ChartWatchers September 15, 2018 at 08:00 AM
The Relative Rotation Graph shows the relative positions of various asset classes (ETFs) against VBINX, a Vanguard balanced index fund, as the benchmark. The long tails for Real Estate and Commodities stand out, as well as the cluster of fixed income related asset classes inside the red oval. The strongest clue, on this RRG chart, however, is coming from SPY which is the only asset class inside the leading quadrant AND the only asset class moving at a positive RRG-Heading. The weak rotation for the US dollar index theoretically suggests that Read More
ChartWatchers September 15, 2018 at 04:52 AM
There are lots of indicators out there, but one metric stands head and shoulders above the rest. No, it is not a head-and-shoulders pattern. There are hundreds, if not zillions, of ways to measure the trend and identify trend reversals. Over the years, I have found trend reversals to be more the exception rather than the norm. Trends show a tendency to persist and this means we are better off staying with the trend instead of looking for reversals. The single best thing a stock can do is record a new 52-week high. A stock that hits a new high is in an uptrend and is a Read More
ChartWatchers September 14, 2018 at 11:35 PM
The bulls have remained in charge for a long time now in large part due to continuing, strong earnings. Even with the constant daily noise surrounding the market it almost always comes down to the bottom line. Thus when traders are looking for high reward to risk trades it makes a lot of sense to zero in on those companies that handily beat earnings expectation. As an example, take a look at the chart below on SWIR, a company that reported its earnings at the beginning of August and easily beat both top and bottom line expectations. You can see that the stock moved up sharply on Read More
ChartWatchers September 01, 2018 at 12:35 PM
At one of the CMT Association meetings in NYC, I was given an interesting tip about the markets. The tip was that bank charts hold clues because bankers see everyone else's business success from the financial side. From this, it's never a bad idea to keep track of what the banks are doing. The reason I want to write about the bank charts this week is that multiple charts are at an important inflection point. This suggests the view is broader than one bank. We also have a Fed meeting in a couple of weeks which is widely expected to raise rates one more time. If the banks Read More
ChartWatchers September 01, 2018 at 08:00 AM
It's widely known that September historically has been a difficult month for U.S. equities. Since 1950, the S&P 500 has risen during the month of September 30 times and moved lower 38 times. It's the only calendar month where the bears have had long-term success. The September annualized return of -5.58% is one of only two calendar months with negative annualized returns. The other is August, which has produced annualized returns of -1.04%. There are several well-known, large cap companies that have bullish track records in September Read More
ChartWatchers September 01, 2018 at 06:44 AM
In one of my recent articles, I high lighted that Relative Rotation Graphs can do (much) more than just show equity sector rotation by showing how RRG can be used to analyze rotation among the different commodity groups against a broad commodity index. In this post, I want to expand that a little further and show how you can combine the relative rotation of the various segments of the (US) yield curve with the, relatively unknown, dynamic yield curve tool that we have available here on Stockcharts.com. There is no holy grail Read More
ChartWatchers September 01, 2018 at 03:49 AM
The S&P 500 hit a new high in August, but only four of the ten sector SPDRs joined in on this high: the Consumer Discretionary SPDR, the Technology SPDR, the Health Care SPDR and the Real Estate SPDR. This suggests that the other six are lagging in some way shape or more. Even so, this is not a problem for the S&P 500 because the four that hit new highs account for around 57% of the index. Leading versus lagging is important when selecting individual sectors, but the weight of the evidence is what really counts for broad market analysis. The customized Read More
ChartWatchers August 31, 2018 at 06:14 PM
The market made new all-time highs this week, but with the upcoming holiday and short trading week, look for consolidation or continued sell-off. The indicators in the very short term and short term are suggesting a selling initiation. Add to that the highly bullish sentiment charts and it spells weakness in the week ahead. The ultra-short-term indicators of breadth and the VIX show declining breadth numbers. Granted today advances did outrun declines, but the reading is still lower than the previous positive readings from earlier in the week. The VIX is getting very close to the lower Read More
ChartWatchers August 31, 2018 at 03:28 PM
Editor's Note: This article was originally published in John Murphy's Market Message on Wednesday, August 29th at 12:33pm ET. Before leaving on vacation on August 15, I expressed concern about the fact that foreign stock ETFs were lagging too far behind the U.S. which could threaten the uptrend in the S&P 500 which was nearing a test of its January high. The message suggested that U.S. stocks needed more help from foreign stocks in order to reach new highs. In the two weeks since then, foreign stock ETFs have actually risen more than in the states. That helped support new highs Read More
ChartWatchers August 31, 2018 at 03:18 PM
Here's a fact: Traders gravitate towards companies that beat earnings expectations. Why? Because they know they are putting their money to work in companies that outperform. Here's another fact. MANY companies that report and beat earnings expectations often gap up - move higher - on positive news and ALWAYS (at some point) pullback to levels that make them attractive trading candidates. Here's a prime example below: As you can see from the above chart on GrubHub, they reported and beat earnings expectations that resulted in a significant gap up on extremely high volume on July 25. The Read More
