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April 2017

ChartWatchers

Investment Grade Corporates Outperform Junk Bonds

by John Murphy

The green bars in the chart below show the iBoxx Investment Grade Corporate Bond iShares (LQD) trading at a new five-month high after clearing its 200-day average. The red bars, however, show the iBoxx High Yield Corporate Bond iShares (HYG) backing off from its early March high. The fact that investment grade bonds are rising, while junk bonds are weakening, carries a potentially negative message for stocks. That's because junk bonds are more closely correlated with stocks than bonds. JUNK BONDS UNDERPERFORM It's often instructive to see what various bond categories are doing relative Read More 

ChartWatchers

Bank Profits Soar But Bank Stocks Sour

by Tom Bowley

At the time of the last ChartWatchers article, I didn't really see a whole lot to be nervous about.  However, the bullish picture certainly is getting a bit murkier based on developments since then.  After a very strong ADP employment report on April 5th, most everyone was expecting a solid nonfarm payrolls report two days later.  That never materialized, though, as the consensus was for 175,000 jobs to be reported.  Estimates ranged from 125,000 to 202,000, yet the actual number reported was 98,000.   That disappointment occurred when the Volatility Index ("VIX") Read More 

ChartWatchers

Earnings Take Center Stage

by John Hopkins

It's that time of the year, a time when all attention is turned to the bottom line of corporate America. It happens every quarter and it always has a major impact on the direction of the market. And the bottom line almost always trumps everything else. Of course there are other factors that impact the market including economic reports, geopolitical developments, Federal Reserve policies, as examples. But investors mostly care about the performance of stocks they own, including how they hold up in times of adversity, including market turmoil. As an example, we issued Read More 

ChartWatchers

How to Track ETF Tracking Errors - Examples for USO and GLD

by Arthur Hill

Most of us are aware of the tracking error between oil and the US Oil Fund. There is indeed a tracking error, but a few charts reveal that this tracking error is subject to fluctuations and can even remain stable for extended periods. Today I will show how to measure tracking errors between ETFs and the underlying asset. Gold and oil will be used for examples, but these techniques can be applied to any ETF and its underlying asset, be it an index or commodity.  There are two ways to chart the tracking error between an ETF and the underlying asset. Chartists can Read More 

ChartWatchers

Scoreboard Weekly PMO SELL Signals Approaching Fast!

by Erin Swenlin

One look at the DP Scoreboards and it is apparent there are problems in the short term. It appears that the intermediate term is sitting comfortably on BUY signals. That is true for the IT Trend Models (20/50-EMA crossover signals on daily chart), but momentum had already starting waining on the weekly charts for these indexes and now all of them are vulnerable to IT Price Momentum Oscillator (PMO) SELL signals this Friday. The Dow barely escaped a PMO SELL signal this week as the IT PMO closed only .01 above its signal line. The large amount Read More 

ChartWatchers

Commodity Calamity? Steel And Copper Crack

by Greg Schnell

The Industrial Metals have been on everyone's radar recently. The daily and weekly charts are showing big cracks.  Starting with the Steel ETF (SLX), this is on a train out of town. This contains a list of companies related to the Steel industry. Watch for a bounce at the 200 DMA and see if we get more than a bounce to the head/shoulders neckline in blue. Copper is also having a rough month. This Copper Miners ETF (COPX) contains companies related to Copper. We are almost 20% off the highs. Having both Steel and Copper weakening is a big Read More 

ChartWatchers

5 Reasons Why This Isn't 2007

by Tom Bowley

Many market pundits on CNBC continue to predict a market top, discussing how we've run too far too fast and that valuations are too high and blah, blah, blah.  Fear sells and CNBC is all about their ratings and advertisements.  There's an occasional nugget of solid information, especially if there's a worthwhile guest on to listen to.  But keep in mind what their end goal is - to make money, and usually at your expense.  I'll watch CNBC for guest appearances and streaming news, but it's typically muted and in the background. Market tops come in all Read More 

ChartWatchers

Percent of Stocks Over 200-Day Average Turns Back Up

by John Murphy

My last two messages have stressed the importance of the 200-day moving average. It's what separates uptrends from downtrends. In order to sustain a bull market, more stocks have be above their 200-day average than below it. And that is currently the case. The red line in Chart 5 is the percent of NYSE stocks above their 200-moving average (which I also showed on Thursday). The line rebounded from 54% just prior to the November election to 76% during February. March's modest setback lowered the line to 64% where it bottomed. This week's upturn shows the red line rising again. That's a good Read More 

ChartWatchers

Trust Your Good Work

by John Hopkins

If you trade stocks you're going to run into situations where you question whether or not you are making good decisions. This could include identifying entry levels and setting price targets and stop losses. It could also include pulling the trigger on a trade, taking a loss or even locking in profits which is sometimes easier said than done. At EarningsBeats we issue trade alerts to our members and every one carries with it potential risks and rewards. A trade can go against you quickly or it might work out just like you had imagined. But every trade alert issued has been studied Read More 

ChartWatchers

A Medical Marijuana ETF (HMMJ) Begins Trading This Week - No April Fools Joke

by Greg Schnell

The Stock Market is a real-time place to see the true spirit of Greed and Fear come to the forefront. Technicians use the words Supply and Demand to study the market characteristics. Over the last few years, one of the most interesting areas of the market is the niche ETF for finding specific areas of investor interest.  This week marks the rollout of the 'Horizons Medical Marijuana Life Sciences' ETF (HMMJ.TO). For anyone interested in the ETF, a look inside its contents would probably be more helpful than the buzz around the concept.  As a technician Read More