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February 2016

ChartWatchers

Two Weeks Later and Not Much Has Changed

by Chip Anderson

Hello Fellow ChartWatchers! I know, I know.  I've shown the same chart again and again recently.  Well, apologies in advance, but here it is one more time: I'm showing it again because I really think it can keep you grounded in the face of emotional short-term reactions to moves that are really just part of a larger pattern.  Two weeks ago, the Dow retested the 15,500 level and quickly bounced higher.  Last week, it tested the 16,500 resistance level and fell back.  Both moves make sense when you consider the bigger picture.  To Read More 

ChartWatchers

Despite Recent Strength, Long-Term Bearish Momentum Accelerating

by Tom Bowley

From a short-term trading perspective, last week's rally was predictable.  Positive divergences flashed all over the equity map on daily charts - globally, domestically, and within sectors, industry groups, and individual stocks.   So it was certainly an opportunity for the bulls to regain control of the action in the near-term and they did.  Last week's leading sectors were consumer discretionary (XLY) and technology (XLK) and both showed that selling momentum was slowing on their most recent lows.  Check out their charts: XLY: Read More 

ChartWatchers

Three Indications that a Bear Market is Ending

by Erin Swenlin

Many of my readers' and viewers' questions remind me of the Whitney Houston song, "How Will I Know?". With the DecisionPoint Scoreboards starting to move "green", it begs the question, "Is the market on its way back up?"  I believe I answered part of that question in Thursday's DecisionPoint blog but I went into detail during last Wednesday's webinar. In the current market environment I don't see a quick end to this bear market. Looking at the indicator charts below confirms this. I narrowed it down to a select few charts to watch. Read More 

ChartWatchers

NYSE Bullish Percent Index Turns Up

by John Murphy

One of the widely watched gauges of market direction is the NYSE Bullish Percent Index ($BPNYA). That index measures the percent of NYSE stocks that are in point & figure uptrends. Chart 1 shows a point & figure version of that index. [P&F charts show alternating columns of Xs and Os. X columns show rising prices, while O columns show falling prices]. Readings over 70% are overbought, while readings below 30% are oversold. The index reached an oversold low of 24% during January. The chart also shows the BPNYA in a potential support zone formed during the 2011 selloff Read More 

ChartWatchers

Profit from Earnings Misses

by John Hopkins

Our primary focus for a long time at EarningsBeats.com has been on those companies that beat earnings expectations and have strong charts. The reason being that companies with strong numbers and strong charts provide superior reward to risk trading opportunities. But we've learned lately that companies that miss earnings expectations can also provide high reward to risk opportunities for those who are willing to short stocks. We have found over the years that it is tougher making money on the short side than on the long side. Why is that? It's because over time the market goes up more Read More 

ChartWatchers

Honeywell Leads the Industrials SPDR. Is GE Next?

by Arthur Hill

It has been a rough year for most of the stock market with seven of the nine sector SPDRs down year-to-date. The Consumer Staples SPDR (XLP) is up .69% and the Utilities SPDR (XLU) is up a whopping 6.75%. Among the seven negative sectors, the Industrials SPDR (XLI) is holding up the best because it is down the least. Thus, XLI is showing a little bit of relative strength in 2016. I will look at the chart for XLI and the three top stocks after the jump.   General Electric (GE), 3M (MMM) and Honeywell (HON) account for around 22% of the ETF. GE weighs Read More 

ChartWatchers

Currencies Are Ripe For Showing Trend Changes In Commodities

by Greg Schnell

With the announcement of the UK / European Union deal late on Friday night, we have a good reason to look at the currencies compared to the US Dollar ($USD).  A macro view of the British pound ($XBP) shown in the centre panel suggests a rising pound is generally bullish for both the $FTSE and the $SPX. Currently, the $XBP has bounced off support with a low of 141. The majority of the time shown, the pound has traded above 140 and below 170. We are at the low end of the range.  Unfortunately, the British Pound also did the best when commodities, namely oil, were Read More 

ChartWatchers

The Market is in a Classic Bull/Bear Battle Right Now

by Chip Anderson

Hello Fellow ChartWatchers! Wow, people are all over the place with their emotions right now.  "Devastating Recession on the Way!"  "Strong Tech Earnings Lead to Rally Mode!"  "The Fed is Out to Kill the Economy!"  and my personal favorite "Head and Shoulders Top Imminent!" Let's calm down and back up a minute.  The reality is that nothing has changed from a long-term technical perspective.  Here's the actual technical situation: (Click on the chart for a live version) Key Points: The stock Read More 

ChartWatchers

Nasdaq May Be On Verge Of Breakdown

by John Murphy

It's never a good sign to see the Nasdaq leading the rest of the market lower, which it did this week. A -3% plunge on Friday (and a -5% loss for the week) made it the weakest of the major market indexes. Heavy selling in software and internet stocks were especially troubling. So is its chart pattern. The weekly bars in the chart below show the Nasdaq Composite bearing down on its January and August lows. On a closing basis, the Nasdaq is already at the lowest level in more than a year. In addition, the Nasdaq/S&P 500 ratio (red line) on top of Chart 4 has fallen to the lowest level in Read More 

ChartWatchers

In Rocky Times Earnings REALLY Matter

by John Hopkins

In the best of times companies see their stock prices rewarded or punished based on earnings results. Even when a company misses its earnings per share or revenue forecasts by just a small amount it can have a meaningful, negative impact on its stock price. But when the market is highly volatile and on pins and needles like the US market has been all year long, missing estimates or guiding lower for the future can be devastating for a company's stock price.  Look no further than Amazon and LinkedIn as prime examples of how unforgiving the market can be when there's zero room for Read More 

ChartWatchers

Materials SPDR (XLB) "Thrust" into BUY Signal

by Erin Swenlin

There has been renewed interest in the Percent Buy Index (PBI) ever since I spotlighted it during one of my webinars. The PBI is not related at all to the Bullish Percent Index (BPI). The PBI is Carl's creation, and it tracks the percentage of Price Momentum Model (PMM) BUY signals for the components in a given index. The Bullish Percent Index (BPI) is a breadth indicator based on the number of stocks on Point & Figure chart BUY signals within an index. The PBI is part of the Thrust/Trend Model of yesteryears on Read More 

ChartWatchers

What You Need To Know About Trading A Bear Market?

by Tom Bowley

There are no guarantees to this question, but we do have history and past technical indications to provide us a few guidelines.  Trading strategies applied during a bull market simply won't work during a bear market.  They may work on a few select industry groups and stocks, but the game has changed for most areas of the market and we have to change with it.  So let's start with a few basic rules I follow: 1. High growth stocks become extremely dangerous to own on the long side Netflix (NFLX) is a great example.  During the 7 year bull market Read More 

ChartWatchers

Is Anyone Helping You Find Strong Stocks In This Market?

by Greg Schnell

This bear market has ripped most portfolios apart. Some portfolios have been shredded. Recently, a money manager was on TV saying he really likes it when stocks are down this hard because there are so many bargains. I have two additional statements for that. He probably wishes he wasn't fully invested when it started falling, and he'll only be happy if the year 2016 ends higher, not lower. One of the other market axioms is that 70% of the stocks follow the index. In bear markets, that correlation goes higher it seems. The S&P 500 closed down 3.1% from the previous Friday. I Read More 

ChartWatchers

Small-caps, Finance and Tech Weigh on Market

by Arthur Hill

After sharp declines the first two weeks of the year, the stock market turned into one mixed up beast the last three weeks. The PerfChart below shows three-week performance for the seven major index ETFs. All seven were down 6+ percent the first two weeks of the year, but four of the seven are up the last three weeks. These include the S&P 500 SPDR, S&P MidCap SPDR, EW S&P 500 ETF and Dow SPDR. The S&P SmallCap iShares, Russell 2000 iShares and Nasdaq 100 ETF are the losers and these three represent the high beta, or riskier, end of the stock market. Relative weakness in Read More