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November 2018

ChartWatchers

Sticking With Companies That Report Strong Earnings

by John Hopkins

The market finally found its legs last week after the Fed signaled they might slow down their interest rate-raising campaign. In fact, after being technically wounded for some time, all of the major indexes closed back above their respective 20-day moving averages, with the Dow clearing its 200 day as well. The move higher was most welcomed by the bulls, who have been behind the eight ball since the market peaked in early October and as the bears have been in charge. But even as the market was getting hammered over the past two months, some stocks that came up big when they reported Read More 

ChartWatchers

Short-Term Trend is Improving

by John Murphy

Editor's Note: This article was originally published in John Murphy's Market Message on Friday, November 30th at 2:36pm ET. There are lots of way to determine the trend of the stock market. The placement of moving average lines is one of them. Bollinger bands (invented by John Bollinger) are another. Chart 1 applies both techniques to a daily chart of the S&P 500. The chart shows the SPX bouncing off previous support at its late October low which is positive short-term development. And it's now moving up to test its 200- and 50- day moving averages (red and blue lines). The 14-day Read More 

ChartWatchers

Plotting breadth indicators on Relative Rotation Graphs - Part II

by Julius de Kempenaer

After finishing the previous article on plotting breadth indicators on Relative Rotation Graphs I have spent hours and hours on studying probably a couple of thousand different RRGs holding various groups of sectors in combination with their breadth equivalents. And although I did not find the perfect prediction tool or the ideal leading indicator I do think using these alternative data series on RRGs can function as a piece of the puzzle that we are trying to solve. What have I learned so far? For this experiment I Read More 

ChartWatchers

You Must Master These Two Things To Trade Successfully

by Tom Bowley

Trading is difficult, emotional and can be quite lonely.  We have seen volatility ($VIX) shoot higher, rising from an 11.61 close on October 3rd to a high of 28.84 on October 11th.  Since then, we've remained above the key 16-17 support level that typically holds during bear markets.  I don't believe we're in a bear market, I'm just pointing out that the last two bear markets saw VIX declines down to 16-17, no further.  Bear markets require a certain level of fear to thrive in.  So far, the VIX is cooperating.  A VIX break below 16 would be a bullish Read More 

ChartWatchers

Taking the Temperature of the Stock Market

by Arthur Hill

The Momentum Factor iShares (MTUM) and the Minimum Volatility iShares (USMV) represent opposing sides of the market. High flying stocks can be found in the momentum ETF, while the more boring issues dominate the minimum volatility ETF. Using these two ETFs, chartists can quickly take the temperature of the stock market and adjust their strategy. The market is running hot and then risk appetite is strong when momentum stocks outperform (risk on). Conversely, the market is running cold and the risk appetite is weak when low volatility stocks outperform momentum stocks (risk off). Read More 

ChartWatchers

You Really CAN Make Money in a Rough Market Environment

by John Hopkins

The quarter beginning 10-1-18 has been challenging for a lot of traders. The NASDAQ has lost almost 10% while the S&P has lost 6%, both well off the quarter's low. Volatility has reigned with the VIX at elevated levels for most of the quarter. It has been challenging for us at EarningsBeats as well, though you might not know it from our results even though, of the 29 trade alerts we issued to our members since October 1, 18 stocks came off with losses. But on a risk adjusted basis - assuming an equal amount of money invested in all 29 stocks - so far we've seen a net gain of over 2.5% Read More 

ChartWatchers

NEW! Introducing "Chart View" For Market And Industry Summary Pages

by Grayson Roze

The more charts, the better. That's my motto, especially this week. I'm happy to announce that our Market Summary and Industry Summary pages have recently received a major upgrade – "Chart View" is here!  We've expanded the functionality of these two important pages, making them even more useful resources to help you track and analyze the current markets. Market Summary Page On our new-and-improved Market Summary page, you'll now see two tabs at the top – one for the original "Table View" and a new tab for "Chart View." This new view Read More 

ChartWatchers

Money Managers Report Lowest Exposure Since Early 2016

by Erin Swenlin

One of the sentiment indicators that I update MarketWatchers LIVE viewers on each Friday is the National Association of Active Investment Managers (NAAIM) exposure reading. A few things you should know about these guys. NAAIM’s membership ranges from small regional firms to large national firms, including hedge fund managers, mutual fund companies and a variety of other firms that provide professional services. Many of them are technicians. They will sometimes be "right" in their exposure in the very short term, but in the intermediate term, price reversals nearly always occur. Read More 

ChartWatchers

The Reason Short-Term Rallies are Failing is Because Weekly Charts Look Even More Negative

by John Murphy

Editor's Note: This article was originally published in John Murphy's Market Message on Wednesday, November 14th at 1:39pm ET. The weekly bars in Chart 2 show the last upleg of the S&P 500 uptrend that began in early 2016. And it shows that uptrend weakening. It shows the October price drop falling below its 40-week moving average (red line) by the widest margin in more than two years, and a rising trendline drawn under its 2016-2018 lows. This week's attempt to regain those two previous support lines is failing. The two weekly indicators in Chart 2 also paint a negative picture that Read More 

ChartWatchers

Experimenting with breadth on Relative Rotation Graphs

by Julius de Kempenaer

Various breadth indicators are used to analyze the underlying strength or weakness of a broad market index like the S&P 500 index or NYSE. Over the years a number of different breadth indicators have been developed and/or used in their work by well known technical analysts. A few names that spring to mind here in the Stockcharts community are Tom McLellan, Carl Swenlin and Greg Morris. "Market breadth" groups a number of indicators that derive data from the underlying market that they cover. Things like the A/D Line, the advance-decline line Read More 

ChartWatchers

These Material Stocks Are Leading

by Greg Schnell

The week that finally bounced! It is always difficult to buy stocks near the lows. The volatility is high and your afraid of further drops. While we never know when the final low will be in advance, we have lots of tools that helps us see an oversold market. That was the case for the bounce we experienced this week as well.  With the bounce, its always good to see what sectors try to lead out of the hole. Materials were clearly one of the leaders.  Within Materials, there were a couple of themes.  CF and Mosaic are both in the Fertilizer space. They both shot up. In Read More 

ChartWatchers

3 Upcoming Earnings Reports I Can't Wait To See

by Tom Bowley

I'm not a fan of buying (or short selling) stocks and holding them into quarterly earnings reports.  It's simply too difficult to manage risk.  Yes, there are options strategies that you can employ to reduce risk so we could debate back and forth the merits of holding stocks into earnings.  For me, though, it's just not something I'm comfortable doing.  I'd much rather trade a stock after its earnings report is in the rear view mirror so I can eliminate one major risk factor. Having said that, I know many of you do like to anticipate positive Read More 

ChartWatchers

Market Overvalued Even on Forward Earnings

by Carl Swenlin

Charts of fundamental data are as useful as price charts in helping us visualize fundamental context and trends. In the case of earnings, the following chart shows us where the S&P 500 would have to be in order to have an overvalued P/E of 20 (red line); fairly valued P/E of 15 (blue line), or an undervalued P/E of 10 (green line). I have added three hash marks on the right side of the chart to show where the range markers are projected be at the end of 2019 Q2. Currently, price is well above the traditional value range; however, assuming no major price advance or decline, and assuming Read More 

ChartWatchers

Introducing Brian Livingston And His New StockCharts Blog, "Muscular Investing"

by Grayson Roze

To kick off the new month, I'm thrilled to announce another all-star addition to our StockCharts commentary team. Brian Livingston, author of the recently-released book Muscular Portfolios, will be sharing his investing insights and money management wisdom through a new weekly blog, Muscular Investing. Brian's background is quite unique, and his unconventional path to the investing world is a fascinating one. Before turning his attention to the markets, he was a successful dot-com entrepreneur and an award-winning business and financial journalist. From Read More 

ChartWatchers

A Precious Metal that Actually Acts Precious

by Arthur Hill

Gold, silver and platinum suffered selling pressure over the last few years, but palladium attracted buying pressure and outperformed. It is one of the few precious metals trading near a 52-week high and in a long-term uptrend. The first chart shows three year performance for the continuous futures contracts for Palladium ($PALL), Platinum ($PLAT), Gold ($GOLD) and Silver ($SILVER). Performance for the latter three peaked in summer 2016 and fell into 2018. Palladium, in contrast, moved higher from early 2016 to early 2018 and is up over 50% the last three years. Read More 

ChartWatchers

Big Drop in Apple Hurts Tech Sector and The Nasdaq Which Are Leading Today's Stock Retreat

by John Murphy

Editor's Note: This article was originally published in John Murphy's Market Message on Friday, November 2nd at 12:28pm ET. It's usually not a good sign when the market's biggest stock takes a big hit. That's especially true when it happens the day after the company reported its fourth consecutive quarter of record revenue and profits. But that's today's biggest story. Chart 1 shows Apple (AAPL) plunging -7% and falling to the lowest level in nearly three months (after failing a test of its 50-day average). Over the past month, we've seen a succession of big tech stocks fall on Read More 

ChartWatchers

Be Prepared to Pounce on the "Best of the Best"

by John Hopkins

We're deep into earnings season, which means patient traders can put themselves into a position to profit handsomely. The process starts by identifying those companies that beat earnings expectations and gap up sharply on strong volume, because these are the types of stocks that traders will be watching to pounce on when things settle down. A perfect example is QuinStreet, Inc (QNST), a company that beat earnings expectations last week and exploded higher on massive volume. In fact, this was an EarningsBeats trade alert that rose 10% in just two days and 27% at its peak based upon its Read More