ChartWatchers Newsletter logo

July 2016

ChartWatchers

Monthly PMO SELL Signals Vulnerable?

by Erin Swenlin

The DecisionPoint Scoreboards stopped changing on July 8th as the final BUY signal was added to the Nasdaq 100's Scoreboard. The question is how much longer before the other four SELL signals are erased? The Long-Term Price Momentum Oscillator (PMO) Signal is generated on the monthly charts which went final today. Let's review the four Scoreboard indexes monthly charts and see where they stand. The long-term picture for these monthly PMOs is getting bullish. The Nasdaq 100 has had a great month. However, it wasn't good enough to turn its monthly Read More 

ChartWatchers

Wilshire 5000 Composite Index Nears Old High, Transports Play Catchup

by John Murphy

The Dow Industrials and S&P 500 continue to hit record highs. I've been showing upside breakouts in other parts of the market that include small caps and the NYSE Composite Index. Here's another one. Chart 3 shows the Wilshire 5000 Composite Index ($WLSH) having risen above its November/June highs to initiate a new uptrend. The WLSH is the broadest measure of the U.S. market (and includes more smaller and midsize stocks). It's now heading for a test of its old highs. With the Dow Industrials having exceeded their 2015 high to reach a new record, chartists are taking some encouragement Read More 

ChartWatchers

Earnings Season Shifts into High Gear

by John Hopkins

The "official" start to earnings season began when Alcoa reported its numbers after the bell last Monday. The market liked what it saw and heard with AA up close to 10% by the time the week ended. We also saw some major banks report their numbers with mixed results. But that was only the tip of the iceberg as thousands of companies will be reporting their earnings over the next several weeks. There's no telling what the collective results will end up being but looking at the market action of late, expectations could be greater than most expect. After all, both the Dow and S&P are at Read More 

ChartWatchers

Are You A Chart Watcher?

by Chip Anderson

Hello Fellow ChartWatchers! Are you a watcher of charts?  By that I mean how much do you trust what you see on price charts?  Do you trust the charts more than the commentary/opinion of others?  Do you trust stories in the financial press more than what you see on the charts?  The reason I'm asking these seemingly straightforward questions is because last week was the kind of week that separates the true chart watchers from the rest. If you trust the charts, you probably took action last week. Last week we had the breakout to new highs Read More 

ChartWatchers

Commodity Countries Reach For 52 Week Highs

by Greg Schnell

With the big push in the markets recently, global markets continue to break out to 52-week highs. Brazil hosts the world in three weeks with the Olympics. I don't think the recent Brazilian stock market ($BVSP) performance is Olympics-related, but Brazil is pushing to new 52-week highs for the first time since September 2014. The next commodity-based market to highlight is Russia ($RTSI). This is the first 52-week high since April 2011. Yes, the first 52-week high in 5 years. The 200 DMA has turned up and the Russian market is outperforming the $SPX slightly as Read More 

ChartWatchers

Long-Term Cycle Chart Suggests Higher Prices

by Erin Swenlin

Let me first profess that I am not an avid follower of cycle charts. They generally take too much tinkering for my taste as they never quite fit over the long haul. However, as I was flipping through some of my longer-term charts, I ran into a chart I created last year. I was determining visually whether the very long-term bull and bear market cycles were telling us anything regarding that first large correction of the year. My sense was that we were extraordinarily vulnerable to a deep correction/bear market and the cycles were lining up. Carl's last DecisionPoint Read More 

ChartWatchers

Treasury Yield Falls to Four-Year Low, Lower Mortgage Rates are Boosting Homebuilders

by John Murphy

The plunge in global bond yields continues. Yesterday's statement from the Bank of England of its intention to lower rates sometime this summer pushed the British 2-year yield into negative territory for the first time, and its 10-Year to another record low further below 1%. Treasury yields continue to follow foreign yields lower. Chart 1 shows the 10-Year Treasury Yield falling again this morning and coming dangerously close to its 2012 closing low near 1.40%. The drop in yields is boosting dividend-paying stocks like consumer staples, telecom, utilities, and REITs. Falling yields are Read More 

ChartWatchers

Bizarre to the Max

by John Hopkins

Exactly how bizarre has the market action been over the last six trading days? Let me count the ways. First, the British voted to leave the European Union which put the market in a tailspin with the S&P losing almost 6% in just two days. But by Friday's close virtually all of the losses were recovered as though nothing had happened. Next, the VIX spiked almost 35% in just one day as fear engulfed the market. By Friday's close the VIX had fallen almost 45% from Monday's high. Fear practically turned to elation. Next, the equity only put/call ratio climbed 40% in one day Read More 

ChartWatchers

Looking For Better Markets In Rough Waters? - A Beacon Shines Offshore

by Greg Schnell

After a rough week where many traders sold on the news of Brexit, a four-day climb has taken us back to the highs before Brexit. This increases the weekly range and volatility, but interestingly enough, the market shocks all seem to come from offshore these days. Let me outline a problem, and then provide a chart that looks investable. If Brexit does end up being the trigger for a systemic banking problem, you'll need to evaluate your entire portfolio. Looking at the chart of Deutsche Bank, it looks a lot like a Lehman Bros. chart in the terminal phase. When the CEO has to comment Read More 

ChartWatchers

Rotation Is Painting A Very Bearish Picture

by Tom Bowley

Here we go again. It seems as though every time the S&P 500 challenges the 2100 level and its all-time high close (2131), another aggressive area of the market falls apart and the rally is not sustainable.  Below is a two year weekly chart of the S&P 500 where you can visualize these relative breakdowns one by one: The three black circles highlight relative tops in the XLY:XLP, TRAN:UTIL and RUT:SPX at various stages of the bull market.  The red circle shows the current S&P 500 price with the corresponding deterioration of nearly every aggressive aspect of the Read More 

ChartWatchers

A Clear Trend and Pattern Emerge on Monthly S&P 500 Chart

by Arthur Hill

Chartists will look back at the long-term charts and try to figure out where exactly this big Brexit panic actually occurred. Was there even such an event? There is something to be said for monthly close-only charts because they filter a lot of noise, and June was definitely a month with lots of noise. Despite some volatile swings, the major indexes ended the month with little change. Outside of the Nasdaq 100, the monthly gains and losses were between +1% and -1%. The Dow Industrials led and the Nasdaq 100 lagged. In a rare divergence, the S&P Small-Cap 600 was up a fraction and the Read More 

ChartWatchers

Market Looking Toppy - Short-Term Indicators Confirm

by Erin Swenlin

There is no denying it, the market experienced an amazing rally this past week after the waterfall correction initiated by Brexit. Now prices are where they were before the landmark vote. The question is whether this rally will persist now that price is reaching strong overhead resistance once again. Looking at the 10-minute bar chart for the SPY, note that the rising trend was interrupted today and price consolidated, moving outside of the rising trend channel. The ultra-short-term indicators are suggesting a buying exhaustion is in play. Note Read More