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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

Railroad Stocks Lead the Transports and Industrial Sector Higher

by John Murphy

Editor's Note: This article was originally published in John Murphy's Market Message on Friday, April 19th at 10:21am ET. Two stock groups did better than the rest of the market this week. Transportation stocks had another strong week. As did the Industrial Sector SPDR (XLI) which was the week's strongest sector. Both have one group to thank for their strong performance. And that's railroads which are included in both groups. And the rails have become market leaders in both. Chart 1 shows the Dow Jones US Railroad Index climbing this week to a new record. The rails have been the Read More 

ChartWatchers

Here Are The Industry Groups Flying Into Earnings Season

by Tom Bowley

Analysts routinely visit management teams of public companies to see how their quarters are progressing.  Based on the knowledge they gain, they return to their offices and their firms issue recommendations to buy or sell.  It's the reason that we do what we do.  By analyzing price action, we begin to get a feel for which areas of the market we're likely to see a rapidly improving earnings environment.  To that end, I'd suggest taking a look at the following groups based on their recent relative outperformance: The green shaded area shows that each Read More 

ChartWatchers

An Aggressive Projection for the Dow

by David Keller

Have you ever played devil’s advocate in a group discussion? That's the situation where everyone comes to one conclusion, so you take the opposite side just to provide an alternative hypothesis and argue its merits. We often avoid this sort of “outside the box” thinking because of confirmation bias. Once we’ve decided we’re bearish, we assign greater importance to any new bearish evidence because it supports our predetermined thesis. One way to combat this is to play devil’s advocate with your own process. Once you’ve drawn a conclusion, force yourself to Read More 

ChartWatchers

Global Stocks Join Global A/D Line Above Key Trend Lines

by Martin Pring

Editor's Note: This article was originally published in Martin Pring's Market Roundup on Tuesday, April 9th at 1:08pm ET. Global stocks, represented in the form of the MSCI World Stock ETF (ACWI), peaked in January of last year and gradually worked their way lower into late December. However, a remarkable turnaround has enabled the price of this ETF to complete a 6-month inverse head-and-shoulders and crash through its bear market trend line. In addition, Chart 1 shows that my Global A/D line has completed a 12-month consolidation pattern and broken out decisively on the upside. This Read More 

ChartWatchers

Trading Stocks Before They Report Earnings - Tips to Improve Your Success Rate

by Mary Ellen McGonagle

Earnings surprises can move a stock substantially, leading to either huge gains or big losses in your portfolio. Today, I’ll be reviewing how you can trade during earnings season to your benefit.  There is no single absolute way to do this; rather, as you’ll see, it will depend on your willingness to put the work in before a company reports. For those of you more averse to the inherent risk of buying into the release of earnings, I’ll be reviewing profitable ways to trade a stock after it reports in my next ChartWatchers article (2 weeks from now!). Before we Read More 

ChartWatchers

EARNINGS: 2018 Q4 Finalized; S&P 500 Still Overvalued

by Carl Swenlin

S&P 500 earnings for 2018 Q4 have been finalized, and with a P/E of 21.4, the market is above the normal value range and very overvalued. The following chart shows us the normal value range of the S&P 500 Index. It shows us where the S&P 500 would have to be in order to have an overvalued P/E of 20 (red line), a fairly valued P/E of 15 (blue line), or an undervalued P/E of 10 (green line). There are three hash marks on the right side of the chart to show where the range bands are projected be at the end of 2019 Q4. If earnings estimates hold and price doesn't change Read More 

ChartWatchers

When Tails Remain On One Side Of A Relative Rotation Graph, What Does That Mean?

by Julius de Kempenaer

Relative Rotation Graphs are a great tool to use to visualize sector rotation, along with other asset rotations in various universes. If you have used RRGs regularly and have monitored multiple rotational patterns, you may have noticed that the rotations do not always travel through all four quadrants in sequential order. Understanding what happens in these situations will help you to read and better understand Relative Rotation Graphs. Typical Rotational Pattern The usual rotation on a Relative Rotation Graph Read More 

ChartWatchers

Materials Sector (XLB) Bursts Through Resistance with Confirming LT Buy Signal

by Erin Swenlin

While I maintain the DecisionPoint Scoreboard for the large-cap SPX, OEX, NDX and Dow, Carl maintains a DecisionPoint "Sector" Scoreboard. On Friday's DecisionPoint show (which airs Fridays at 4:30p EST on StockCharts TV), Carl and I pointed out that the Materials sector triggered a new LT Trend Model BUY signal. Interestingly, the signal came on the heels of a significant breakout. The only two sectors left with SELL signals are XLE and XLF, which have both been reluctant to accelerate off of December lows at the same rate as many of the other sectors. Read More 

ChartWatchers

Earnings Season Can Produce Real Sizzle

by John Hopkins

As earnings season gets ready to kick off this week once JPM, PNC and WFC report their results on Friday, here's a reminder that those stocks that come up big on the top and bottom line could ultimately become high reward-to-risk trading candidates, possibly multiple times. There are many examples of this from last quarter, but one stock that stands out as worthy of examining is Trade Desk (TTD). Starting with the initial boost from its earnings report, TTD rose over 30% after posting its numbers, then almost 19% when it pulled back to test its 20-day moving average, then Read More 

ChartWatchers

RSI Shifts from Bearish to Bullish for EEM

by Arthur Hill

The Emerging Markets ETF (EEM) experienced a trend-momentum shift over the last few months as RSI moved from its bear range to its bull range. In addition, RSI came close to 70 (69.5) twice and EEM broke above its 200-day SMA. The downtrend reversed and I expect higher prices until the evidence proves otherwise.   The chart below shows EEM falling into October 2018 and then firming in the last two months of the year. EEM actually showed some relative strength from October to December because it forged a higher low when SPY forged a lower low. This is partly due to strength in China Read More 

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