfing pattern on high volume. Combined with a bullish failure swing in RSI, the ETF could be setting up for a tradable low.  Created by Welles Wilder, the Relative Strength Index (RSI) is a classic momentum oscillator that has stood the test of time. The image below, which comes from his book, New Concepts in Technical Trading Systems (1978), details the top and bottom failure swings. A bottom failure swing occurs when RSI dips below 30, bounces, retreats, fails to break back below 30 and turns Read More