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March 2016

ChartWatchers

A Set up for Shorts?

by John Hopkins

The market has been pretty much straight up since the February 11 bottom of 1810. Since that day the S&P has climbed 13%. That's a very impressive move by any measurement. In fact, I would argue that it has been too much too quick. Look at the chart below and you will see a very stretched S&P with stochastics in the mid 90's and a RSI right near 70. Those two readings alone tell me that there's not much room left in this rally. On top of that the S&P is now two really strong days away from its all time high, something that seemed almost impossible just over a month ago when Read More 

ChartWatchers

NYSE Percent Above 200MA Turns Up, AD Line Breaks Out

by John Murphy

NYSE PERCENT OF STOCKS ABOVE 200-DAY MOVING AVERAGE TURNS UP The previous Wedneday's message showed the % of NYSE stocks trading above their 200-day moving average moving up to challenge its fourth quarter high around 40% (after bottoming in January in oversold territory below 20%). Chart 9 shows the percentage figure having broken through that fourth quarter barrier to reach the highest level at 45% in eight months. That's a positive sign for the market. A further move above 50% would be even more positive. NYSE ADVANCE-DECLINE LINE BREAKS OUT The same message from last Wednesday Read More 

ChartWatchers

Hitting It Like A Hammer On A Nail!

by Greg Schnell

Industry breadth is usually helpful in finding a new breakout trend. What we mean by that is the number of stocks within an industry group that are breaking out together. When lots of stocks are moving higher in an industry group, rather than just one, it is a much better signal of opportunity. Looking at one specific chart that is looking great is $LUMBER. $LUMBER recently broke out to six-month relative strength highs in February, shown in purple. This week it made new 1-year highs. That strength attracts interest by portfolio managers. We can see the downsloping trendline in Read More 

ChartWatchers

Healthcare Sector Not so Healthy

by Erin Swenlin

All of the sectors on the DecisionPoint Market Sector Summary are green with Intermediate-Term Trend Model BUY signalsexcept for Healthcare. As you can see from the excerpt of the report below, the current Neutral signal has been in effect for over two months. I decided it was time to investigate why and see if the Healthcare SPDR (XLV) was regaining its health as the other sectors have. Looking at the longer-term picture on the weekly chart, the picture is not great. First, price was attempting to test resistance along the declining tops Read More 

ChartWatchers

Medical Supplies Group Bounces At Key Moving Average Support

by Tom Bowley

Healthcare (XLV) has been the weakest sector over the past one and three month periods, but you'd never know it from looking at the Dow Jones U.S. Medical Supplies Index ($DJUSMS).  The DJUSMS has gained over 8% during the past three months while the Dow Jones U.S. Biotechnology Index, for example, has tumbled 15% over the same three month period.  Medical supplies hit an all-time high one week ago, then last week fell back to test both price support and the rising 20 day EMA.  Here's the chart: The daily MACD was pointing higher on the most recent Read More 

ChartWatchers

There's No Such Thing as "Overbought"

by Chip Anderson

Hello Fellow ChartWatchers! Well, I don't know about you, but I'm impressed.  Last week, the current rally moved higher and gained more momentum.  After briefly (very briefly) pausing at its 200-day moving average, the Dow surged higher and obliterated the rounding-top concept I've talked about in the past.  There is still lots of overhead resistance that can cause problems for this uptrend - especially around 17,750 - but so far there is no evidence that the market is paying attention to the past right now.  Here's the final(!) version of my weekly Dow Read More 

ChartWatchers

New Highs Surge on NYSE, but Lag on Nasdaq

by Arthur Hill

Two weeks ago I featured the NYSE McClellan Oscillator ($NYMO) and the Nasdaq McClellan Oscillator ($NAMO) as they surged to their highest levels in years.  These breadth indicators are very broad and represent virtually all stocks traded in the US. Big moves in both breadth indicators signaled a bullish breadth thrust. Today, I am turning my attention to new highs for the NYSE and Nasdaq to see if strength is broadening. If you are looking for leaders, look no further than the new high list. Stocks hitting 52-week highs are in obvious uptrends and clearly leading the market.  Read More 

ChartWatchers

Up Next: A Stock Market Showdown!

by Chip Anderson

Hello Fellow ChartWatchers! After an unexpectedly quick rise in stock prices this week, the markets are poised for a showdown.  It's too bad we can't have the stock market be more like an athletic event In this corner, weighing in at 200-days in length, our long-term, bearish tag team champions - the masters of disaster - "Rounding Top Formation" and "200-day Moving Average!"   (The crowd boos loudly.  The champions don't care.) And in the other corner, only 15-days old, the young upstarts - the great bullish hope - the uptrend that up-ends - Read More 

ChartWatchers

NYSE Percent of Stocks Above 50-Day Average Nears November High

by John Murphy

A lot of attention is now being paid to stocks testing or exceeding their moving average lines. My February 20 message had a headline suggesting that the percent of NYSE stocks trading above their 50- and 200-day moving averages might be bottoming. Let's take another look. The blue line in Chart 1 shows the % of NYSE stocks above their 50-day lines. Since February 20, that line has nearly doubled from 38% to 73%. That reflects the short-term improvement that's taken place over the last month in major stock indexes. That line, however, is nearing an important test of its early November Read More 

ChartWatchers

It's as Easy to Get Burned Up as it is Down

by John Hopkins

If the market this year has taught us one thing it's that it's as easy losing money when the market is going up as when it is going down. Consider this. After the first trading day of the year was over, the S&P closed at 2012. This past Friday the S&P got as high as 2009 before closing just below 2000. So for a brief moment, the S&P had changed just 3 points from the first trading day of the year up until Friday. Now, if someone had taken a long nap from December 31 up until Friday and looked at the S&P when they woke up, they would think Read More 

ChartWatchers

Is Now The Time To Short?

by Tom Bowley

Yes. Does that mean the stock market is guaranteed to roll over and play dead?  Absolutely not.  Trading success is not always dependent on being right, as crazy as that might sound.  It's about planning your trades to minimize risk in the event your call is incorrect.  Many times it "feels" good to short after the market has already fallen for several days in a row because that's when you feel most bearish.  But truly the best time to short is when the market reverses in a counter trend rally for a period of time and approaches key price, gap, moving Read More 

ChartWatchers

Gold Bugs ($HUI) Support Levels

by Erin Swenlin

I don't want to steal Carl's thunder as I happen to know he will be writing a follow-up article to his previous article on Gold. However, I did receive an email question to look at possible support levels on the Gold Bugs Index ($HUI). I'm going to start with the longer-term weekly chart and follow it up with daily and 10 minute bar charts.  The breakout on the weekly chart for $HUI is impressive. Additionally the rising weekly Price Momentum Oscillator (PMO) has now reached readings not seen since 2011, yet it isn't overbought. The 17/43-week EMAs are preparing for a positive Read More 

ChartWatchers

A Double-edged Sword for the McClellan Oscillators

by Arthur Hill

The McClellan Oscillators for the NYSE and Nasdaq surged over the last few weeks and hit multi-year highs. Medium-term, I would consider this breadth surge bullish. Short-term, however, it creates an overbought condition that could lead to a pullback or consolidation in stocks. Despite this double-edged sword, the medium and long term prognosis outweighs the short-term.  The NYSE McClellan Oscillator ($NYMO) is leading the charge with a surge above +100 and its highest reading since January 2009. In less than two months the indicator has moved from -89.2 to +105.77, which is a Read More 

ChartWatchers

The Bear Market In Energy Reaches A Critical Decision Level

by Greg Schnell

This week did a lot to shake my resolve on the continuing bear market in the energy sector. Let's look at three charts and discuss why they are at critical levels. The OIH (US Oil Services ETF) has broken the downtrend for the first time since oil topped and started to break down. The Relative Strength closed just above the trend line on Friday. If nothing else, it indicates a change in trend for the XOP. The actual price of the XOP has now made a higher high but is still well below the trend line. The extreme volume shows a huge level of interest. We can also see the MACD gave a Read More