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April 2016

ChartWatchers

Financials Have a Strong Week, As Do Economically-Sensitive Materials and Industrials

by John Murphy

FINANCIALS HAVE A STRONG WEEK Financials went from the year's weakest sector to the strongest gainer this past week. Chart 1 shows the Financials Sector SPDR (XLF) climbing to the highest level in three months and challenging its 200-day moving average (red arrow). The dotted line, which is the XLF/SPX relative strength ratio, jumped this week for the first time since February. Banks played a big role in the week's rally, as did brokers and life insurers. The market usually does better when financial stocks are helping. Read More 

ChartWatchers

Earnings Season off and Running

by John Hopkins

Alcoa reported its numbers after the bell last Monday which served as the kick off for first quarter earnings season. This was followed by a few big banks and then next week we'll get hundreds of more companies reporting their numbers.  Earnings season is important because when everything else is said and done what matters most is the bottom line. In other words, every trading day we are inundated with mostly useless information and noise but when it comes down to it investors want to know if companies they own stock in are making money or not. The whole earnings Read More 

ChartWatchers

Taking Note of the New ChartNotes Annotation Tool

by Chip Anderson

Hello Fellow ChartWatchers! After pausing 5 days to catch its breath, the Dow powered higher this week and is close to breaking overhead resistance from the peak set last November.  In addition, the Dow's 50-day Moving Average looks set to move back above its 200-day Moving Average - a bullish signal that is sometime referred to as the "Golden Cross."  Here's the  longer-term weekly chart: In the larger scheme of things, the Dow has essentially moved sideways - albeit with some huge price swings - since the collapse last August.  This sideways movement is Read More 

ChartWatchers

Where Should We Look For May Strength?

by Tom Bowley

Based on April performance alone over the past 20 years, the best industry groups to invest in have been the following: $DJUSHL (Hotels & Lodging REITs) +12.4% $DJUSAU (Automobiles) +10.3% $DJUSRL (Retail REITs) +9.7% $DJUSES (Real Estate Services) +8.9% $DJUSTR (Tires) +7.9% All five of these industry groups remain technically sound in the short-term and are poised to do well in the second half of April if the overall market continues to perform well. So looking ahead, what performs well during the month of May?  Well, here's the seasonality chart for the Read More 

ChartWatchers

Small-caps and Financials Perk Up, but Still Lag Overall

by Arthur Hill

It was a pretty good week for the stock market with the Russell 2000 iShares (IWM) and the Finance SPDR (XLF) showing upside leadership for a change. IWM gained 3.21% for the week and led the major index ETFs higher. XLF gained 4.60% and was the second strongest sector (behind XLE). Even though IWM and XLF do not share any components, there is a link because financials account for around 25% of the Russell 2000. Those looking for a more direct connection should note that the SmallCap Financials ETF (PSCF) gained 4.33% last week.  On the price chart Read More 

ChartWatchers

April Is A Good Prescription For Pharmaceuticals

by Tom Bowley

The seasonality tool here at StockCharts.com provides an easy way to review historical results for indices, sectors, industry groups and individual stocks.  I looked at financials and healthcare industry groups as these two sectors have performed the worst over the past three months.  Perhaps seasonal strength can provide a "cure" for pharmaceuticals ($DJUSPR), which have clearly been under the weather.  Here's the historical view of pharmas, broken down by average calendar month returns over the past 17 years: There are a couple points to be made here Read More 

ChartWatchers

S&P 500 2015 Q4 Earnings Results: Market Even More Overbought

by Carl Swenlin

The preliminary S&P 500 Index 2015 fourth quarter earnings results are in, and it is once again time to look at our earnings chart, which shows the S&P 500 in relation to its normal value range. (Note: The chart is a static graphic, not an active chart.) The bands on this chart show where the S&P 500 would be if it had an undervalued P/E of 10 (green), a fair valued P/E of 15 (blue), or an overvalued P/E of 20 (red). While the bands don't rigidly contain the range of the Index, they do help us get a quick assessment of the current valuation along with some historical Read More 

ChartWatchers

Another Earnings Season Ready to Kick Off

by John Hopkins

The first quarter has come and gone and now we are about to embark upon another earnings season that will officially kick off when Alcoa reports its numbers after the bell on Monday, April 11. Alcoa rarely sets the tone for earnings season but when they do report it's a signal that thousands of companies will be sharing their financial results over the span of a few week's time. Almost anyone you ask will tell you that earnings expectations have been lowered for the first quarter and this is one of the reasons the market has had trouble gaining traction. But along with lowered Read More 

ChartWatchers

ChartCon 2016 is Coming to a Computer Near You!

by Chip Anderson

Hello Fellow ChartWatchers! The markets continue to power higher with the S&P 500, Nasdaq and Wilshire 5000 all joining the Dow Jones Industrials in the "Above the 200-Day Moving Average" club.  The Dow is now challenging its big overhead resistance area around 17,750.  Last November, it faltered just below 18,000.  Will history repeat itself?  Check out last Saturday's webinar for more details on where things might be headed (and please join me for next Saturday's webinar too!). Today's Big Announcement:        Read More 

ChartWatchers

Dow and S&P 500 Near Fourth Quarter Highs

by John Murphy

The chart below shows the Dow Industrials moving closer to a test of its fourth quarter highs near 18000. Given the steepness of the recent rally, it might run into some resistance there. But its trend is still higher. The second chart shows the S&P 500 moving closer to a resistance line drawn over its May/November highs. It may meet some resistance there as well. But it's trend is also higher. Earlier in the week, I showed the NYSE Advance-Decline line testing its 2015 high. I also suggested that a major drop in stock prices was highly unlikely with market breadth figures in such Read More 

ChartWatchers

Is The World Pricing In The Failure Of Abenomics? It Looks Like The Japanese Are

by Greg Schnell

If the Dow fell 900 points in two days, would that get our attention? This article will explain the linkage for North American investors and why I say it so succinctly. The continued case for watching price action rather than Monetary Policy has resumed in Europe and Japan. Recently, one of the institutional money managers on television chimed in that Europe and Japan were the best places to invest because of the stimulative backdrop from their Central Banks. While those words of wisdom sound eloquent, let's look at the facts according to the market response to policy Read More