Don't Ignore This Chart

$TSX Struggles With Nirvana

The Toronto Stock Exchange was open Friday while the US markets celebrated Independence Day. So it was a potential candidate for the Don't Ignore This Chart blog anyway. However, after using Martin Pring's Nirvana settings, it really is an important time to look at the  $TSX. The price is currently just below the 65 week MA. The three indicators below are still on sell signals. This really needs to turn up right away to hold this long term trend line.

We can see the KST for the Relative Strength line is almost above the signal line. If the $TSX could start outperforming the $SPX that would really help shift to investor focus to the Canadian market. We are hanging right at the 65 Week MA and a bounce here could be very bullish. Its an important time for the Canadian market to hold up. We'll see what happens over the next few months. 

To all of the American friends around the world, enjoy the long weekend!

Good trading,
Greg Schnell, CMT

MDSO: Recent Weakness Presenting Opportunity?

Medidata Solutions (MDSO) posted better than expected revenues and EPS in late April and the stock exploded higher as a result.  Since that time, MDSO hasn't been able to add to those gains, instead consolidating in rectangular fashion with its RSI dropping to 40.  As you look at the chart, you can see that each time MDSO's RSI has fallen back to 40 during its current uptrend, it's been a nice time to enter on the long side.  Will this time be different?  This most recent move lower has failed to hold the rising 50 day SMA for the first time since earnings were reported, but recent price support closer to 53 continues to hold.  Then there's trendline support, which intersects the 53-54 area as well.  A close below 53 would likely lead to a test of very significant price support at 51, the level of price resistance prior to the April earnings breakout.  Volume trends are strong, so I'm expecting that MDSO will bounce sooner rather than later.  We'll see.  Have a look at the chart:

Happy trading and enjoy the holiday weekend!


QQQ is Stymied by Performance Split and 3 Consolidations Hold the Key

A look at performance for the top holdings in the Nasdaq 100 ETF (QQQ) explains a lot about performance since March. The PerfChart below shows the percentage change for QQQ and its top nine holdings. Note that this chart does not include Wednesday's price data, which is still subject to change. Over the past four months, QQQ is down around 2%, four stocks are down and five are up. Note that Apple, which is by far the biggest holding, is down and should probably count twice. Using this funny accounting, five are up and five are down, which makes for a draw. I will show two CandleGlance charts with these stocks after the jump. 

Continue reading "QQQ is Stymied by Performance Split and 3 Consolidations Hold the Key" »

What Does A Quarter Buy You These Days? Not Much?

The $SPX has been moving in a tight range for the last six months. In December 2014 we closed at 2059, in March 2015 we closed at 2067, in June we closed at 2063. Quarterly data can take a lot of the weekly machinations of the market and make it look more normal. So the chart below shows a steady advance over the last 3 years with the close of every candle inside or above the body of the previous candle. Nicely defined uptrend. In one year we have moved from 1960 to 2063 so 5% over a 1 year span. More interesting for me is that the price range (ATR) in the quarter was the smallest range going all the way back to March of 2006 or 10 years ago. Interestingly enough, the March of 2006 was actually a rise in volatility from lower levels in 2005. The real difference here being the percentage change was a lot smaller as the basis is 2000 now not 1300. The green arrow points to the most recent long candle wick compared to the current one. This just shows how far down we closed from the high of the quarter. The bottom line is it was not extreme. Lastly, the volume continues to decline with 2 years of a declining 5 quarter average.

If you look at the Bollinger Band Width (bottom pane on a weekly chart below), the last time the range was this small was 1994 when the $SPX was at 477. Usually a pinching of the Bollinger Bands is associated with the calm before the storm. In 1994 it marked a sideways market that broke out to the upside for a 5 year run. Can it do the same now? We'll watch closely, but a low quarterly range, accompanied by the low weekly Bollinger Band reading suggests a market in search of direction. We also have the lowest MACD level in two years with declining momentum so it's a great time to pay attention to the underlying signals in the market.

Continue reading "What Does A Quarter Buy You These Days? Not Much?" »

FTSE Hits Fibonacci Cluster Zone and LLoyds Forms Bull Flag

Today's post is for our UK traders because it focuses on the FTSE and three of the biggest banks in the UK. Shares in Europe were sharply lower in early trading on Monday with the German DAX Index ($DAX) and French CAC Index ($CAC) losing around 3%. The FTSE Index ($FTSE) in London was holding up relatively well with a 1.5% decline around midday. Chart 1 shows the FTSE peaking in the 7100 area in April and falling to the 6600 area in late June. Note that the index hit a 52-week high in April and this suggests that the long-term trend is up. In addition, the index is near a potential reversal zone marked by a Fibonacci cluster. Instead of picking just one advance to draw the Fibonacci Retracements Tool, I drew the Fibonacci retracements from the October (blue), December (red) and January lows (green). There was a cluster in the 6725 area, but this level did not hold and did not produce a reversal. The next cluster is in the 6600 area where the three lines overlap (yellow area). There is also potential support from broken resistance in this area. Despite potential support, the trend since late April is down and we need to reverse this downswing before betting on a continuation of the bigger uptrend. First resistance is set at 6900 and a break above this level would do the trick. I am also showing charts for three big banks after the jump. 

Continue reading "FTSE Hits Fibonacci Cluster Zone and LLoyds Forms Bull Flag" »

AMZN Awaiting Next Bullish Breakout (AMZN) continues to reach for the stars and if the current technical pattern plays out, it'll likely be much closer.  After soaring through price resistance in April to set a fresh all-time high on the heels of better-than-expected earnings, AMZN has been consolidating in a bullish continuation pattern - the cup with handle.  The handle is easier to see on a daily chart, which is not presented below.  But the cup is quite clear.  The good news for the bulls is that even if this pattern doesn't confirm and short-term price support is lost at the bottom of the cup, the April breakout above resistance should provide another solid layer of price support just above the 400 level.  Also note the rising 20 week EMA is currently at 404, providing further support.  Earnings will be out in the latter half of July, but traders appear to be anticipating solid results.  Check out the current technical picture:

Happy trading!


These Soles Are On Fire - Footwear Index Continues To Leap

Footwear is one of the best performing industry groups recently. The Dow Jones Footwear Index soared to new highs this week. It was the fifth best group over the last month, and fourth best over the last week. Skechers (SKX), Steve Madden (SHOO), and Crocs (CROX)  all have SCTRs above 75. But the big winner as a large cap stock is Nike (NKE). It continues to leap to new highs.

So if you continue to look at some of the outperforming industry groups, there are some great companies which can keep your portfolio on its toes! 

With strong uptrends in the biggest stock in the group, and a few other small caps that are performing equally well, it might be time to start evaluating if footwear stocks are something you want to own into the christmas season.

Good trading,
Greg Schenll, CMT

IPG Photonics (IPGP) - Charting Upcoming Triangle Support

IPGP resides in the semiconductor industry and is pulling back with this industry group as June has proven to be a very rough month for this space.  I'm expecting that to soon change and IPGP could be a direct beneficiary.  But first, there's some technical business that might have to be taken care of.  After a very strong uptrend that ended in mid-2011, IPGP consolidated in a bullish long-term ascending triangle.  That pattern finally resolved to the upside in early 2015 and the recent selling could be nothing more than a retest of a key breakout level.  The selling has been on heavier volume the past couple trading sessions and that could create more stops being triggered and further weakness in the near-term as April price support is being violated intraday today.  I'd expect the 77-80 area to provide nice support in the days ahead.  Look for a potential reversal in this area.  Check out the chart:

Happy trading!


A Classic Sector Breadth Oscillator Surges to Highest Level of 2015

StockCharts users have access to the McClellan Oscillators and Summation Indices for the nine sector SDDRs and the major stock indices. Before showing how to find these symbols, let's take a look at the McClellan Oscillator and McClellan Summation Index for the Consumer Discretionary SPDR (XLY). The chart below shows the McClellan Oscillator surging to its highest level since November 28th. With three readings above 50 the last four days, it is clear we have a breadth thrust to go along with the new 52-week high in the underlying ETF (XLY). The bottom window shows the Summation Index moving into negative territory in early May and staying in negative territory. The Summation Index turned up and broke its 10-day EMA, but more strength is needed to turn positive again. Note that the Summation Index is a running total of the McClellan Oscillator values. You can read more about these indicators in our ChartSchool article

Click this image for a live chart

Continue reading "A Classic Sector Breadth Oscillator Surges to Highest Level of 2015" »

Rite Aid (RAD) Continues To Push Against Up Side Resistance

Rite-Aid (RAD) has a very interesting chart formation this week. Recently the stock surged to long term highs. As it continues to battle against the resistance levels, we can see $8.75 seems to be an important area for the stock. It struggled to push above $8.75 in early April. After spending a week trying to go higher, it rolled over after making new highs. In May, it tried again. In June it has pushed up within a penny of the April highs. after a quick dip down on Friday, Rite-Aid was bought again on Monday and Tuesday. If we look at the top of the chart, the SCTR broke above 75 in December and the stock rallied 20% within 6 weeks. After making higher lows going sideways from February to June, it looks like Rite-Aid is ready to move up through resistance now. 

If there was anything to worry about on the chart it was the high volume on Thursday on a big down candle and that was also a bullish general market day. It is a warning sign that stops just below are important. However, everything including the SCTR showing the stock performing better than 87% of the peer group. Thats pretty important!

Good trading,
Greg Schnell, CMT