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October 2016

ChartWatchers

Stock Bounce Fades as Yields and the Dollar Keep Climbing

by John Murphy

A morning bounce in stocks faded by the end of the day. Chart 1 shows the S&P 500 ending the day at its low. That keeps stocks in a short-term downside correction and well below a falling 50-day average (blue arrow). It also leaves open the possibility that the September low could still be retested. Rising bond yields continue to weigh on stocks. Chart 2 shows the 10-Year Treasury Yield ending the week on a strong note after bouncing off its 200-day moving average. That pushed bond prices lower again. The jump in yields pushed utilities lower while supporting financials. Rising Read More 

ChartWatchers

Looking Ahead To Potential November Strength

by Tom Bowley

We've entered a very strong historical part of the year for our major indices and most sectors and industry groups.  Today, I want to focus on one of the best of the best, the Dow Jones U.S. Steel Index ($DJUSST).  Average DJUSST monthly gains over the past 17 years are as follows from October through December: October:  +2.8% November:  +4.3% December:  +4.3% Those are average monthly gains over a 17 year stretch.  Given this historical strength, it would seem like a good time to evaluate the technical merits of the group.  So let's Read More 

ChartWatchers

Broad Market is Seriously Mixed, but Breakouts are Holding

by Arthur Hill

The broader market is incredibly mixed over the last three months. Even though performance divergences reflect a divided market, the major index ETFs are holding above their June highs and I view this as a correction within an uptrend. The PerfChart below shows eight major index ETFs with four up and four down. The Russell 2000 iShares, Nasdaq 100 ETF, Nasdaq 100 EW ETF and Russell MicroCap iShares are up, while the S&P 500 SPDR, Dow Diamonds, S&P SmallCap iShares and S&P MidCap SPDR are down. Basically, small-caps and techs are strong, while large-caps and mid-caps are Read More 

ChartWatchers

Bonds Are Breaking Meaningful Trend Lines

by Greg Schnell

The 30-Year Bond ($USB) broke down through a long term uptrend this month but the bigger picture shows something else. There is still a major uptrend channel. However, we appear to be on a big countertrend move starting now. Interestingly, four other countertrend moves went all the way to the other side of the channel. Also of note is the PPO. It shows a rollover from the current high level so this move is just getting started. Zooming in on the last ten years, a major rollover occured on the $USB when all the central banks applied QE Read More 

ChartWatchers

Holding Stocks into Earnings can be Costly

by John Hopkins

We're now in the thick of Q3 earnings season when thousands of companies will report their numbers over the next several weeks. Earning season kicked off when Alcoa reported its numbers early last week and served as the poster child of why it's a crap shoot at best to hold a stock into its earnings reports. You can see in the chart below that AA reported its numbers before the market opened on October 11 and you can also see that the stock got crushed, losing almost 17% over the next few trading days. Interestingly, AA had climbed nicely off of its recent bottom on September 20 and Read More 

ChartWatchers

March Intermediate-Term BUY Signals Abort

by Erin Swenlin

The DecisionPoint Scoreboards had significant changes this week. Note the difference between last Friday's DP Scoreboard and today's. Scoreboards went from very bullish to very bearish in one week. The intermediate-term BUY signals that were replaced on the SPX and OEX had been in place since March! We've seen quite a bit of whipsaw on our short-term signals, but they seem to have settled in with the intermediate-term signals in the bearish position. The Intermediate-Term Trend Model (ITTM) Neutral signals are Read More 

ChartWatchers

Transports Are on the Verge of Bullish Breakout -- Rails Have Already Turned Up

by John Murphy

Once again, transportation stocks appear to be on the verge of a bullish breakout. Chart 1 shows Transportation Average iShares (IYT) on the verge of breaking through their April/September highs. Their relative strength ratio (top of chart) also appears to have bottomed. I recently showed buying in airlines and air freight. Rails, however, have been the strongest part of the transportation group and are leading it higher today. As I showed yesterday, transports are now outperforming utilities which is a positive sign. A transportation breakout would be another good sign for the market and Read More 

ChartWatchers

Tis the Season - Earnings Season

by John Hopkins

The third quarter has come to an end. It ended on a high note with the S&P gaining 3.3% from the June 30 close to Friday's close. Interestingly, the S&P got to 2168 two weeks into the third quarter which is exactly where it ended on Friday. In other words, if you had gone into a long slumber on July 14 and woke up on September 30, you wouldn't have missed a thing. Of course there's no telling how the market will perform between now and the end of October when a good portion of earnings will be reported. But in looking back over the past five years, from September 30 to October 31 Read More 

ChartWatchers

Technology Stocks Produce Huge Third Quarter; 3 Stocks To Watch

by Tom Bowley

Technology stocks (XLK) produced gains of more than 10% in the third quarter of 2016, more than double that of any other sector.  Industrials (XLI) were the second best group, posting a quarterly gain of 4.80%.  We all know the bigger names in technology, so this article will focus on other names in key technology industry groups that perhaps you haven't been paying attention to.  Let's start with computer hardware ($DJUSCR). Computer Hardware Of course Apple (AAPL) is the stock that everyone watches in this space and rightfully so.  It's been Read More 

ChartWatchers

Passing the Torch

by Chip Anderson

Hello Fellow ChartWatchers! Well, after 18 years of writing these newsletters - and doing webinars and hosting conferences and writing educational articles - I am reliquishing those duties to others so that I can focus (re-focus?) on my real passion - making the technology behind StockCharts.com really great. Last week's ChartCon event - which was amazing and went off with almost zero glitches - marked a milestone in my development as a writer/educator.  It feels like I've said most of what I needed to say and that continuing forward in that space would just involve lots Read More 

ChartWatchers

Pipeline Stocks Make New Highs On LNG Approvals

by Greg Schnell

While the world continues to debate the path of every pipeline, investors are not debating the path of the pipeline companies. Three of the larger pipeline companies are in focus this week as another LNG project on the west coast was approved in Canada. One of the major pivot points on these approvals is that the pipelines required to feed them would also need to be approved. With three majors working on access to get Crude Oil and Natural Gas products to tidal water for exporting, it is timely to look at the stocks.  Kinder Morgan (KMI) made new 9-month closing Read More 

ChartWatchers

Bull Flags Take Shape in Bank SPDRs

by Arthur Hill

Deutsche Bank dominated the news late in the week, but US banks have been largely unaffected and bullish flags are taking shape in two bank-related ETFs. The charts below show the Bank SPDR (KBE) and the Regional Bank SPDR (KRE) in long-term uptrends. Notice that the 50-day EMAs are above the 200-day EMAs and both ETFs hit their highest levels of the year in late August. Both ETFs pulled back in September, but I view short-term pullbacks as opportunities when the bigger trend is up.  The ETFs pulled back after the August surge and these pullbacks look Read More