Don't Ignore This Chart

Google (GOOGL) Holds Its Own

Google (GOOGL) has been holding a PnF support trend above the normal PnF major support trend.

Google is currently on a sell signal because it has made a lower low than the $580 level. Since breaking below $580, Google has bounced back up and back down. It is oscillating into a narrowing pennant. However, if we look at the longer trend, Google appears to like this support level higher than the standard trend line calculated by the PnF engine. Because it is on a lower low and has been unable to make higher highs, Google has a bearish target. It would take a break above the last column of X's at $595 to go back on a buy signal. In order for the PnF chart to make a higher high, Google will have to make it up to $600.00. While that would be easy to accomplish, Google is just at a precarious position of support based on the higher trend line which is parallel to the main PnF trend.

It is worth watching at this point. Google recently celebrated its tenth anniversary of being a public company. It has been a wild success story for investors so far.

Good trading,

Greg Schnell, CMT

Goldman Sachs (GS) Looks To Do A 180 Again

I did a presentation for a chapter of the CSTA back in July. At the time, Goldman Sachs (GS) was mired below the 40 WMA. I like to use Goldman Sachs as a warning bell. If the deal makers are below their 40 WMA, we can probably expect the overall economy to be beneath the longer moving average not far after. Well, good ol' market ($SPX), ignored Goldman's move down. Another failed clue about banks smelling danger first. But more importantly, Goldman Sachs looks to do a $180 this week. Why is that a good thing? Well, Goldman Sachs has struggled at the $180 level since the financial crisis kicked stocks in 2008. Here is the longer chart. We can see the Lime Green line has kept Goldman away from higher highs. Looking at the times when Goldman Sachs was below the 40 WMA was usually a good time to be cautious. 2010, 2011, 2012 all had GS below the 40 WMA. With the RSI breaking above the down trend this week, and the MACD bouncing off the zero line, things are looking more positive for the broader picture. The weak Relative Strength shown in the shaded purple area chart is a concern. But the dip below the 40 WMA looks to have been a false dawn.

So Goldman is testing 180 this week. Its a good place to watch for GS to "break out and hold" or "fail the test of $180 and do a 180" at $180. Goldman has not spent a month above $180 since the start of the financial crisis  in 2008. 

Here is a link to the chart for my presentation chart back on July 28. CSTA presentation

Here is a link to a Morgan Stanley (MS) article on this blog a week ago. Morgan Stanley

Morgan Stanley broke through to new highs above an old ceiling at $33.50 this past week. I would expect Goldman to do the same. That bodes well for the market if they are making higher highs through long term resistance. If my July 28th chart was right and this is a head/shoulders base, the target would be $210 which is near 2 of Goldman's 3 peaks in the tumultuous top of 2007.

Good trading,

Greg Schnell, CMT

Trina Solar Is Looking For Blue Sky

Trina Solar (TSL) is poised to break out here, but it has important resistance to get through first. The RSI has stayed bullish throughout the 1 year pullback. The stock has drifted sideways since last August.

After breaking the down sloping trend line, Trina Solar is trying to get through the 40 WMA. It has struggled here for two weeks, so this is becoming more meaningful.

The MACD recently crossed above the signal line and the Relative Strength has turned up above the down sloping trend. A horizontal line could be drawn across the last 6 months peaks. If Trina can get rolling, it could be a nice long breakout. Definitely worth watching right here.

Have a good weekend,

Greg Schnell, CMT

German DAX Reverses Near Key Retracement

The German DAX Index ($DAX) is at an interesting juncture because it broke down in July and then retraced 62% of the prior decline with a bounce in August. Notice that broken support turns into resistance in the 9600 area as well. The index stalled on Wednesday and was trading near 9450 on Thursday. 

Click this image for a live chart. 

Volume Drying Up On DJIA

Dollar-Weighted Volume (DWV) is a short-term indicator. Generally the DWV and the price index run pretty close together, with tops confirming tops and bottoms confirming bottoms. What we look for are positive/negative divergences and for instances where volume doesn't confirm price, meaning that volume either leads or lags price. When this happens, look for a change in the short-term price trend. Right now we are seeing a divergence between DWV and price on the Dow Jones Industrials. Currently price is moving up faster than volume. This tells us that volume is drying up and support for the rally in the short term may be falling away. 

You'll find the DWV charts in the DP Market Indicators ChartPack. It is in the "DPMI - 1040 - Dollar Weight Volume" ChartList and the chart I used above is "120 - DJIA Dollar-Weighted Volume (1-Yr)" chart in the DPMI - 1040 ChartList.

If you'd like to read more about DWV, here is a blog article that Carl wrote a few years back.

Happy Charting!

The Emerging Energy In Emerging Markets

The Emerging Markets ETF (EEM) continues to post new highs today. The SCTR ranking has moved into the cherished top quartile, and the EEM segment looks to be powering higher.

Although the SCTR broke out in early July into the top quartile, the ETF traded between $43 and $45 since then. Today marks a new breakout from that range.

Good trading,

Greg Schnell, CMT

Consumer and Capital Spending Sectors Lead in August

Contrary to seasonal tendencies, August has been a strong month for the stock market. The Sector PerfChart shows the S&P 500 SPDR (SPY) up just over 3% since July 31st. Of the nine sectors, the Industrials SPDR (XLI) and the Consumer Discretionary SPDR (XLY) are up over 4% and showing upside leadership. This is a positive because the consumer discretionary sector covers the consumer-spending portion of the economy and the industrials sector represents companies that benefit from capital spending.  

Click this image for a live chart

Morgan Stanley (MS) Knocks On Old Ceiling Plaster At $33.50

Morgan Stanley (MS) had a beautiful run in 2013. In 2014, MS continued to make mostly higher lows but the ceiling was capped in the $33 - $33.50 range. Today it is back there testing it again.

While we commonly look at charts over the past 2 years, how about looking at 15 years of history for Morgan Stanley. Here is just a crazy coincidence. Back in 1998 MS hit $33.50. When looking across the chart this was a massive support and resistance zone for Morgan Stanley. It oscillated around it all of 1999, it was not broke until 9/11/2001. It became resistance for the 2002 -2003 lows, support in 2004, 2005. It was tested during the Bear Stearns collapse and then plummeted during the Lehman Brothers collapse. On the revival bounce in 2010, it stalled at...$33.42. In January 2014, it returned to the $33 level and we have tried at least 5 times this year to exceed it. Wow!

The SCTR is just about to move above 75, the MACD has cycled lower and tried to reset near zero. In the Zoom window we can see it is on an up signal.

If Morgan Stanley can finally break through and hold, it would be a very significant move on what has been a difficult ceiling for the stock.

Good trading,

Greg Schnell, CMT



Finance Sector Takes the Green on Sector Carpet

The finance sector is showing strength as the annual conference in Jackson Hole gets under way. Fed Chair Janet Yellen will speak tomorrow and this could move Treasury yields and further affect the group. The image below comes from the Sector Carpet and shows the finance sector leading with a dark green. Also notice that technology and consumer staples are leading today. Click on the arrow at the top to see the individual squares. A more detailed Carpet can be seen after the jump. 

Continue reading "Finance Sector Takes the Green on Sector Carpet" »

NuCor (NUE) Makes New All Time Highs

Some of the Steel sector has been moving up aggressively. But poking out to new 52 week and All Time Highs today was NuCor (NUE).

This chart has great technicals. The RSI has stayed in bull mode above 40 for 2 years. The MACD has gently pulled back to the zero line and completed its reset and is off to the races with a big weekly histogram bar.  The SCTR has not quite moved into Top Quartile yet, but it looks to be headed up there. There are a few in the industry group that look worthy of attention.  To find them, click on sector summary on the home page. Go to the Materials sector, click on that. Choose Steel as the next industry group and then select the one month setting up top on the drop down menu. 

If you liked this article, feel free to forward it to investing friends and family. The chart is printable. It should also be clickable so that you can go look at the settings.

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Good trading,

Greg Schnell, CMT

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