ChartWatchers Newsletter logo

December 2016

ChartWatchers

The Best And Worst Of 2016; Watch This One In 2017

by Tom Bowley

We're two weeks away from another stock market year in the books.  Where does the time go?  Anyhow, since this is the last ChartWatchers newsletter of 2016, it would be an appropriate time to check out the best and worst industry group awards for 2016. Drum roll please! Best 2016 Industry Group:  Dow Jones U.S. Coal Index ($DJUSCL, +143.14% YTD) While it would have been difficult to pull the trigger to buy coal at the end of 2015, a dead cat bounce certainly was not out of the question.  By the time 2015 had ended, coal had fallen close to 90% during the year and Read More 

ChartWatchers

Stock/Bond Ratio Still Favors Stocks But Has Become Overbought

by John Murphy

Several market messages over the past couple of months used relative strength ratios to paint a more bullish picture of the stock market, and a more bearish picture for bonds. While those ratios have strengthened considerably, especially since the election, I'm a little concerned that they're starting to look stretched. On October 28, I showed a ratio of the S&P 500 divided by the 20+year Treasury Bond ETF turning up in favor of bonds. That's the lower circle in Chart 1. Since then, the stock/bond ratio has soared to the highest level in nearly three years. That puts it up against a Read More 

ChartWatchers

Tech Sector and Key Tech Groups are Still Leading

by Arthur Hill

Even though the finance, energy and industrials sectors are grabbing most of the headlines these days, the tech sector is doing just fine with the Nasdaq 100 ETF (QQQ), the Nasdaq 100 EW ETF (QQEW), the Technology SPDR (XLK) and the EW Technology ETF (RYT) hitting new highs this week. We are not talking new 52-week highs, but new all time highs. In addition, the Cloud Computing ETF (SKYY) and Semiconductor SPDR (XSD) hit new highs. At the risk of stating the obvious, it is impossible to be in a downtrend when hitting new highs. Even though these ETFs may seem extended in the short-term (a Read More 

ChartWatchers

Some Long Term Breakouts Are Coming Into Play Globally

by Greg Schnell

There are some very important macro charts starting to come into play globally. These are monthly charts, so we need to check these at the end of December, January and February. The collection of charts shows how big a global bull market could be if they all break through. First of all, France looks like it wants to test the 16-year, long term trend. This chart for the Nikkei in Japan always shocks me when I zoom out. Notice how important 21000 has been for the Japanese Market for the last 25 years, yes 25 years! There is a trend of Read More 

ChartWatchers

Put/Call Ratios At or Nearing Two-Year Lows - Sentiment Bullish

by Erin Swenlin

A webinar viewer recently sent me a chart showing put/call ratios nearing extreme lows. I pulled up the chart and indeed, the 10-DMA of the put/call ratios are nearing or are at two-year lows. What does this actually mean? As the ratio gets smaller and smaller, that means that the amount of calls is accelerating faster than puts. When everyone is buying calls, that implies traders are extremely bullish. When everyone is very bullish, that is generally when the market reverses. Looking at the National Association of Active Investment Read More 

ChartWatchers

ChartLists Are The Key To Disciplined And Successful Trading

by Tom Bowley

I spend a great deal of time scouring the market and looking for interesting trade setups.  It's quite often that I see a stock that I really like, but it's not at a price level where I'm ready to pull the trigger.  If I move onto the next chart, chances are that prior chart will be gone until..I see it days or weeks later and it's made a big move that I was anticipating.  Then it just becomes a wasted opportunity.  So how can StockCharts.com make a difference? ChartLists, that's how. I couldn't trade any longer if I didn't have Read More 

ChartWatchers

Rotation Continues Into Value Stocks, Financials and Energy Still Look Cheap

by John Murphy

Two days after the election (November 10), I wrote a message entitled: "Rotation Out of Growth Stocks into Value Stocks Causes Profit-taking in Technology". We're seeing a replay of that rotation again this week as technology stocks are underperforming the market while financials, energy, and industrials surge. Chart 1 compares the move to new highs in the S&P 500 Value ETF (black bars) to the weaker action in the S&P 500 Growth ETF (red bars) since the start of November. That rotation can be seen more graphically by the surge in the IVE/IVW ratio over the last month (top of Read More 

ChartWatchers

Taking Advantage of Good Luck

by John Hopkins

Every once in a while the gods of trading look out for us and reward our perseverance, a little bone for all of those trades that don't turn out so well. When one of these opportunities takes place you should be prepared to take advantage of these rare gifts by pocketing profits when you can.   As an example, we issued a trade alert to our members this past week on HLX. We issued the alert because the stock had reported strong earnings and had pulled back to a key technical level and looked ripe for a bounce. And as you can see in the chart below the bounce was sharp. Read More 

ChartWatchers

Sum of the Parts Analysis for the S&P 500

by Arthur Hill

The whole is only as strong as the sum of its parts. Applying this logic to the stock market, the S&P 500 represents the whole and the nine sector SPDRs represent the sum of the parts. Let's see just how strong the parts of the S&P 500 are. The chart below shows SPY and the nine sector SPDRs. The sector charts are sorted by the percentage above the 200-day EMA with the highest at the top (XLF) and the lowest at the bottom (XLP). First, note that SPY is above its rising 200-day EMA and in a clear uptrend. Second, note that six of the nine sector SPDRs are above their 200-day EMAs Read More 

ChartWatchers

Is There A Holiday Present For Gold Investors Here?

by Greg Schnell

Gold has dropped into the very unloved category. There is a great quote that interests me when we get technical setups like this.  " I believe the very best money is made at market turns. Everyone says you get killed trying to pick tops and bottoms and you make all your money by playing the trend in the middle. Well for twelve years I have been missing the meat in the middle but I have made a lot of money at tops and bottoms" - Paul Tudor Jones Martin Pring has created some great indicators for helping to find oversold levels. I like to use long term charts and look to see how Read More 

ChartWatchers

Weakened NDX Triggers Two Short-Term Bearish Signals

by Erin Swenlin

The daily chart of the Nasdaq 100 doesn't really resemble any of the other large-cap indexes or even most small-cap indexes. Technology sectors have performed terribly. The Election "euphoria" enjoyed by the Dow Industrials and most other indexes really didn't do much for tech. Consequently, the NDX has triggered a Short-Term Trend Model Neutral signal and a Price Momentum Oscillator (PMO) SELL signal. A look at the DP Scoreboards below and it is quite clear the NDX is weakest and the Dow, the strongest. The Dow is the only index to manage an IT PMO BUY signal. I invite you to watch Read More