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March 2019

ChartWatchers

The Federal Reserve Deja Vu

by Greg Schnell

As always, next week's Fed meeting will be closely watched, with chartists in particular watching it uniquely. On the chart below, the blue lines represent Federal Reserve meeting dates. Friday marked a test of the 2823 level on the $SPX. The brown line at 2823 was the closing level on the first Fed meeting of Jay Powell's role as head of the Fed. It's déjà vu all over again as we closed at 2822.48!  The green line has marked an important resistance level for the index, with the $SPX having tested and rejected that level multiple times Read More 

ChartWatchers

Could The S&P 500 Fall 2.6% Every Year For 16 Straight Years?

by Tom Bowley

In a sense, it already has.  Well, maybe not 16 straight years, but play along. I've done a lot of historical stock market research over the years and several patterns really stand out.  But one in particular always keeps me on edge as a short-term trader.  The week after options expiration generally is not good.  Over the past 7 decades, here is the S&P 500 annualized return by calendar day of the week: Mondays:  -14.82% Tuesdays:  +10.12% Wednesdays:  +20.09% Thursdays:  +10.51% Fridays: Read More 

ChartWatchers

Real Estate Now Leading On Asset Class- And Sector RRGs

by Julius de Kempenaer

This Relative Rotation Graph shows the rotation for asset classes over the past 9 weeks. The main observation is that fixed income related asset classes are all inside weakening and heading, rapidly, towards lagging. SPY (stocks) is close to returning into the leading quadrant. The strongest rotation at the moment, Leading-Weakening-Leading, is now shown by Real Estate. This is interesting as Real Estate is both an asset class but, since not too long, also a sector in the equity universe. The asset class RRG shows VNQ rotating at the right-hand side Read More 

ChartWatchers

Party Like it's 1999

by Arthur Hill

Anyone recognize these two phones? A good old indestructible Nokia candy bar was the first phone for many of us. I had a few Nokia cellphones over the years and they always worked great, back in the day. And, we all remember the Nokia ring tone, which was the most played tune in the world as late as 2009. You can hear it about four and a half minutes into this Ted talk (The 4 Ways Sound Affects Us), which is worth watching (and hearing). Nokia (NOK) and Ericsson (ERIC) were leading telecom stocks some 20 years ago and both took part in the tech-telecom boom of the late Read More 

ChartWatchers

Tech-Dominated Nasdaq Leads Market Higher -- The Nasdaq and S&P 500 are Clearing Their November Highs

by John Murphy

Editor's Note: This article was originally published in John Murphy's Market Message on Friday, March 15th at 2:58pm ET. Just a week after slipping below their 200-day averages, the Nasdaq Composite Index in Chart 1 and the S&P 500 in Chart 2 appear to be ending the week above their November highs. That's the last overhead chart barrier to overcome below last year's highs. And increases the odds that those highs may be tested again. Chart 3 shows the Dow Industrials lagging behind. But that may have a lot to do with this week's heavy selling in Boeing. There seems little doubt Read More 

ChartWatchers

Unofficially a Bull -- PMO BUY Signals Appear on OEX and NDX

by Erin Swenlin

I have a chart at the bottom of this article that will explain my moving out of the bear market camp. Yes, it is delayed, but, as I explained before the December crash, I'd rather miss a bottom and rally than be hanging on for dear life during a quick and painful decline. More BUY signals are appearing on the DecisionPoint Scoreboards. Today, two new PMO BUY signals were triggered when they crossed above their signal lines. Don't get too excited, though, as the VXN and VXO suggest a decline for both next week. I've annotated the new Read More 

ChartWatchers

The Strong Continue to Thrive

by John Hopkins

The S&P is pretty much at the same level it was back in October of last year. However, it still remains well below its all-time high of 2939, which was also achieved in October of last year. Yet there are a number of stocks at their all-time highs, reflective of strong earnings and showing how traders remain attracted to the "best of the best." As an example, take a look at the charts for Trade Desk (TTD) and Stryker (SYK) below. Both easily beat earnings expectations and have hit their respective all-time highs, in spite of the market being below last year's highs Read More 

ChartWatchers

China Dominates The February Big Movers

by Greg Schnell

As we look at the strongest ETFs for February, you'll notice how Chinese-related ETFs have soared of late, as shown in the list below.  Commodity-related ETFs also did very well, as did the technology-related industry groups. From palladium to water, from oil to sunshine to silver, the commodities can be very fast-moving. As solar stocks are part of the energy sector, I like to correlate them into the commodities. One of the things about the commodity area is how fast they can move. In January, gold stocks were doing very well. In February, however, gold was Read More 

ChartWatchers

The Gold Rush Is Likely Over

by Tom Bowley

Gold ($GOLD) performs its best in a falling U.S. Dollar ($USD) environment.  There is a solid inverse relationship between the direction of GOLD and the direction of the USD that has existed for decades.  The following chart illustrates this relationship from 2001 to 2010: "Gold thrives when the dollar dives."  Now let's move on to current reality.  The U.S. Dollar has been in an uptrend since 2011 and I'd let the chart tell us when this uptrend is over.  One major factor in the dollar direction is the relationship between our treasury yields and Read More 

ChartWatchers

Materials (XLB) Are Failing To Break Resistance And Lose Relative Strength

by Julius de Kempenaer

The Materials sector, XLB, is testing overhead resistance around $56. This is the level where lows have been formed in 2017 and 2018 as well as two important highs at the end of 2018. For the time being, the attempt to break is failing, and this is visible on both the daily and the weekly charts. The relative strength for XLB against SPY is in a solid downtrend since the start of 2018, and without a break higher on the price chart, it is hard to see how this can improve at short notice. A Relative Rotation Graph can help to put things into perspective and Read More 

ChartWatchers

S&P 500 Clears the 200-day. Should we Take the Bait?

by Arthur Hill

We are all well aware of the S&P 500 and the 200-day moving average, but how well does this moving average work for broad market timing? Pretty well, it turns out, but only on the long side. I put the 200-day moving average to the test for the S&P 500 and other indexes in "On Trend" on February 21st (Youtube link here). In a nutshell, I found that closes above/below the 200-day work well overall, but a second moving average is needed to smooth closing prices and reduce whipsaws. While there is no such thing as the perfect setting, I settled on the 20-day SMA and 200-day SMA combo Read More 

ChartWatchers

Mid- and Small-Cap Relative Performance Matters! Don't Miss These Crossovers!

by Erin Swenlin

While comparing the relative performance of the OEX, IJH and IWM to the SPX, I found an attention flag. The market is very overbought, with momentum indicators rolling over in overbought territory. The same thing goes for all the sectors. A CandleGlance of the sector SPDRs and SPX are all in agreement concerning the PMOs decelerating and rounding into tops. The CandleGlance below strongly suggests a market top. Bright spots? Technology and Utilities have PMOs that are still somewhat rising. Below is the chart you need to Read More 

ChartWatchers

Major Stock Indexes Continue to Test Overhead Resistance Near Their November Highs

by John Murphy

Editor's Note: This article was originally published in John Murphy's Market Message on Friday, March 1st at 11:55am ET. After having one of the strongest starts to a new year in history, major stock indexes find themselves testing yet another potential overhead resistance barrier. And they're doing so while in an over-extended technical condition. But they've been looking over-extended for most of the past month. Chart 1 shows the Dow Industrials testing their early November intra-day high at 26,300 (first red circle). A decisive close above that previous peak would clear the way for a Read More 

ChartWatchers

A Treasure Chest Awaits You

by John Hopkins

SO MANY stocks that recently reported earnings beat expectations and gapped up sharply on very strong volume after their results were released. Those stocks include OLED, TTD, W and PANW, among others. In fact, take a look at the chart below on TTD, which reported its earnings before the bell on February 22, and you'll get a snapshot of what a lot of stocks that beat expectations looked like. Just take a look at that powerful gap up on massive volume, which occurred when traders heard about the company's numbers; it climbed 33% from the prior day's close to the high of the Read More