Don't Ignore This Chart

J C Penney (JCP) Starts To Outperform

J C Penney (JCP) is a crazy chart that was decimated by a dramatic change in marketing strategy. Recently, a new management team was put in place to revive the brand. Here is a view of the chart and what makes it particularly compelling to watch.

I particularly like the SCTR ranking. When it rises up, tests above 70, falls back and then rises up again, it is usually a pretty bullish picture. We can see the MACD is back above zero for the first time in 2 years.

The price action looks like institutional size buyers are just absorbing stock at this level. While Dillards (DDS) and Nordstrom (JWN) still look strong, Macy's (M) seems to be losing the love of investors that it has enjoyed since JC Penneys downfall started.

Tis' the season for the broad line retailers to start to pick up. We might enjoy shopping at JCP if it can break to the upside out of this accumulation pattern. At this point it still needs to break out, but I think it might have to go on my Christmas in July list!

Good trading,

Greg Schnell, CMT

Precious Metals Lag their Industrial Counter Parts

The PerfChart below shows the Base Metals ETF (DBB) along with seven other metal-related ETFs. Notice that the Aluminum ETF (JJU) and Palladium ETF (PALL) are the big leaders. Meanwhile, the Gold SPDR (GLD) and the Silver ETF (SLV) are the laggards. Gold is clearly precious and lagging. Aluminum is clearly industrial and leading. Perhaps this says something about the state of the economy and the Dollar. 

Click this image for a live chart

Cocoa Bucks the Selling Pressure in Agriculture ETFs

The PerfChart below shows the Multi-sector Agriculture ETF (DBA) along with six other agriculturally based ETFs. Five of the six got slammed over the past month with the Corn Trust ETF (CORN) and Soybean Fund (SOYB) posting double digit losses. The Cocoa Fund (NIB) is the lone winner with a .79% gain. 

Click this image for a live chart

iShares BRIC (BKF) Breaks Out

We keep wondering when the global economy is going to improve. Well, India has been on a tear for a while. China, Russia and Brazil have not been able to break out. That might be changing. Here is the chart for the iShares BRIC Countries (BKF).

Almost every indicator with the exception of the MACD is surging to new highs. I specifically like the long Full Stochastics finally breaking out. The SCTR ranking has moved to almost 90%. Top quartile ETFs can run for a while. We'll see if that happens here, but last weeks breakout to new 52 week highs is bullish. The Money Flow has been positive for its longest run in the last 5 years. 

Good trading,

Greg Schnell, CMT

Baltic Dry Index ($BDI) Revisits The Major Lows

The shipping rates represented by the Baltic Dry Index ($BDI) just can't seem to get a break. With rates soaring to huge highs in 2007, new ships were ordered well into the future. As those ships are delivered and commodity demand is still slack, the Baltic Dry Index ($BDI) is dropping like a stone again. I drew a horizontal red line at the current price. Most of the lows below this level are spike lows. 

One thing to note, the rates are almost back to where they were in the 3rd and 4th Quarters of 2012. It would seem demand for shippers has not picked up yet.The surge off the lows was almost a quadruple up to 2330.  The correlation to the Shanghai Composite ($SSEC) is not great, but both of these should start to rise if demand is going to pick up meaningfully.

Good trading,

Greg Schnell, CMT

Rough Week Leaves DIA the Last Man Standing

Stocks came under selling pressure over the past week with small-caps bearing the brunt. The PerfChart below shows the performance for eight major index ETFs over the past week. Seven are down and only one is up. The Dow Diamonds (DIA) has the only gain. The Russell 2000 iShares (IWM) and Equal-Weight S&P 500 ETF (RSP) led lower. In his recent commentary, Martin Pring noted that news highs in the Dow were not telling the whole story (subscription required). 

Click this image for a live chart

Change Your View On $$GDP

Gross Domestic Product ($$GDP) is the broad view on the economy. Normally there is some tracking of the stock market with Gross Domestic Product.

The top graph shows the USA GDP in Millions of Dollars.The left hand scale is for the SP500 ($SPX) shown as an area chart in behind the plot of GDP. We can see that GDP does not usually have a negative print but it did in the first quarter where the line changes to orange.

The bottom graph shows the quarterly Rate Of Change (ROC) in Percent of the GDP data shown in the top plot. So what is critically important ?

Continue reading "Change Your View On $$GDP" »

A Rather Dull Advance for the S&P 500

The S&P 500 is up over 6% since mid April, but this advance has been about as boring as they get. Note that this key benchmark has not moved more than 1% since April 16th (hat tip The old Wall Street adage, "never short a dull market", is clearly working here. Chartists can mark first support at the mid April trend line and mid July low (call it 1950). 

Click this image for a live, and boring, chart. 

Solar Energy ETF Tests Key Moving Averages

After a wedge breakout in late May, the Solar Energy ETF (TAN) is testing this breakout and two key moving averages in July. Notice how the 50-day and 200-day moving averages converge in the 40-41 area. TAN is currently above both and the 50-day is above the 200-day. The bias is still positive, but a move below 40 would break both moving averages and turn the bias bearish. 

Click this image for a live chart

Alaska Air Bucks the Selling and Remains Strong

Alaska Air (ALK) fell sharply in early June, established support just above 46 and bounced off this support zone the last few days. This is impressive considering the selling pressure that hit the market this week. Notice the hollow, or white, candles. These form when the close is well above the open, which means there was buying pressure during the day. The indicator window shows the StockCharts Technical Rank (SCTR) holding above 70 as ALK continues to show relative strength. 

Click this image for a live chart

VIX Seasonality Shows a Strong Tendency in July

There are seasonal tendencies and then there are STRONG seasonal tendencies. Over the last 20 years, the S&P 500 Volatility Index ($VIX) has moved higher 80% of the time in the month of July. This follows the weakest month, June, which shows a rising VIX just 25% of the time. A strong tendency for a higher VIX in July suggests that the S&P 500 could close lower this month. Don't forget about ChartCon, an action packed conference featuring Richard Arms, Alexander Elder, John Murphy and Martin Pring - live and in person.  

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