Don't Ignore This Chart

Google (GOOGL) Stops At The Last Gap Saloon

Google (GOOGL) is one of the great pioneering companies of our time. We use it every day and if someone tries to avoid using Google, it is almost impossible. So to see one of the dominant stocks in our world join the list of companies making fresh 52 week lows seems almost shocking.  But Tuesday marked the first time Google made a 52 week low since the financial crisis. Yes, the last 52 week low was 6 years ago. With Wednesday's Patience Day, Google rallied but it rallied less than the $SPX, the Nasdaq Composite ($COMPQ), or the Nasdaq 100 ($NDX). It is a primary component of all of those. In a series of lower highs and lower lows since July, where could Google find support? 

The volume on Tuesday and Wednesday was significantly higher than the 50 EMA on the volume. Google had the share class split (GOOG and GOOGL) around the middle of March which ultimately marked the 2014 top for the stock. The relative performance shown in purple at the top has been declining consistently since September. The SCTR shows the stock as one of the bottom 20% in terms of price performance. Looking back on the price action, Google would appear to be standing on a relative cliff with no price action (Gap) between the current price and $450. Google made a huge leap on earnings in October 2013 and moved up almost 10% from $450 to $500 and then migrated to $615 which was about a 25% gain from the price of $450. This gap seems like an ominous place for Google. 

On the 6 year trend line off the 2008 lows, Google touched it Tuesday. For a long term trend line from the 2008 lows to the horizontal support from the gap, Google has garnered some attention and it showed up in the last two volume candles. The Pnf support line currently sits at 460 which is the bottom of the gap. With Google staring into the gap, I wasn't sure if the title should have been the Last Gap Saloon or the Last Gasp Saloon. There are compelling trend lines to buy it right here based on the horizontal support, a 6 year trend line and a one day move in and out of 52 week lows to take out any stops. But any failure to hold here would continue a significant price decline and make this broad topping pattern on the chart look long term. That would be remarkable for one of the greatest companies that supports our online work and personal life. 

Good trading,
Greg Schnell, CMT

Caribbean Fund Surges to Multi-year High

Cuba is in the news today on the announcement that the US and Cuba will start talks to normalize ties. What does Cuba have to do with a Technical Analysis website? Well....I was looking at the most actives on the Nasdaq and saw CUBA with a 40+ percent gain on big volume. This is the Herzfeld Caribbean Basin Fund and it would appear to have ties to Cuba, though I cannot confirm. In any case, the fund broke above the highs extending back to early 2013 and could be poised to start a new era. While I would not run out and mortgage the house on this one right now, it is one to keep on the radar for bullish opportunities in the future (pullbacks, consolidations, flags, falling wedges etc...). Added Note: recent filings show that CUBA holds mostly US stocks and is simply "prepared" to take advantage of normalized relations with Cuba. The normalization process is likely to be a long and drawn out affair. 


Click this image for a live chart.

IWM and QQQ Break Support - GLD Breaks Channel Line

QQQ broke pennant support on Friday and continued below 102 on Monday to break its support zone. The early December trend line and last week's highs mark resistance at 105. Apple continues to work its way lower and I am marking resistance at 112. 


**************************************************************

IWM is still holding up better than SPY, but the ETF broke support with a move below 114 on Monday. A short Raff Regression Channel marks the current downswing with resistance set at 116


**************************************************************

The Gold SPDR (GLD) had a flag working last week and had every chance to breakout, but did not and moved sharply lower on Monday. This move broke the lower trend line of a rising channel and erased last week's surge. With the bigger trend down, this looks like a continuation breakdown and a move to new lows is expected. 


***************************************************************

Several Consumer Discretionary Stocks are Bucking the Market

The S&P 500 was hit pretty hard over the last six days with all nine sectors losing ground. There were, however, some pockets of strength in the consumer discretionary. The Sector Market Carpet shows performance for the consumer discretionary sector since last Monday, 8-December. Over a dozen green boxes can be found, and these are stocks that advanced in the face of broad market weakness. In particular, Macy's (M), Kohls (KSS) and Coach (COH) are up over 3%. Nordstrom (JWN), Best Buy (BBY) and L Brands (LB) are up over 1%. 


Click this image for a live chart.

Teekay Tankers (TNK) Floats Higher In A Sea Of Red

Teekay Tankers (TNK) is a shipper of Crude Oil. With crude oil plummeting, why would shippers be busy? Well, holding spot price crude on a ship till the price improves can be a hedge fund's game. It looks to me that this might be what's going on.


Photo Credit:Teekay Tankers

Continue reading "Teekay Tankers (TNK) Floats Higher In A Sea Of Red" »

LinkedIn Tests Breakout and Gap Zone

LinkedIn broke out and surged to a new high in early November, and then corrected the last five weeks with a falling channel. This channel retraced 62% of the prior surge and almost filled the gap, but didn't. Throw in support from broken resistance in the 205 area, and the stock is setting up for a potential move higher. A channel break would trigger a price signal and a bullish momentum signal would trigger if the MACD Histogram turns positive. 


Click this image for a live chart.

Small Caps are Starting to Outperform

Small-caps are starting to live up to their reputation for outperformance in December. Even though the month is far from finished, the PerfChart below shows the Russell 2000 and the S&P Small-Cap 600 with 1+ percent gains so far. In contrast, the other seven indices are actually down month-to-date. Talk about a seesaw market. 


Click this image for a live chart.

Tesla (TSLA) Breaks Support

Tesla (TSLA) seems to be the talk of the town. The leader, Elon Musk, always has an interesting perspective on what is going to be big for the company. Since they launched their Gigafactory initiative, Tesla has been in a topping pattern. We can see the sudden jump the stock took on the announcement of a gigafactory. Tesla pulled back and went on to make a higher high, but it was almost all gained and lost within a week. Since being at $291, Tesla has pulled back and closed at $216. Tesla is currently testing support after breaking below the previous low at $217 and has now bounced back up to $216. If Tesla has trouble maintaining a foothold here, next support would appear to be around $185.

If Tesla can hold support around this $217 level that would be bullish. 

The last few candles have been associated with high volume as Tesla failed to stay above the 200 DMA. Today marked the first close higher than the previous day over the last 8 days. Where Tesla goes from here is very important. This is the first time Tesla has been below the 200 DMA for a while. Caution is advised.

Good  trading,
Greg Schnell, CMT

Bank of America (BAC) Tests Resistance

Bank of America (BAC) has been pausing at resistance for a while. But Friday it showed big interest with a nice volume surge. We can see it is sitting just below the spring time highs.

With the MACD finding support just above zero, a near doubling on the daily volume, all with the surge above resistance, this looks very sweet. It was the #1 most active stock on Friday!

Good trading,
Greg Schnell, CMT

Russell MicroCap iShares Goes for P&F Breakout

The Russell MicroCap iShares (IWC) is leading the market higher on Friday and breaking above a triangle trend line. The P&F chart shows the ETF surging in October and then consolidating in November. The red A marks the beginning of October and the red B marks the beginning of November. With a big move today, the current X-Column broke above the prior X-Column to trigger a double top breakout and exceeded the triangle trend line, which I drew by hand using MS Paint. 


Click this image for a live chart.

Seasonality Tool Says 'Tis the Season

There has been a lot of chatter about the seasonal pattern for the S&P 500 in December, and it is bullish. StockCharts users do not need to rely on the chatter because they can chart seasonal patterns using our Seasonality Tool and see for themselves. The chart below shows the seasonal tendencies for the S&P 500 over the last twenty years. The S&P 500 has closed higher 75% of the time in March and December, and the average gain for December is 1.6%. Seasonal tendencies do not always pan out, but the S&P 500 is in a clear uptrend and the bullish seasonal pattern acts as another tailwind. 


Click this image for a live chart.

Taser (TASR) Goes Ballistic

Taser (TASR) is developing cameras for the police forces around the world. Here is the chart. The Relative Strength shown in purple is up trending and the SCTR is one of the best.The stock has consolidated for a year and is now breaking out on high volume.

What is nice about TASR is the unique niche it resides in is very profitable and they already have inroads with most police departments. Looks interesting here. Highly volatile.

Good trading,
Greg Schnell, CMT

 

Broker-Dealer iShares Forms Classic Continuation Pattern

The Broker-Dealer iShares (IAI) surged to the September high and then stalled with a three week consolidation. With a downward slope, this consolidation looks like a falling flag, which is a bullish continuation pattern. A breakout at 41 would signal a continuation higher and project a move to new highs. Chartists can also watch StochRSI for a pop above .80 to trigger an upside thrust in momentum. 


Click this image for a live chart.

Solar ETF Triggers Bearish Continuation Signal

Lower energy prices may be making solar less competitive and putting pressure on solar-related stocks. The chart shows the Solar Energy ETF (TAN) breaking down in Sep-Oct, consolidating with a triangle and breaking triangle support with a sharp two-day decline. This break signals a continuation of the prior decline and targets a move to new lows. The indicator window shows MACD in negative territory and moving back below its signal line. 


Click this image for a live chart.

XME Fails at Resistance and Lags Market

The Metals & Mining SPDR (XME) got a bounce with the stock market in the second half of October, but struggled in November with a trading range between 34 and 36.5. This struggle turned to weakness as the ETF gapped down on Friday and fell sharply. A follow through support break would signal a continuation of the bigger downtrend and target a move to new lows. The indicator window shows the XME:SPY ratio hitting a new low already as XME shows relative weakness. Note that copper fell sharply on Friday, Caterpillar gapped down and gold is down sharply. 


Click this image for a live chart.

The Canadian Energy Market Shows The OPEC Fallout

This intraday chart shows the drop on the OPEC announcement.

With crude oil down hard into the high $70 level ($70.91 at time of writing) and the Toronto Stock Exchange moving marginally on the news (-40 on an index at 15000) it might be a contrary time to look for energy plays that hold up well over the next few weeks and months. It won't take much to push crude into the high 60's which should start to set the desperation level at exhaustive. 

Good trading,
Greg Schnell, CMT

 

 

The Noose Narrows on the Oil & Gas Equip & Services SPDR

Oil remains weak overall and so do the energy related ETFs (XLE, XOP, XES). The chart below shows the Oil & Gas Equip & Services SPDR (XES) hitting a new low in October and then consolidating with a triangle. The pink lines show the Bollinger Bands narrowing like a noose around price action. The narrowing tells us that volatility is contracting and we can expect a volatility expansion to follow. Given the downtrend and the triangle, the odds favor a continuation lower. 

  
Click this image for a live chart.

The Rails Keep Rolling

After pulling back in October, all the rails have gone on a major rally from the lows. Canadian National Railway (CNI) is one of the most efficient railways. This particular stock is returning back to some of the highest closes in September before it pulled back. We can see today was a big bullish wide ranging day. The SCTR has returned to be one of the top 25% and today it was just shy of being in the top 10% of the large cap stocks. We can see on the indicator panel below it continues to outperform the S&P 500 ($SPX)

After Bill Gates and Warren Buffett flew up to the oilsands for a tour two years ago, they have steadily been investing in the oil companies like Suncor and infrastructure like Canadian National Railway (CNI). As the stock tests its former high, it looks well-positioned to continue the up trend.

Good trading,
Greg Schnell, CMT

Fastenal Follows Through on Big Island Reversal

Fastenal continues to improve on the chart with two bullish patterns and signs of accumulation. First, a big island reversal formed at the stock gapped below 43.5 in early October and gapped back above this level in late October. Second, the stock broke pennant resistance with a move above 45 last week. Third, the Accumulation Distribution Line (ACDL) bottomed in mid October and moved above its September high. FAST is looking bullish as long as support at 44 holds. 

Click this image for a live chart. 

Three of Five Offensive Sectors Lead within Small Caps

The PerfChart below shows the nine small-cap sector ETFs and the Russell 2000 iShares (IWM). Notice that the SmallCap Consumer Discretionary ETF (PSCD) and the SmallCap Technology ETF (PSCT) led over the last five days with bigger gains. Throw in the SmallCap Industrials ETF (PSCI) and three of the four offensive sectors are leading. The SmallCap Financials ETF (PSCF) is, however, lagging with a smaller gain (neon green). The other five sectors on the right side of the chart sport smaller gains and are lagging. 


Click this image for a live chart. 

Alcoa (AA) Gaps Out To New Highs

Alcoa (AA) has been a strong stock on the run for a while. Recently it consolidated for the last 150 days. This morning Alcoa pushed to new highs suggesting the consolidation is over.

The powerful gap out of the consolidation is nice to see on a very liquid stock. This push to new highs after a sideways period looks very healthy for breakout buyers. With the SCTR ranking pinned to the top and the Relative Strength holding nice and high, this has all the characteristics of a strong stock continuing to climb.  Support looks to be $17. If it doesn't keep closing above that level, it will be a failed breakout for now.

Have a great weekend.

Good trading,
Greg Schnell, CMT

Other StockCharts Blogs

About The Author

Subscribe to this blog