Don't Ignore This Chart

February 2009

Don't Ignore This Chart

What Did the VIX Know and When Did It Know It?

by Chip Anderson

Click here for a live version of this chart The VIX is the Volatility Index published by the Chicago Board Options Exchange (CBOE).  It measures the "implied volatility" of a hypothetical SPX option created from a weighted average of several actual SPX options.  (For all the gory details, check out our ChartSchool article on the VIX.)  Typically, the VIX is interpreted as an "inverse" market indicator - i.e., down is bullish and up is bearish.  In the chart above, I've plotted the reciprocal of the VIX with the ratio symbol Read More 

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The Battle for Apple (AAPL)

by Chip Anderson

Click here for a live version of this chart. Apple has been bouncing around $90 since October.  Is that support going to hold?  One way to gauge the strength of a support level is to use the "Vol by Price" overlay - the horizontal histogram on the left side of this chart.  It adds up all the volume for any days on the chart that close within the bars price range.  The bars in two colors - one for volume when the stock closed up and the other for when the stock closed down.  In the case of AAPL, the long horizontal bar Read More 

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Up + Down = Down (CQP)

by Chip Anderson

Click here for a live version of this chart. The MACD Histogram shows the change in momentum of the MACD Line.  The MACD Line - in turn - shows the change of momentum in the underlying stock.  In the case of CQP, the MACD Line has been moving up pretty steadily since early October (blue trendline).  Recently however the MACD Histogram has started moving lower and is now diverging significantly from the MACD Line.  This signals trouble for the stock - something that may already be appearing on the chart. Read More 

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Support for the Dow? ($INDU)

by Chip Anderson

Click here for a live version of this chart. Today the Dow Jones Industrials closed below its 6 year low just under 7500.  What's the next important support level?  What's the one below that?  (and, gulp, the one below that?)  Here you go.  Let's hope those green lines on the right side of this chart stay green. Read More 

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Bottom Feeding: Time for Asia Time? (TYM)

by Chip Anderson

Click here for a live version of this chart. Trying to catch a "falling knife" like Asia Time (TYM) is extremely risky in any market.  Doing it in today's market is pure folly.  And yet  TYM is the only stock on any of the major markets to have its RSI rise back above 30 after staying below 30 for several days.  Today's big rebound (on good volume) continued yesterday's bounce (on relatively light volume) and made the RSI movement possible.  Strong resistance at 0.50 appears to limit the upside however.  While extremely risky Read More 

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Bollinger Band "Topo Map" ($INDU)

by Chip Anderson

Click here for a live version of this chart. Based on the statistical concept of Standard Deviations, Bollinger Bands graphically illustrate how "far away" prices are from their "average" value.  Traditionally, 2.0 standard deviations are used to determine where the upper and lower bands should appear.  In the chart above, I've layered 6 different Bollinger Bands on top of each other going from 2.0 deviations to 3.0 deviations forming two "bands of Bands."  The "deeper" prices go into either band, the more likely things will "snap back" towards the dashed average Read More 

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Long-Term Log Scale Chart Provides Context ($INDU)

by Chip Anderson

How bad is it?  How big was the Internet bubble?  How does the current decline compare to the 1987 crash?  It's all here in black and white (and red and blue).  On a log scale chart like this, movements of the same percentage appear to have the same height regardless of the point values. The key take away here is that when the Internet bubble burst in 2002, the market went back to the "normal" rate of climb that it established after the crash in 1987.  The current economic crisis destroyed that trendline in mid-2008 and is therefore much more serious Read More 

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After the Head and Shoulders (NDN)

by Chip Anderson

NDN has been falling after completing a classic Head & Shoulders chart pattern back in January.   Today was the first set of positive technical signals for the stock in quite a while - a bullish MACD crossover, a rising RSI line and a bullish Parabolic SAR signal.  While all of these signals can be premature, when combined with three up days after what looks like an exhaustion sell off, the odds of a turnaround taking hold increase. While I have no idea what will happen with this particular stock in the coming days, this is a good example of the Read More 

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McClellan Summation Index Struggling to Stay Positive

by Chip Anderson

Click here for a live version of this chart. The McClellan Summation Index is a great market indicator that recently set some all-time record lows back at the end of last year.  Since then, it has bounced back into positive territory, but over the past couple of days a new decline has begun.  While not unexpected, that is disappointing since "according to the McClellans, the beginning of a new bull market is signaled if the NYSE-based Summation index first moves below the -1200 level and then quickly rises above +2500." Read More 

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Anatomy of a Doji (STAA)

by Chip Anderson

STAA put in a huge Doji on its daily chart today.  Technically, a doji is a candlestick where the open and the close are the same.  The huge upper shadow and relatively small lower candle makes STAA's Doji especially striking.  It is very close to being a "Gravestone Doji" - a doji with a big upper shadow and no lower shadow. Doji's often signal a reversal.  We can see the reason for that by looking at the 10-min intraday chart for STAA: STAA gapped up on the open and then quickly rose to its Read More 

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DROOY - Bullish CMF Signal Confirmed by Long-Term Crossover

by Chip Anderson

(Click here for a live version of this chart.) Durban Roodeport Deep (DROOY) is a major gold mining company in South Africa.  Their stock jumped in late November generating a "buy" signal from the standard 20-day Chaiken Money Flow (CMF) in early December.  The longer term moving averages for DROOY crossed today providing a major technical "buy" signal for the stock. Read More 

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Sirius XM Radio's (SIRI) Runaway Gap Up

by Chip Anderson

( Click here for a live version of this chart.) SIRI gapped up on the open and moved higher from there today on strong volume.  Very nice turnaround play with resistance at 0.225.  When a stock that is already in an uptrend gaps up like this, it is called a "Runaway Gap." Read More 

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Hitachi's (HIT) RSI Rebound

by Chip Anderson

( Click here for a live version of this chart.) Hitachi's RSI indicator moved back above 30 today after sinking down around 20 two days ago.  This big jump indicates that an important rebound is underway and has a good chance of continuing at least until the RSI crosses 50 again.  The price action shows what may be a selling climax follow by a strong 2-day rally.  This is worth watching closely. Read More 

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NetFlix (NFLX) has a Powerful MA Crossover

by Chip Anderson

The 50-day Simple Moving Average for NetFlix moved above the 200-day Simple Moving Average today in a very convincing manner confirming the stock's gains over the past couple of days.  No other heavily traded Nasdaq stock has a similarly bullish signal right now. Read More 

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Quadruple Bottom P&F Breakdown for Target (TGT)

by Chip Anderson

( Click here to see a live version of this chart.) Target Corp's Point and Figure chart broke below the bottom of the Quadruple Bottom Pattern that it had put in over the past 5 weeks.  See the 4 "O's" in the boxes at 32?  Those "O's" formed the bottom of the pattern.  Today's decline to 30.20 filled in the 31 and 30 boxes, signaling the breakdown. Read More