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April 2018

ChartWatchers

Bloomberg Commodity Index Testing Its 2018 High -- Upside Commodity Breakout Would Signal Higher Inflation -- Rising Commodity Prices Push Bond Yields Higher

by John Murphy

Editor's Note: This article was originally published in John Murphy's Market Message on Thursday, April 19th at 12:11pm ET BLOOMBERG COMMODITY INDEX IS NEAR AN UPSIDE BREAKOUT This week's surge in commodity prices is starting to attract a lot of attention. That's because rising commodity prices are a leading indicator of inflation. Rising commodity prices have a lot of intermarket implications. For one thing, rising commodity prices usually cause Treasury bond prices to fall and yields to rise (as they're doing today). That usually helps Read More 

ChartWatchers

Go Away In May? Not If You Own This NASDAQ 100 Stock

by Tom Bowley

One of the most over used cliches in the stock market, in my opinion, is "go away in May".  First of all, it's simply bad investment advice.  Since 1950 on the S&P 500, the May 1st to July 17th period has produced annualized returns of 6.00%.  So if you decide to "go away in May", where will you park your long-term money in today's environment and beat 6%?  Granted, that 6% return is not guaranteed, but it is the historical return for the period listed above and it's not bad considering that a 10 year treasury note yields 2.95%. A better piece Read More 

ChartWatchers

Three Strike Trend Following with the PPO

by Arthur Hill

The Percentage Price Oscillator (PPO) is mostly used as a momentum oscillator, but chartists can also use it to define the trend, even the long-term trend. Chartists interested in trend signals can simply ignore the wiggles and the signal line, and instead focus on zero line crossovers.  As noted in ChartSchool, the PPO is the percentage version of MACD because it measures the difference between two EMAs. The PPO takes MACD a step further by dividing this difference by the longer EMA. MACD shows the absolute difference, while the PPO shows the difference as a percentage of the longer Read More 

ChartWatchers

What a Trip! PMO Finds Two Travel & Tourism Stocks Poised To Take Off

by Erin Swenlin

This afternoon I ran one of my PMO scans (you'll find the link to my most popular scan in the link at the bottom of this article) and found two Travel & Tourism stocks that I found quite interesting. What I look for are Price Momentum Oscillator (PMO) readings that are rising or have had a positive crossover along with a favorable price chart. TripAdvisor (TRIP) and Booking Holdings (BKNG) both fit the bill. TripAdvisor (TRIP) hasn't yet broken out above resistance at $42 and declining tops line resistance is also right around there. I am looking for a breakout here Read More 

ChartWatchers

Can Financials Soar If Bonds Yield Rise Above 3%?

by Greg Schnell

Financials have been down and out recently but the last two days they showed some resiliency in the face of broader selling.  The Bank Index looks set to turn higher. Widening out the picture, since 2016, the rising rates shown on the $TNX chart have created sudden moves on the $DJUSBK index. I posted an article in Don't Ignore This Chart Friday afternoon with this price chart of the TLT. If the TLT price is going to break down, sending yields higher, perhaps we can expect another surge in the US financial stocks. I recorded the first Read More 

ChartWatchers

It's all About Reward to Risk

by John Hopkins

Anytime we issue a trade alert to members at EarningsBeats it must carry a minimum reward to risk of at least 2 to 1. In fact we rarely consider getting involved in a trade unless the potential reward to risk is at least 3 to 1 or higher. The concept of reward to risk is simple; we don't want to put capital at risk unless it's worth while. This means there needs to be a disproportionate upside to downside potential in a trade to make it worth pursuing. A perfect example of a high reward to risk trade is Square (SQ) where we issued a trade alert to members on April 6 with an entry price Read More 

ChartWatchers

Third Tariff Threat Sinks Market

by John Murphy

Editor's Note: This article was originally published in John Murphy's Market Message on Saturday, April 7th at 7:55am ET Just when it looked like the stock market was about to recover from the first two rounds of tariff threats, stocks were hit with a third and bigger $100 billion tariff threat after the close on Thursday. As a result, stock market indexes fell more than 2% on Friday with all market sectors in the red. That pushed all three major stock indexes back into the red for the week. Foreign stocks also fell sharply. After Read More 

ChartWatchers

Making Money on Earnings Reports

by John Hopkins

Earnings season is about to get underway with thousands of companies scheduled to report their Q1 numbers. It's an exciting time each quarter when companies are  rewarded or punished depending on their results. It's always interesting to watch how traders react to a specific earnings report since there's really no way of telling what the reaction will be. For example, a company might beat earnings expectations but the stock might sell off. Or a company might miss earnings expectations and garner a positive response. And it's because of this unpredictability that it's dangerous to Read More 

ChartWatchers

Identifying Solid Reward To Risk Trades For A Big Pre-Earnings Advance

by Tom Bowley

The start of every quarter represents a big opportunity to me and the reason is simple.  Historically, the odds favor a bullish move into earnings season.  Before we consider which individual stocks might be poised for a solid advance, let's take a look at history and the Volatility Index ($VIX). History is fact and indisputable.  It doesn't guarantee future results, but it does provide us a seasonal roadmap.  We know that earnings are a key factor in the direction of stock prices and we know that earnings tend to rise over time.  We also know, or should know Read More 

ChartWatchers

Rocky Indexes Frustrate Bulls And Bears

by Greg Schnell

A wild week for the indexes concluded with a slam on Friday. As we head into earnings, we continue to see the market oscillate between the bulls and the bears. I continue to see a couple of nice things in the wild swings. The upcoming week should tell us which way this is going. Here is a two week view of the $SPX with 60-minute bars.  If Friday is the low or near the low: We have a head shoulders base Left and right shoulders are equal here The improving momentum matches a head/shoulders base Read More 

ChartWatchers

The 800-pound Gorilla Continues to Struggle

by Arthur Hill

The percentage of stocks above the 50-day EMA is a breadth indicator that measures internal performance. Chartists can compare this indicator across indexes to identify the leaders and laggards. The Nasdaq 100 is the weakest of the major indexes and weighing on the broader market.  The chart below shows %Above 50-day EMA for the S&P 500, S&P Mid-Cap 400, S&P Small-Cap 600 and Nasdaq 100. First, notice that this indicator did not dip below 30% in 2017 for the S&P 500 and Nasdaq 100. This was a strong year for large-caps and large-cap techs.  Read More 

ChartWatchers

Defensive Sectors Performing - Utilities Only IT Trend Model BUY Signal

by Erin Swenlin

If you've been reading the DecisionPoint Blog lately or watching the MarketWatchers LIVE show on StockCharts TV, you know that I have been expressing concern over the sector rotation over the past few weeks and month. Over the past month, the worst performer is the Technology sector, followed by Financials which also took a hit. The highest performers by far have come in the more defensive areas of the market. If rallies come on the back of the defensive areas of the market, that is a sign of a bear market in the making. This week, we lost Read More