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About this blog: is our free newsletter for individuals interested in technical trading and chart analysis. It is sent out twice a month via email. This blog contains early-access, preview versions of the articles that later appear in the official newsletter.

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ChartWatchers

Stocks Remain On The Defensive

by John Murphy

Editor's Note: This article was originally published in John Murphy's Market Message on Friday, March 2nd at 12:26pm ET Wednesday's message showed the PowerShares QQQ (representing the Nasdaq 100 Index) pulling back from overhead resistance at its late January peak. That suggested profit-taking in the technology-dominated QQQ and the rest of the market. It also suggested a retest of its 50-day moving average. Chart 1 shows that test taking place today. Since the QQQ led the market higher during its February rebound, what it does from here will tell us something about the direction of the Read More 

ChartWatchers

Bearish Bias - Weekly PMOs Log New SELL Signals on DP Scoreboards

by Erin Swenlin

I did a review of the monthly charts Wednesday and noticed a bearish bias. Today three new Intermediate-Term Price Momentum Oscillator (PMO) SELL signals arrived. The weekly PMOs crossed below their signal lines which triggered these signals. Weekly charts are presenting bearish characteristics. After looking at all three of these weekly charts, the main thing to notice are the rising bottom trend lines  price could continue lower and preserve the rising trend. Helpful Read More 

ChartWatchers

How Long Do Corrections Last Usually?

by Greg Schnell

After a massive run in 2017, the market has paused to absorb all the news of the tax package. I am reminded of other instances where the market sold off on good news, surprising retail investors. Stock markets usually lead the economy, but that does not mean that a little rock and roll won't happen along the way. When the $SPX was flying above a long term moving average by such an extreme (13%), who wouldn't expect some correction of sorts?  A crack in the momentum trend shown by the PPO can be a clue to more weakness. In this particular case Read More 

ChartWatchers

Is A Bear Market Underway? No And Here's My Argument

by Tom Bowley

THE Question Is this a correction within a bull market or is it the beginning of a bear market?  That is THE question that everyone is debating and hoping to answer correctly.  There's no crystal ball to know for sure the correct answer.  However, the market does provide us clues if we're willing to look for them. Let's begin with the knowledge that roughly two-thirds of GDP is comprised of consumer spending.  So it makes common sense to analyze consumer stocks for clues about the direction of our economy and, hence, the stock market.  The aggressive component Read More 

ChartWatchers

Applying Dow Theory to the Top Sectors for Broad Market Analysis

by Arthur Hill

The principle of confirmation is important to the application of Dow Theory. This principle asserts that the Averages, Dow Industrials and Dow Transports, should confirm each other when making new highs. In other words, both should make new highs to affirm the broad market trend. Failure by one results in a non-confirmation that reflects underlying weakness.  Chartists can apply this confirmation principle to sector analysis and assess the state of broader market. I am not going to use all ten sectors because the bottom five sectors account for less than a quarter of the S&P Read More 

ChartWatchers

The Dark Side of Earnings

by John Hopkins

Most analysts would agree that overall, 2017 Q4 earnings were superb. For quite a while we saw one company after another beat earnings expectations and they were rewarded for those results as well. But recently, as the market has come under fire, responses to many earnings reports have been brutal. For example, last week MNST, BOX and JCP got slammed after disappointing the street. And WTW reported as well with a nice after hours pop only to get hammered after the numbers sunk in. I bring this up since I know there are traders who are willing to hold positions into earnings reports Read More 

ChartWatchers

Recent Pullback in Commodities Is Likely Tied to Stock Correction

by John Murphy

My January 27 message wrote about a bullish breakout in commodity prices to the highest level in two years. I took that as another sign that inflation pressures were starting to build. The weekly bars in Chart 1 show that bullish breakout taking place in the Bloomberg Commodity Index (circled area). During February, however, commodity prices have sold off enough to call that upside breakout into question. In my view, it probably doesn't. Commodity prices have been rising on signs of a growing global economy which increases demand for raw materials. As a result, commodities and stock prices Read More 

ChartWatchers

Big Scores Made Possible through Extreme Patience

by John Hopkins

I'm sure most traders get tired of being told to be patient when the market or a specific stock is climbing day after day. Missing out on nice rallies can be extremely frustrating. But if there ever was a time when patience paid off big time it was over the past few weeks. Before I share the results of some recent trade results with you I want to point out our formula at Earnings Beats, because it's simple. We scan for stocks that beat earnings expectations - top and bottom line - examine the market reaction to the earnings and then wait for pullbacks to strategic levels that could prove Read More 

ChartWatchers

Natural Gas In February - Yes Really

by Greg Schnell

Natural Gas has been testing the $2.60 level for two weeks now. I have placed arrows around the centre of the first quarter in each of the last six years. By watching Natural Gas closely right now, there can be a great 4-6 week trading opportunity that is not correlated to the equity market indexes.  Zooming in on the daily, Natural Gas is testing the lows. I have included the Commodity Channel Index (CCI) Indicator below the chart. One of the reasons to look for a bounce here is the test of the 4th quarter lows. It is not uncommon for Natural Read More 

ChartWatchers

History And Fibonacci Say We Topped On Friday

by Tom Bowley

Fear ramped up with the early February selling and a capitulatory bottom (at least short-term) printed.  The Volatility Index ($VIX) doesn't hit the 40-50 zone often and, when it does, it typically coincides with a panicked selloff and bottom.  The last time we saw panicked selling (before the past few weeks) was in August 2015.  Let's take a trip down memory lane: The drop was a little more than 10%, the VIX spiked to 50, a major counter trend rally topped at the 61.8% Fibonacci retracement level and we experienced a false breakout above the 20 day EMA - all Read More 

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