Don't Ignore This Chart

DP Trend Model Neutral Signal on Technology ETF (XLK)

The Technology ETF (XLK) looks a lot like the SPY (see DecisionPoint Blog article, "Double-Top and Initiation Impulse Spell Trouble") which is not a good thing right now.

First, the DecisionPoint Intermediate-Term Trend Model generated a Neutral signal when the 20-EMA crossed below the 50-EMA. It was not considered a SELL signal by the Trend Model because the 50-EMA was above the 200-EMA when the crossover occurred. The Price Momentum Oscillator (PMO) was unable to affect a positive crossover and in fact turned down below its EMA which is very bearish. The next problem for XLK is the bearish double-top formation that is in the process of executing. Price broke below the neckline today but closed well above it, so I don't see it as a true fulfillment of the pattern. This is about the only positive on this chart. 

Continue reading "DP Trend Model Neutral Signal on Technology ETF (XLK)" »

Gold (GLD) Pulls Back To Test The 200 DMA

Gold is getting a rough ride the last few days. Today the Gold Tracking ETF (GLD) pulled back to test the 200 DMA. This is typically an important line in the sand. If it can hold here and start to move higher that would be significant. Gold has been very finicky over the last few years. You can see each peak was one day above a previous peak and then it rolled over hard. One exception occurred a few weeks ago with the taking out of October 2014 high of 120.50. GLD just kept marching on. The high recently at 125 was just slightly above the final uptick at the 200 DMA. The region from 125 to 130 has been a real struggle. 

Today Gold is testing a major horizontal support / resistance line. I am a believer in the 200 DMA acting as support or resistance. The whole April to September 2014 was a battle along the 200 DMA . We'll find out in the next few days if Gold can get a bounce here. If the $USD was to stop rising that could give GLD the tailwind it might need to break this trend of lower highs. The March push, the July push and this January push all seem to drift above the 200 DMA to get the bulls hopes up, only to be wiped out with severe gaps down. Today's gap lower looks very similar to the March and July peaks in terms of height above the 200 DMA, the vertical surge up, and a gap down ending the trend. The real difference today is the horizontal support resistance line might provide some meaningful help to support the bulls' case right here at the 200 DMA. Decision time. 

Good trading,
Greg Schnell, CMT

Bond Market Says Lower Rates Ahead

Another Fed statement has come and gone, and Treasury bonds simply continue to march higher. The chart below shows the 7-10 YR T-Bond ETF (IEF) hitting yet another 52-week high today with a big move above 110. The indicator window shows the 10-YR Treasury Yield ($TNX) moving below 1.75%. The 2012 lows mark the next target in the 1.5% area and this means bond prices could move even higher. 


Click this image for a live chart

Retail SPDR Holds Key Area and Shows Relative Strength

The chart below shows the Retail SPDR (XRT) bouncing off a support zone and remaining in an uptrend. For relative strength, the first indicator window shows the StockCharts Technical Rank (SCTR) above 90, which means XRT is in the top 10% of our ETF universe. The second window shows the price relative (XRT:SPY ratio) bottoming in early October and moving higher. This means XRT is outperforming SPY the last 3-4 months. 


Click this image for a live chart

How Much Wood (WOOD) Can A WoodChuck Chuck?

The iShares Lumber Related ETF (WOOD) has been stuck in a wide trading acreage for the better part of a year. Today it made a decisive move to the upside. Today it was the tallest twig on the chart. The SCTR notched its highest level in a year and the relative strength line made new 6 month highs. While this is a low volume ETF,  there are a lot of good looking stocks in the forestry group. A lot of the Canadian Forestry stocks do well with a strong US Dollar. 4 of the top 10 Holdings in (WOOD) are non US based. They are also producing energy through cogeneration and some of the big US based forestry like Weyerhaeuser (WY) are structured as REIT's. What used to be a lumber pure play is anything but.

This particular ETF also holds container and packaging companies in the top 10. While the actual timber industry group performance is hard to see the forest for the trees, there is still upward pressure on these related stocks. The feedback from DR Horton Builders (DHI) today was very bullish and the news certainly didn't hurt the lumber related plays. But the lumber stocks are a little like the products they supply. A wide range of profiles all within the same general grouping!

Continue reading "How Much Wood (WOOD) Can A WoodChuck Chuck?" »

Starbucks (SBUX) Sends The SCTR Skyward

Starbucks (SBUX) reported earnings yesterday. The earnings were good but the power in the stock move was based on the earnings call. Howard Schultz, Chief Barista for the investors brew, was glowing about the opportunities in Asia. Here is the chart.

Recently SBUX pushed the SCTR above 75 in December and then retreated. This push back up in January is bullish as it shows a confirmation of a very strong stock where investors are increasingly bullish on the story. If the broader markets hold up here, I would expect Starbucks to continue to perform well. A major gap to new highs on a high profile stock is usually bullish. Particularly when the SCTR can jump up above 75. Recent examples would include Walmart gapping in November after making a brief SCTR surge in October. Click here for an example (WMT) . Plan your trade, trade your plan.

Good trading,
Greg Schnell, CMT

Blackrock Leads Assets Managers Group Higher

The finance sector came to life on Thursday with leadership from banks ($DJUSBK) and asset managers ($DJUSAG). The chart below shows asset manager Blackrock holding its breakout and surging off support with a big move above 355. Notice that the stock shows a little more "chart" strength than the Finance SPDR (XLF) and DJ Asset Managers Index ($DJUSAG). BLK broke above the high from the first week of January, but XLF and $DJUSAG did not (yet). Note that you can enter $INDUSTRY and $SECTOR to see the corresponding sector or industry group for a stock. Set the legends at "verbose" to see the full names. 


Click this image for a live chart

Six Semiconductor Stocks Lead on SCTR MarketCarpet

The image below comes from a MarketCarpet for the Nasdaq 100. It is set to show the biggest changes in the StockCharts Technical Rank (SCTR). The biggest gainers have dark green boxes and the biggest losers have dark red boxes. Notice that seven green boxes come from the semiconductor group (AMAT, INTC, NVDA, LRCX, LITC, TXN and XLNX). Some basic instructions are shown below the image. 


Click this image for a live chart.

Instructions for getting the SCTR Movers on the Nasdaq 100 MarketCarpet:
1. Open the major indexes market carpet. 
2. Double click on the Nasdaq 100 section (upper right)
3. Hover over carpet, right click and choose "show ticker"
4. Go to drop down menu in upper left and choose SCTR. 

NetFlix (NFLX) Shows A Flicker Of Upside

Netflix (NFLX) has introduced the world to the easiest way to spend a day watching a series of shows one after the other. It is remarkable how a technology can change a behaviour of adults so fast. After repeatedly asking kids to not spend hours in a row watching TV, the parents get absorbed in a series and have trouble stopping at 'just one'. When Netflix was pulling back, everyone wondered if that would be the final high with all the competition in the online streaming space. It still might be, but for the first time in a few months, Netflix broke above it's downward trend line. On double the average volume, NFLX broke above the downward trend line which is a similar slope to the break out in May. It still has to contend with the most recent high at $352.32, but the trend line break on high volume suggests strong support for the move.

The MACD continues to trend higher. The SCTR turned up nicely. It is still early days, but a lift in momentum usually needs volume, and the buyers showed up for work in a big way today. A lot of analysts expect Netflix to continue rolling out around the world and expect the rest of world start "flixating" in front of the television! Analysts have targets in the $400 range which has plenty of upside from here if you can get comfortable with fundamental analytics.

After Hours Update: The volume was right. I didn't realize it was Netflix earnings date for the article. Big pop after hours.

Good trading,
Greg Schnell, CMT

Chocolate Always Looks Great! Hershey Hits New Highs

As we head into Valentine's day, Hershey's breaks out. It has had a smooth climb for a while now.

This is part of Consumer Staples. As a defensive sector, we can see the growth in the stock price since the October lows. This is a good example of acceleration into the defensive sectors as investors look for stability from the commodities instability. However, since Cocoa topped out, Hershey's has soared! The SCTR has just moved above the 75 level which is usually bullish. The volume that accompanied the breakout is excellent. Good Loving!

Good trading,
Greg Schnell, CMT