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December 2015

ChartWatchers

Don't Fight the Fed (or the MACD, or the Summation Index, or...)

by Chip Anderson

Hello Fellow ChartWatchers! Welcome back to reality - just in time for Christmas!  Reality is a place where interest rates are not stuck at zero.  It's a place where the yield curve actually moves from time-to-time.  It's a place we all know that we need to get back to and it appears we are on our way.  The journey could get bumpy, but StockCharts has some of the best "seats" for watching things unfold along the way - starting with our Dynamic Yield Curve.  Compare the yield curve from July 2007 (the upper red line) with today's yield curve (at the bottom): Read More 

ChartWatchers

Bond/Stock Ratio Still Rising

by John Murphy

Last Saturday's message showed that Treasury bonds have been doing better than stocks since the summer. That's still the case. This chart below shows a ratio of the the long-dated Treasury ETF (TLT) divided by the S&P 500 SPDRs (SPY). The rising ratio shows Treasury bonds outperforming stocks during December. The chart also shows that long-dated Treasuries have done better than stocks since mid-year. Part of the reason for the bond buying is growing fear of global deflation, which usually favors bonds over stocks. Treasury yields are also higher than other developed markets, which Read More 

ChartWatchers

Three Topping Structures That Make January So Important $SPX

by Greg Schnell

The markets have been rolling over worldwide in 2015. The big picture worldwide is a massive topping structure as shown by the MSCI All World Index (ACWI). This index has a 53% weighting towards the USA and 9 of the top 10 are American companies. I have shown the chart with daily data so you can see the last 3 years have had a huge volume day. in December. Looking into the zoom panel, you can see the high volume day was Thursday, not Friday which normally has high volume due to quarterly Options Expiration. I am surprised by this volume on Thursday, but we'll have to see if that is a Read More 

ChartWatchers

More Bearish Signals Emerging

by Tom Bowley

I'm not ready to write off this bull market as the most important indication of all - the combination of price/volume - remains bullish in my view.  But the signals "under the surface" are beginning to erode.  One of two things will likely happen.  Either we'll see those under the surface resume their prior strength to sustain the current ongoing bull market OR we'll see price breakdowns in our major indices to confirm the warning signs that are beginning to emerge.  Before I discuss this further, it might be helpful for you to review the many signals that I like to Read More 

ChartWatchers

Equal-weight SPX Leads the Way with Big Bearish Pattern

by Arthur Hill

The S&P 500 Equal-Weight Index ($SPXEW) continues to underperform the market-cap weighted S&P 500 and its downtrend resumed with a break down in mid November. On the price chart, the index broke below its mid November low with a long black candlestick, made an attempt to recover this past week and failed with a close near the low of the week.  The October-November bounce formed a lower high and looks like a counter-trend bounce. In other words, the decline from 3400 to 2950 (-14%) looks like the dominant move and the advance back to 3250 looks like a corrective bounce within a Read More 

ChartWatchers

"Blue Chip Top 10" Negative Divergence

by Erin Swenlin

In the late-1990s Carl developed the Blue Chip Top 10 Index (!TOP152), which tracked the top ten ranked stocks (by PMO value) from our Blue Chip list of 152 stocks that DecisionPoint covers in its reports in the DecisionPoint Reports blog. The Top 10 Index is calculated daily based upon the average percentage change of the top ten stocks. This indicator gives us a unique view of failing leadership.  I wrote my last blog article on the deterioration of the Nasdaq 100 which had been outperforming all indexes, but is now showing weakness. This Top 10 Read More 

ChartWatchers

Taking Full Advantage of StockCharts.com's Holiday Special

by Chip Anderson

Hello Fellow ChartWatchers! Well, it's that time of year again - time to save a bunch of money on your StockCharts membership!  As long-time members know, we usually run our Holiday special during the month of December and that is usually a great time to take advantage of the end-of-year deals at StockCharts.  This year is no exception.  We have some great deals going on right now and I want to make sure that you are fully aware of what they are and how to take maximum advantage of them. For those of you that are new, here's my famous (infamous?) Read More 

ChartWatchers

When Markets Have Wider And Wider Swings

by Greg Schnell

Wow, this market has been one for the Almanac. This week I read a commentary from a top technician saying the bull market is still intact. It was only 4 months ago that Dow Theory triggered a sell signal. Since October, the $SPX has been making higher highs and higher lows but continues to struggle at this level. Looking at the chart below, most people would have trouble calling this a bull market. It has been up a maximum of 2.84% from the one-year ago reference point and down 9.86%. The zero line just shows where prices were 1-year ago, but this is a pretty good support resistance Read More 

ChartWatchers

Friday Jump Keeps Stocks in Uptrend

by John Murphy

A strong rally on Friday more than erased losses from Thursday and left the market in much better shape. The chart below shows the S&P 500 ending the week back above its 200-day average after bouncing off its 50-day line on Thursday. Chartwatchers will now recognize the pattern of the last month as a "pennant" or "symmetrical triangle" which is defined by two converging trendlines. That's usually a continuation pattern and increases the odds for an upside breakout. That would fit with the seasonal tendency for stocks to end the year on a high note. The 14-day RSI line (above chart) Read More 

ChartWatchers

Trading in a Sideways Market

by John Hopkins

On 12-3-14 the S&P closed at 2074. On 12-3-15 (Friday) the S&P closed at 2091. That's about as flat as you can get over a 12 month period and it helps explain why many traders have had a difficult time scoring big gains over the past year. We have certainly found it more challenging at EarningsBeats.com, especially when you get out of the blue sell offs like we saw on Thursday only to be followed by an out of the blue surge on Friday. And everything else in between! Here's an example shown below. We provided our members with a trading candidate, SWHC, on 10-28-15. This was a Read More 

ChartWatchers

Rydex Assets Sentiment Suggests Topping Market

by Erin Swenlin

After the tug-o-war of the last two trading days, I decided it was time to look at sentiment based on the DecisionPoint Rydex Assets Analysis charts. There are two to look at and they are both available in the free DecisionPoint Rydex Funds ChartPack. You'll also find cashflow and asset analysis charts for the Rydex sector and inverse funds within that ChartPack. The beauty of measuring sentiment based on these charts is that it isn't based on a survey or question, it is based in fact, it shows exactly where the money is. The chart below is the Read More 

ChartWatchers

Finance Sector Comes to Life and Leads

by Arthur Hill

The finance sector is one of the stronger sectors right now and this is positive for the overall market. As the table below shows, the Finance SPDR (XLF) has the fourth highest StockCharts Technical Rank (SCTR) of the nine sector SPDRs and the EW Finance ETF (RYF) has the third highest SCTR of the nine equal-weight sectors. Also note that the SCTRs for both are above 85 and this means both are in the eighty-fifth percentile for performance (top 15% of our ETF universe). The finance sector is important because it accounts for around 16.5% of the S&P 500, 18% of the equal-weight S&P Read More 

ChartWatchers

This Is How Money Rotates Prior To Bear Market

by Tom Bowley

The start of every bear market is different.  Sometimes it's driven by technology stocks, other times it's a financial crisis.  Whatever the case, one common denominator seems to be that aggressive areas of the stock market are abandoned as final tops are made or challenged.  In my last ChartWatchers article entitled "Four Reasons The Market Is Heading Higher", my third point concentrated on this idea of bull market sector rotation.  As the benchmark S&P 500 moves to new highs or to challenge old highs, it's important to view what's happening "under the Read More