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February 2019

ChartWatchers

Energy Is Up To Bat

by Greg Schnell

One of the hurdles to being a great market analyst is understanding the shifting sands of the stock market without an end point. In a baseball game, momentum may swing to and fro, but the game has an ending, based on innings and score, that defines when the game is over. The stock market, by contrast, wakes up renewed every day with new clues and no predefined terminus as to where momentum is going. Healthcare (orange) continues to be a below-average sector in the market since the 2018 Santa Claus low. The defensive sectors are on the right-hand side. Consumer Staples Read More 

ChartWatchers

The Secret Combination For Solid Reward To Risk Trades

by John Hopkins

Well, it's really not a secret, but it's our secret at EarningsBeats.com.  Our mantra is "Better Timing.  Better Trades." and, for us, that means finding the best stocks, identifying key price and moving average support and then adding..an extra helping of patience.  Many of the stocks on our Strong Earnings ChartList never hit key support and, therefore, are not solid trades despite the fact they may go higher, even much higher in some cases.  To be successful traders, we must be disciplined in managing risk. Read More 

ChartWatchers

Here's How Relative Strength Will Help Your Trading Right Now

by Tom Bowley

Understanding relative strength is extremely important in outperforming the benchmark S&P 500.  As a sector begins to outperform, it tells us that money is rotating towards that particular sector.  One way to visualize this is to look at an RRG chart.  It will only take one glance to quickly identify what's working RIGHT NOW and what is not: I have highlighted consumer discretionary (XLY) on this chart because it's the only sector with "RS-Momentum" and "RS-Ratio" above 100 readings.  That places it in the leading quadrant and tells us that we need to beware of Read More 

ChartWatchers

Checking The NIFTY 50 Universe On RRG Results In A Nice Setup For INFRATEL.IN

by Julius de Kempenaer

With more and more eyeballs looking at the Indian stock market and data for individual stocks and sectors becoming available on Stockcharts.com I started to keep an eye on developments in that market via Relative Rotation Graphs. To make it easier (for you but also myself), the NIFTY 50 Index is added as a group to the drop-down selection box. This universe holds all the members of the NIFTY 50 index and uses that index, $NIFTY, as the benchmark. Going forward we are planning to add pre-defined groups for Indian sectors as well as groups holding Read More 

ChartWatchers

Small and Mid Caps Take the Momentum Lead

by Arthur Hill

The Relative Strength Index (RSI) is a momentum indicator that chartists can use to measure the strength behind a price move. Moreover, chartists can also use RSI values to rank momentum and find the leaders. As an indicator that measures the magnitude of gains relative to the magnitude of losses, RSI values above 50 indicate that the gains are outpacing the losses over the lookback period. The further above 50, the stronger the gains relative to the losses. Thus, RSI values above 70 indicate that the gains are seriously outpacing the losses. Put another way, RSI values above 70 reflect Read More 

ChartWatchers

Dow and SPX Log New IT BUY Signals - Consumer Discretionary (XLY) LT BUY Signal

by Erin Swenlin

During today's DecisionPoint show on StockCharts TV (airing Fridays at 4:30p EST), Carl and I discussed how, while we're still bearish, there are signs of improvement. The main problem will be getting too overbought. Three signs of definite improvement are the two new IT Price Momentum Oscillator (PMO) BUY signals on the Dow and SPX Scoreboards, as well as the new LT Trend Model BUY signal on Consumer Discretionary (XLY), generally considered an aggressive sector that does well in bull markets. You'll note the positive PMO crossover Read More 

ChartWatchers

Nasdaq May Be the Third Major Stock Index to Cross Its Red Line

by John Murphy

Editor's Note: This article was originally published in John Murphy's Market Message on Friday, February 15th at 12:40pm ET. Charts 1 and 2 show the Dow Industrials and S&P 500 building on their gains after rising above their 200-day averages (red lines). Both now appear headed for a test of their early December peaks. Chart 3 shows the Nasdaq Composite Index in the process of testing its red line and its December high at 7486. A close above both barriers would be a positive sign for the Nasdaq and would strengthen the market's uptrend. All eleven sectors are in the black today Read More 

ChartWatchers

Combining Earnings Strength And Seasonal Tendencies

by Tom Bowley

I love the seasonality tool here at StockCharts.com.  It can potentially give you an advance notification of a price move before it happens.  One of the more striking seasonal tendencies that I've seen has been the unbelievable historical performance of Bookings Holdings (BKNG) from January through May, where it's averaged the following monthly returns over the last two decades: January:  +5.7% February:  +8.2% March:  +8.0% April:  +8.4% May:  +3.1%. Add those up.  That's a gain of 33.4% on Read More 

ChartWatchers

Using Relative Rotation Graphs To Break Down The Bloomberg Commodity Index Family

by Julius de Kempenaer

This article was published in the RRG blog on 31 January and takes a look at the Bloomberg Commodity Index Groups through the lens of a Relative Rotation Graph. When possible, I prefer to use data-sets that come from the same family and creating a "closed universe." This is a universe where all securities on the RRG together make up the benchmark that is used for comparison. For the US sectors, we often use the 11 SPDR ETFs and compare them against SPY. All these ETFs together make up SPY. For commodities, we can achieve a similar setup by using the Read More 

ChartWatchers

Putting January Into Perspective

by Arthur Hill

One's outlook often depends on one's timeframe. This outlook can also be influenced by recent price action or a recency bias. The S&P 500 surged 7.87% in January and recorded its biggest monthly advance since October 2015. This surge, however, was preceded by a deeper 9.18% decline in December and the biggest monthly loss since February 2009. Taking the two months together, the bears still have the monthly scoring edge. The January gain is clearly impressive by itself, but the picture dims when we step back three, six and twelve months. Based on the January Read More 

ChartWatchers

Cyclicals and Biotechs are Trading Above Their 200-Day Lines

by John Murphy

Editor's Note: This article was originally published in John Murphy's Market Message on Thursday, January 31st at 12:34pm ET. Chart 4 shows the Consumer Discretionary SPDR (XLY) trading above its 200-day line in today's trading. That a positive sign for the economically-sensitive sector and the market. It's usually a good sign for both when cyclical stocks are leading it higher. Chart 5 shows the Biotechnology Index ($BTK) also trading above its 200-day line. That's giving a boost to the healthcare sector and the Nasdaq market. Interestingly, defensive stock groups like consumer staples Read More 

ChartWatchers

Earnings Season Brings with it Lots of Trading Candidates

by John Hopkins

We're now deep into earnings season, with hundreds of companies reporting last week alone. The reaction to earnings so far has been mostly positive - witness the nice move higher in the market. But we've also seen some earnings misses, with those companies taking it on the chin. The very good news for traders is that, at some point, those companies that beat or missed expectations will become high reward-to-risk trading opportunities, both on the long and short side - especially for those traders who exhibit extreme patience. As an example, take a look at the chart below on Read More 

ChartWatchers

New Feature Alert! Introducing The Advanced Scan Editor

by Grayson Roze

Calling all scanners! The biggest thing since sliced bread has just hit the Advanced Scan Workbench. Last week, we released a major upgrade to our premier scanning tool – the Advanced Scan Editor. This useful addition to the Advanced Scan Workbench is designed to make it both easier and faster to create and run your own custom technical scans. When you write a new scan or edit a saved one, the new Advanced Scan Editor will automatically check the syntax as you type. It can provide shortcuts and suggestions, point out Read More 

ChartWatchers

New IT Trend Model for Dow - Rising Trend Channels Replace Ascending Wedges

by Erin Swenlin

Today, we had a new Intermediate-Term Trend Model (ITTM) BUY signal trigger on the Dow Industrials ($INDU). Additionally, the SPY (which is not on the Scoreboards) triggered a new ITTM BUY signal as well. Be sure to read Carl's DP Weekly Wrap for this week to read about that signal change in more detail. The other three large-cap Scoreboards will add similar signals next week unless price falls below the 50-EMAs.  Not only are we seeing several ITTM BUY signals appearing or nearly arriving, but the bearish ascending wedges Read More 

ChartWatchers

Three Things From January Stand Out

by Greg Schnell

There are three areas of the market perking up nicely that you might not be hearing about much on the business news channels. These are Chinese stocks, Solar stocks and Industrial Metals. For the Chinese stocks, I will use the KWEB ETF to represent a broad group of Chinese technology companies. The Chinese Technology ETF is turning up nicely. The SCTR is still very low, but some individual stocks in the ETF and the broader Chinese technology group look pretty strong. I talked more about these stocks on the January 23rd episode of Market Buzz. Read More