The news of Deutsche Bank (DB) breaking well below the Brexit lows can not be comforting for the broader financial community. Today the XLF lost its momentum and dropped to the bottom quadrant. While this is a weekly chart, the first day of the week sent a chilly message. We broke to 2-month lows today and this week is important as it will mark an end-of-quarter and end-of-month close. Having a very weak financial chart is troublesome and the SCTR suggests some caution is warranted after the price failed to breakout above resistance.
Crude oil prices ($WTIC) have been hovering between $40-$52 per barrel for the past six months, but the bottoming reverse head & shoulders pattern is telling us to watch closely to see if we can get a confirming breakout on this pattern above neckline resistance at $52. In the meantime, the energy sector ETF (XLE) remains in a very bullish pattern with rising 20 week EMA support holding on every pullback since breaking above this key moving average in late February. Check it out:
The energy SCTR has fallen back to the 50 level, but still remains elevated from where it was earlier in the year. At this point, you should keep an eye on support close to 65 while price resistance clearly is marked at 70.
Etsy.com (ETSY) is a website focused on the craft community. This user community is a large group with very unique and creative products. As a retailing website, ETSY is bringing craft providers to craft buyers.
Etsy went public in April 2015. The stock has been in decline and built a base for the first 6 months of this year. Recently, ETSY broke above the $10 base and went sideways at $15 for about 8 weeks. This morning, ETSY broke out above the trading range.
It's nice to see a heavy volume gap higher to break a downtrend. It can be a very strong signal that sentiment has changed on a particular stock or industry group. While renewable energy stocks ($DWCREE) remain technically-challenged, one of its components - Sunrun (RUN) - has certainly begun to show improving technical signs that could be considered by aggressive traders. Take a look at the chart:
The bottom of gap support close to 5.40 has been filled and RUN is beginning to turn higher again. Ultimately, a breakout above 6.50 on a closing basis would indicate a much healthier stock with rising highs and lows.
The Retail SPDR (XRT) is at its moment-of-truth with a long-term bullish pattern battling a short-term bearish pattern. Long-term, the ETF formed a double bottom and broke resistance with the July surge. This breakout zone turned into support with a successful test in early August. After a sharp decline from late August to early September, the ETF formed a flat consolidation near this support zone. Technically, a consolidation after a sharp decline is a bearish continuation pattern. Thus, we have the bullish double bottom breakout battling the potentially bearish flag. More after the jump....
Fifth Third (FITB) is a bank with an upward bias above the previous peaks. After spending almost 2.5 years building a ceiling on the stock, FITB is finally pushing through. The SCTR started pushing up above 75 back in July. Last week was the break above the trend line.
Chartists looking to track the finance sector can turn to the iShares Financials ETF (IYF). Note that the Finance SPDR (XLF) is in the midst of a metamorphosis this week so chartists can consider watching IYF for clues on the finance sector this week. IYF is in a long-term uptrend because the 50-day EMA is above the 200-day EMA and the ETF hit a new high in early September. Since hitting this new high, the ETF pulled back to broken resistance and this area turns into the first support level to watch for a bounce. Also notice that the 20-day Commodity Channel Index (CCI) became oversold last week and is starting to turn up. The Fed meets this week and Treasury yields will be in the spotlight when the FOMC makes its policy statement on Wednesday afternoon. Note that banking stocks and Treasury yields are positively correlated, which means banking stocks tend to rise and Treasury yields rise.
Thanks for tuning in and have a great day!
--Arthur Hill CMT
Plan your Trade and Trade your Plan
After technology stocks (XLK, +2.70%) clubbed the energy sector (XLE, -2.64%) last week, the former group is now the leading sector over the past six months, widely outperforming the benchmark S&P 500 index. Within technology, there are four industry groups that have been outperforming the benchmark technology sector ETF (XLK). Here's a chart that summarizes all of this relative strength:
The relative strength of each of the industry groups is fairly obvious, although the relative performance of internet stocks ($DJUSNS:XLK) is a bit suspicious. However, this group has seasonality on its side as it tends to outperform from September through December. That recent relative uptrend shouldn't be ignored given this seasonal preference.
The Industrial Sector (XLI) SCTR has gone from top to bottom in the last few months. One of the reasons this is a little concerning is when the SCTR for the XLI dropped into the bottom quadrant in 2015, it marked a 6-month struggle for the index and the sector.The industrials are a good economic gauge of the economic activity and the chart suggests this is getting quite weak.
Friday, September 23, Chartcon 2016 is coming to you via live stream broadcast! Rather than have customers spend all the money to travel to the event, we have arranged for all the technicians to gather in one location and broadcast from there, saving you thousands of dollars. It should be a fantastic couple of days with a tight synopsis of the markets from an award winning Technical Analyst crew. You can register for this event for under $200 and have access to the recordings. Chartcon 2016.
On another note, I will be presenting in person at Golden Gate University in September if you are in the area.
September 20th, 2016 @ 4 PM
Golden Gate University. Rm 3214
536 Mission Street
San Francisco, 94104
Cost: Registration is $10 for MTA members and $20 for non-members
If you would like to receive future articles by email, click on the Yes button below. I do roughly one-two articles a week from each blog (Commodities Countdown, The Canadian Technician, Don't Ignore This Chart) so you need to subscribe to each one individually. I also do a couple of webinars each week and you can view those live or in our webinar archives. As a heads up, I'm on twitter @Schnellinvestor.
Thanks for taking the time to join me.
Greg Schnell, CMT, MFTA
Live Nation Entertainment (LYV) is a $5 billion consumer discretionary company that in late July reported excellent quarterly results and gapped higher to touch the 28.00 level. The stock's all-time high came in October 2015 just beneath 30.00. It's consolidating just above its rising 20 week EMA and volume trends have been strong. Here's a look at the weekly chart:
Volume trends have improved, while both the MACD and SCTR are surging. A high volume close above 28 would represent the breakout of a bullish inverse head & shoulder pattern. Currently, LYV is consolidating in that right shoulder as both its RSI and stochastic retreat from recent overbought conditions.