Don't Ignore This Chart

December 2012

Don't Ignore This Chart

Top 5 Technical Developments for 2012 – Number 2 – Technology SPDR (XLK) Fails at Broken Support

by Arthur Hill

The Technology SPDR (XLK) led the market in the first half of the year, but lagged the market in the second half and underperformed the S&P 500. The technology sector accounts for over 19% of the S&P 500 ETF (SPY) and is by far the biggest sector. Lack of leadership from this key sector is a concern as we head into 2013. The chart below shows XLK breaking the August 2011 trend line and this break-zone turning into resistance in the 29-29.5 area. This zone marks clear resistance because the ETF failed to hold above 29 at least five times in the last nine weeks. Note that XLK Read More 

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Top 5 Technical Developments for 2012 – Number 3 – US Dollar Index ($USD) Forms Large Head-and-Shoulders Reversal

by Arthur Hill

The US Dollar Index ($USD) was all over the place in 2012, but ended the year slightly lower than where it started. The index started the year around 80, surged to 84 and closed at 79.62 on Friday. From February to December, a large head-and-shoulders reversal formed with a rising neckline. Overall, I would use the 2012 lows to mark a support zone in the 78-79 area. A break below this zone would confirm the head-and-shoulders pattern and target further weakness towards the 74 area. Such a move would be bullish for stocks because the Dollar and S&P 500 move in opposite directions Read More 

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Top 5 Technical Developments for 2012 - Number 4 - Finance SPDR (XLF) Starts Strong and Finishes Strong

by Arthur Hill

Big banks came to life in 2012 as the Finance SPDR (XLF) started the year strong and ended strong. XLK opened 2012 just above 13 and is likely to finish near a 52-week high. The ETF scored a 52-week high with the move above 16.5 in mid January and is currently around 16.18. The mid November low marks key support for this long-term uptrend. The indicator window confirms relative strength as the price relative hit a 52-week high on December 28th. Relative strength in the finance sector, which accounts for around 15.65% of the S&P 500, is a positive for the overall market. Some of the Read More 

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Top 5 Technical Developments for 2012 – Number 5 – Nikkei Hits 52-week High as Yen Reverses 5 Year Uptrend

by Arthur Hill

The Nikkei 225 ($NIKK) came to life over the last two months and surged above its March high with a massive surge. Notice that the index held above its 2009 lows and also broke channel resistance in the process. This move opens the door to the next resistance zone in the 13000 area. Weakness in the Yen is helping the export driven Nikkei immensely. Notice that the Yen Index ($XJY) broke support at 120 to reverse a five year uptrend. A weakening Yen makes Japanese exports more competitive and Japanese exporters more profitable. 2013 could be the year of the rising sun. Read More 

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Dow Tests Key Moving Average as MACD Rolls Over

by Arthur Hill

The Dow has fallen over 300 points in the last six trading days and is now testing the 200-day moving average. The senior Average broke above this key average in early December and needs to hold the breakout. A break back below 13000 would be quite negative.  MACD is already signaling a turn in momentum as the oscillator moved below its signal line today. *LINEBR** Read More 

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Macy’s Breaks 200-day Moving Average

by Arthur Hill

Macy’s (M) is having a rough season as the stock broke the 200-day moving average and support at 37.50 the last few days. Also notice that stock gapped down four days ago and fell on high volume just before Christmas. This gap zone becomes the first resistance zone to watch.   Read More 

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Red Engulfs the Market Carpet, but Nike Bucks the Selling

by Arthur Hill

The Sector Market Carpet is full of red today as selling pressure hit an overbought stock market. All sectors are down, but there are a few isolated green boxes. Nike (NKE) is the top performer with a 4.8% surge. Red Hat (RHT) is up within the technology sector and Intuitive Surgical (ISRG) is the best performer in the healthcare sector. Read More 

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EA Breaks Support with Three Black Crows Pattern

by Arthur Hill

Electronic Arts (EA) came under strong selling pressure the last three days with consecutive long black candlesticks. As this chart now stands (11:48 ET), a bearish three black crows pattern is taking shape. The stock is short-term oversold already, but the trend line and support break are medium-term bearish. Read More 

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Nasdaq 100 Equal-Weight ETF Breaks September Highs

by Arthur Hill

The Nasdaq 100 Equal-Weight ETF (QQEW) continues to lead the Nasdaq 100 ETF (QQQ) with a break above its autumn highs. After forming a doji and a hammer, QQEW broke channel resistance in late November and never looked back. The indicator window shows the price relative breaking out in early December. Read More 

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Consumer Discretionary SPDR Forms Pennant after Breakout

by Arthur Hill

The Consumer Discretionary SPDR (XLY) is showing strength with a channel breakout in November and a pennant consolidation in December. XLY surged over 1.4% on Monday to form the second low for the pennant. A breakout would signal a continuation higher. *LINEBR** Read More 

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KB Home Forges Quadruple Top Breakout on P&F Chart

by Arthur Hill

Intraday P&F charts are good for capturing short-term and medium-term price movements. The chart below is a 60-minute P&F chart for KB Home (KBH). Notice how the stock broke the Bearish Resistance Line and forged a breakout at 15 this week. Read More 

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Drug Retailers Lead the Consumer Staples Sector

by Arthur Hill

With the consumer staples sector showing some relative strength on Thursday, I went to the sector summary to find the strong industry groups within this sector. The image below shows the 10 industry groups with the DJ US Drug Retailers Index ($DJUSRD) leading the way. Users can click on the index name to see the components. CVS, RAD and ABC are leading today. Click this image for a live version. Read More 

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NYSE AD Line Hits New High

by Arthur Hill

The NYSE AD Line ($NYAD) reflects broad market strength with a move above the September-October highs this week. In fact, the indicator is trading at a 52-week high. There are no signs of weakness here. Read More 

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Techs Lead on Sector Carpet

by Arthur Hill

The technology sector is showing upside leadership with the average stock gaining 1.3% on Tuesday. The red ovals highlight the top five stocks in the S&P 500 today. Three of the top five are in the consumer discretionary sector, one comes from the sector and one from the consumer staples sector. Read More 

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Expeditors Leads with Flag Breakout

by Arthur Hill

After a surge from mid to late November, Expeditors International (EXPD) hit resistance from the early November high around 38. A falling flag formed into early December and the stock broke flag resistance with a surge above 38 on Monday. This signals a continuation of the prior advance and the early December lows now mark key support. Read More 

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Apple Reverses at Long-term Support

by Arthur Hill

Apple (AAPL) tested its mid November low and long-term support with a dip below 520 on Thursday. Support in the 520 area extends back to the May low. Notice how the stock forged an intraday reversal for the second time in two months. Also notice that volume exceeded 40 million shares. Read More 

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Aroon Turns Bullish for Semiconductor ETF

by Arthur Hill

The Market Vectors Semiconductor ETF (SMH) is challenging resistance with a big surge over the last few weeks. Aroon confirms strength as Aroon Up (green) moved above Aroon Down (red) and hit the +100 level. This sometimes signals the start of a new trend. You can read more about Aroon in our ChartSchool. Read More 

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Finance, Industrials and Utilities Lead Market Higher

by Arthur Hill

Acheck on the sector summary shows the finance, industrials and utilities sectors leading the market on Wednesday afternoon with 1+ percent gains. Users can click on the sector names to drill down and see which industry groups are leading and lagging within the sector. Read More 

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Aaron Forms A Fibonacci Retracement

by Arthur Hill

Aaron (AAN) surged above 32 and then fell all the way back below 29. Even though this decline looks excessive, note that it retraced 62% of the prior decline and the stock firmed near broken resistance. A break above the mid November high on good volume would be bullish. Read More 

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Coal ETF Forms Bearish Flag

by Arthur Hill

After hitting big resistance in the 26 area, the Coal ETF (KOL) moved sharply lower and then formed a rising flag the last two weeks. These are bearish continuation patterns that typically form after a sharp decline. A move below flag support would signal a continuation lower. Read More