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Hang Seng Lagging S&P 500

by Arthur Hill

While the S&P 500 sports a small gain for the month of August, the Hong Kong Hang Seng Index ($HSI) is actually down and lagging. The S&P 500 (black) moved above its early August high last week, but the Hang Seng Index (red) formed a lower high. Continued relative weakness in China could be negative for US stocks. Read More 

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Intel's Raised Guidance Lifts Semiconductors to Key Resistance

by Tom Bowley

Once the SOX broke below the March and July lows of 2008, a new low close of 312 was established in mid-Sept 2008.  After a move higher to quickly retest the earlier breakdown area, the SOX fell precipitously into late 2008.  After months of trending higher, the SOX had climbed within a whisker of the 312 resistance area.  On Friday morning, Intel (INTC) provided the catalyst to test this key area.  The SOX opened at 311, just beneath support, then rallied to an intraday breakout at 316.  At mid-day Friday, the breakout attempt had failed.  The SOX had fallen Read More 

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When to Ignore Gaps

by Arthur Hill

Nokia is a $49 billion company that trades on the NYSE - as an ADS (American Depository Shares). Nokia also happens to trade on the Nasdaq OMX Helsinki. Yes, Nasdaq bought the Helsinki exchange. Anyhow, this means Nokia starts trading long before the NYSE opens. Because prices have already moved in Helsinki, there is usually a gap on the open in New York. Note: This is an educational post featuring a technical analysis technique. Click on this chart to see more details. Read More 

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Combining Factors

by Arthur Hill

Candlesticks are more powerful when combined with other aspects of technical analysis. Noble Energy (NE) gapped down and formed a hammer in early July. Over the next two days, a piercing pattern formed to further affirm support around 28. The catalyst came when the stock surged above 29 with good volume to confirm support and the piercing pattern. Note: This is an educational post featuring a technical analysis technique. Click on this chart to see more details. Read More 

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Bullish Engulfing Reinforces Support

by Arthur Hill

There are bullish engulfing patterns and then there are BULLISH ENGULFING patterns. Kohls (KSS) successfully tested support from its May lows with a bullish engulfing on high volume. Three items came together for this bullish signal: support, a bullish candlestick reversal and high upside volume. The more, the merrier. Note: This is an educational post featuring a technical analysis technique. Click on this chart to see more details. Read More 

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Bearish Engulfing Marks Resistance

by Arthur Hill

The bearish engulfing pattern is a short-term candlestick reversal, but it can also mark future resistance. Jabil Circuit (JBL) formed a bearish engulfing in early May and this area marked resistance a month later. The stock formed a rising wedge that peaked just below the early May high and then gapped down. Note: This is an educational post featuring a technical analysis technique. Click on this chart to see more details. Read More 

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Looking for Volatility Contractions

by Arthur Hill

Volatility contractions often precede volatility expansions. This is the rational behind Bollinger Bands. After surging above 5.5, Ford (F) formed a long consolidation and Bollinger Bands contracted as the range narrowed. The subsequent move above resistance and the upper Bollinger Band triggered the volatility expansion (breakout). Note: This is an educational post featuring a technical analysis technique. Click on this chart to see more details. To find stocks with narrowing Bollinger Bands, use the Market Carpet tool and select Bollinger Band width. Read More 

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Using the Price Relative

by Arthur Hill

The price relative can be used to show relative strength or relative weakness. While the S&P 500 moved to new lows in March, Broadcom (BRCM) held support around 16 from mid January to early March. As a result of relative strength, the price relative (BRCM:$SPX ratio) surged higher in February and March. Relative strength preceded absolute strength as BRCM surged from 16 to 24. Note: This is an educational post featuring a technical analysis technique. Click on this chart to see more details. Read More 

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Detecting a Fade in Downside Momentum

by Arthur Hill

Positive divergences in MACD show waning downside momentum that can lead to a breakout. DR Horton (DHI) forged a lower low in early July, but MACD held above its June low for a positive divergence. Despite a lower low in the stock, downside momentum was fading. MACD’s subsequent move above its signal line preceded a resistance breakout in DHI. Note: This is an educational post featuring a technical analysis technique. Click on this chart to see more details. Read More 

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Volume By Price Confirms Support

by Arthur Hill

The volume-by-price bars for Bank of America were the longest between 11 and 13. Even though the red and green portions were relatively equal, it is clear that many positions were established in this range. Remember, there is a buyer for every seller. With so much volume, the 11-13 area becomes support after the July breakout. Note: This is an sensitive educational post featuring a technical analysis technique. Click on this chart to see more details. Read More 

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RSI Breakouts

by Arthur Hill

Momentum indicators like RSI can be used to define periods when there isn’t much momentum, such as a consolidation. Applied Materials (AMAT) was largely range bound from mid May to mid July (yellow area). So was RSI. The breakout in the stock corresponded with a range breakout in RSI (green dotted line). Note: This is an educational post featuring a technical analysis technique. Click on this chart to see more details. Read More 

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Volume By Price Confirms Support

by Arthur Hill

The volume-by-price bars for Bank of America were the longest between 11 and 13. Even though the red and green portions were relatively equal, it is clear that many positions were established in this range. Remember, there is a buyer for every seller. With so much volume, the 11-13 area becomes support after the July breakout. Note: This is an sensitive educational post featuring a technical analysis technique. Click on this chart to see more details. Read More 

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Envelope Surges Show Strength

by Arthur Hill

The chart below shows DIA with a 20-day SMA and an envelope set 4% above/below the 20-day SMA. Notice how the January plunge below the lower envelope triggered an extended decline. Conversely, the March surge above the upper envelope kicked off the current rally. Not all signals are this clean though. There will be whipsaws. Click on this chart to see more details. Read More 

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Gamestop Moves above Upper Band

by Arthur Hill

Gamestop (GME) came across the Bollinger Band screen with a move above the upper band on Thursday. Such moves show underlying strength. Notice how GME plunged below the lower band in early May and then worked its way lower until July with the 20-day SMA acting as a short-term bearish reversal point. Now that the stock has surged above the upper band, watch for the 20-day SMA to act as a bullish reversal area. Read More 

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NDX Consolidates After the Fed

by Arthur Hill

There are three distinct periods over the last two days. First, stocks surged as the Nasdaq 100 advanced above 1620 before the Fed meeting. Second, stocks gyrated rather wildly as NDX moved above and below 1620 after the announcement. Third, stocks consolidated as the market digested the Fed statement. Watch this consolidation for the next directional clue. Click on this chart to see more details. Read More 

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Oil and Base Metals Keep Pace With Stocks

by Arthur Hill

The PerfChart below shows the key commodity related ETFs and the S&P 500 since early March. As the stock market surged, the US Oil Fund ETF (USO) and the Base Metals ETF (DBB) were the only two commodity ETFs able to keep pace. The Natural Gas ETF (UNG) remains the weakest of the group - by far.  You can click on this chart to see more details. Read More 

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Steel ETF Hits Resistance

by Arthur Hill

After surging to the June high, the Steel Vectors (SLX) met resistance and pulled back over the last two days. Notice that the August 3rd gap did not hold and the price relative formed a lower high. SLX is starting to show relative weakness.  Users can click on this chart to see more details. Read More 

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Bullish Percent Index Shows Strength

by Arthur Hill

The S&P 500 Bullish Percent Index stands at 80%, its highest level since February 2007. Above 70% is generally regarded as overbought because this indicator spends most of its time fluctuating between 30% and 70%. However, 80% testifies to underlying strength within the index and this indicator favors the bulls as long as it remains above 50%. Read More 

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Sunoco Surges to Broken Support

by Arthur Hill

Sunoco (SUN) broke support around 26 with a sharp decline in June. After reversing course in early July, the stock surged back to broken support, which now turns into resistance. Notice how the stock pulled back with high volume on Thursday. This is a big resistance test. Users can click on this chart for more details. Read More 

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An Inverse HS for the Aluminum Index

by Arthur Hill

The DJ US Aluminum Index ($DJUSAL) traced out a massive inverse head-and-shoulders over the last nine months and broke above neckline resistance this week. With this pattern representing a large base, the breakout is bullish and targets further strength towards 140. Careful though, the index is already up over 40% from its July low and getting medium-term overbought. Read More 

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Financials Dominate Most Active List

by Arthur Hill

From the NYSE most active list on the stockcharts.com home page, we can see that banks take up half the list (5 of 10). Although not a bank, GE has a large financial services arm and was third on the list.  Also notice that all six of these finance related stocks were up. Read More 

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Transports Near January High

by Arthur Hill

Despite rising oil prices, the Dow Transports surged on Monday with a move above 3600. This key average is now within spitting distance of its January high. Also of note, the Dow Industrials broke above its January high last month. Read More