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May 2016

ChartWatchers

Four Things All StockCharts Users Need to Know

by Chip Anderson

Hello Fellow ChartWatchers! Short Version:  The Dow continues moving lower.  The upcoming death of Flash means everyone is getting the new version of ChartNotes.  You really need to sign up for ChartCon 2016 soon.  We have 10 once-in-a-lifetime seats available if you want to see ChartCon 2016 in person. 1.) The Dow continues moving lower: Despite the fact that stocks rallied on Friday, the Dow finished in negative territory for the fourth week in a row.  It is now below its 50-day moving average.  While weekly momentum (as measured Read More 

ChartWatchers

VIX Fails Breakout Attempt, NASDAQ May Be Turning Higher

by John Murphy

My Thursday morning message showed the Volatility Index (VIX) trying to break through resistance near 17. It rose as high as 17.65 intra-day which was the highest level in two months. Fortunately, it wasn't able to close there. The good news is that the VIX closed at its low for the the day and dropped again on Friday. That left it well below the 17.00 resistance level. An upside breakout in the VIX would have signalled lower stock prices. The fact that the breakout attempt failed helped stabilize the market at week's end. The next chart suggests that the Nasdaq Read More 

ChartWatchers

Defense Stocks Remain A Must Own

by Tom Bowley

The Dow Jones U.S. Defense Index has been annihilating its competition for the past few years.  It's very clear if you take a look at a longer-term relative performance chart.  Check this out: This is an interesting chart.  During the bear market from 2007 to 2009, defense stocks performed very well on a relative basis.  But the start of the bull market in March 2009 was not kind to the DJUSDN.  In fact, this group underperformed for the first four years of the bull market.  They have made up for it since 2013, however, jumping from a .08 relative ratio (vs Read More 

ChartWatchers

Trading Tune Up Part Two

by John Hopkins

In my last ChartWatchers article I pointed to the importance of taking a time out now and then to analyze trading habits. I referred to it as a "Trading Tune Up". The article served as a reminder to me that you need to be on your toes at all times when trading and that even a minor deviance can be costly. This led me to a full review of my E-Book, "77 Essential Trading Lessons for Life" which I wrote a few years back that contains a treasure trove of information and a few specific lessons caught my attention: 1-What kind of trader are you? Some people think of Read More 

ChartWatchers

XLK Shows Signs of Life as Key Moving Average Holds

by Arthur Hill

It has been a wild ride for the Technology SPDR (XLK) since August, but the ETF is showing signs of strength by holding the 200-day moving average in May. The red line shows the 200-day SMA dissecting the chart in the 41.5-42 area. Note that XLK broke above this key moving average in early March and is now testing this breakout here in May. I consider the cup half full (bullish) when XLK is above and half empty (bearish) when below.  The May consolidation provides the first levels to watch for a directional signal. XLK fell rather sharply in late Read More 

ChartWatchers

Finding Great Stocks In Technology AVGO QCOM CY

by Greg Schnell

Technology has been one of the worst-performing sectors recently. However, over the last three weeks, the Tech sector represented by the SPDR ETF (XLK) has been performing slightly better than the SPX. Scanning through the carnage, I found lots of interesting charts. However, Broadcom (AVGO), Qualcomm (QCOM) and Cypress Semiconductor (CY) are charts that look investable here with close stops. The Broadcom (AVGO) chart looks classic. After breaking out above year-long resistance, it pulled back just enough to make all the investors check their Read More 

ChartWatchers

PMO Analysis - SPX Not Ready to Bottom, But NDX Is?

by Erin Swenlin

During today's webinar, my "Bonus Indicator Chart" was the Price Momentum Oscillator (PMO) Analysis chart for the SPX. It reveals that it doesn't have the internal strength necessary (yet) to rally out of the current declining trend. The NDX is beginning to show signs of life. Comparing these two charts will give us insight on what preparations are needed to support a new rally. Trouble was brewing over the Spring. Price was climbing higher, but PMO Buy signals and % of PMOs Rising were in decline. What we need to see based on previous price bottoms that resulted in Read More 

ChartWatchers

My New Favorite Page on StockCharts.com

by Chip Anderson

Hello Fellow ChartWatchers! The market moved lower this week, retreating from its failed assault on the highs of last August.  Optimists can conclude that more consolidation is needed before the market will be ready to put in new highs.  Last week's earnings announcements certainly played a roll as well and more time may be needed to fully digest those.  Pessimists will trot out the "O" word - "overbought" - and they are correct - the market is overbought from a purely technical perspectives right now.  Add in the fact that we are heading into Read More 

ChartWatchers

Two Versions of the New York Advance-Decline Line Giving Different Signals

by John Murphy

THE TRADITIONAL NYAD LINE HITS NEW RECORD Chartists look to the NYSE Advance-Decline line to help determine the trend of the stock market. The NYAD line is simply a running cumulative total of the number of advancing stocks minus decliners on the big board. And it has a good track record of leading turns in the stock market itself. Chart 1 shows the traditional version of the NYAD line peaking last May which warned of a market downturn that started last summer and lasted into this year. Chart 1 also shows the advance-decline hitting a record high this spring. That's a very positive sign Read More 

ChartWatchers

Energy Resting At Key Pivot Area

by Tom Bowley

2016 has been a very good year thus far for the energy sector (XLE) as it's gained 17.51% in just the last three months alone.  Unlike many of the other sectors that have been battling slowing momentum in the form of negative divergences, momentum remains very strong for the XLE on the daily chart.  Check out the three month chart: In addition to recently breaking out on an absolute basis, energy has been performing exceptionally well relative to the S&P 500 where we've also seen a breakout.  The recent selling likely is providing a late entry into this sector for Read More 

ChartWatchers

Trading Tune Up - Lessons Learned

by John Hopkins

If you've been trading for a decent period of time you know how quickly things can turn against you. Sometimes with no warning, all of the good work you've done seems to disappear and before you know it, profits quickly disappear as well.  As a trader for many years I have experienced the same thing. But each time I stumble I step back and try to figure out what I might have done differently to change the outcome and I have found that I always learn from my mistakes.  For example, from time to time I will trade Leveraged ETF's in a particular sector that I think is Read More 

ChartWatchers

Oil Reaches Moment-of-truth

by Arthur Hill

Oil remains in an uptrend this year, but the bigger trend remains down and this could be just a counter-trend bounce.  The price chart shows the USO Oil Fund (USO) in the top window and June Crude (^CLM16) in the bottom window. I am using June Crude for analysis because it is the pure play on oil.  Crude advanced around 50% in four months, but this advance still pales relative to the bigger downtrend and the prior decline. Note that oil fell around 40% from October to January. This down-up sequence highlights an important aspect of trading. Namely, it takes a 100% Read More 

ChartWatchers

TV Content Companies Start To Perform (SNI, DIS, CBS)

by Greg Schnell

Entertainment is all about watching something exciting. With all the discussion of cord cutting for cable, multiple companies have discussed that they expect to make more money through direct subscription or skinny bundles. While it is still early to know, this is a hot area to watch. Scripps has a lot of the Home & Garden shows and the Scripps SCTR (not shown) is just moving above 75. Time Warner Cable has moved to a multi-platform distribution model which is an important area for all the cable companies. It also has an SCTR just moving above 75 late last month.  Read More 

ChartWatchers

NDX Equal-Weight ETF (QQEW) Weak Against QQQ

by Erin Swenlin

As I reviewed the charts of the Nasdaq 100 with my viewers during webinar today, I started to wonder how the equal-weight version was stacking up against the NDX ETF (QQQ). Typically the equal-weight versions do better over time than their cap-weighted counterparts. (Carl wrote an excellent article on this that you can read here.) However, they aren't right now. Let's start with the QQQ. It is a bearish chart, to be sure, but notice that the 50-EMA crossed above the 200-EMA back in early April and consequently the upcoming new 20/50-EMA Read More