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Regional Bank SPDR Continues to Track the Yield Spread

by Arthur Hill

While falling yields translate into lower borrowing costs for the borrower, they are not always positive for the lender. In particular, the recent decline in the 10-Year Treasury Yield ($TNX) caused the spread between the 10-year yield and the 2-year yield to narrow (red dashed line). The chart below shows the spread falling from 2.65 at the beginning of the year to 2.07 this week. Banks make money on this spread and its narrowing translates into lower profits. The indicator window shows that the Regional Bank SPDR (KRE) is positively correlated with the 10-2 Yield Curve ($YC2YR). Notice Read More 

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Tech SPDR Makes a Relative Strength Breakout

by Arthur Hill

The chart below shows year-to-date relative performance for four sector SPDRs (XLK, XLF, XLI and XLY). Notice that the XLK:SPY ratio shot up over the last two weeks and moved to its highest level of the year (above the February peak). In fact, the XLK:SPY ratio is the only one in positive territory and technology is clearly the strongest of these four sectors right now.      Read More 

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Intel Gets a Squeeze and a Breakout

by Arthur Hill

Intel (INTC) is leading the semiconductor group higher with a move above its upper Bollinger Band. Notice how the bands contracted as volatility narrowed over the last few weeks. The breakout signals what could be the start of a volatility expansion and continuation higher. Chartists can use the recent lows to mark a support zone in the 25.75-26 area. The indicator window shows the MACD Histogram on the verge of turning positive.  Read More 

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Uranium ETF Tests Support with Inside Week

by Arthur Hill

The Global Uranium ETF (URA) has had a tough eleven weeks with a decline from 19 to 14, but support may be at hand. The October-November lows marked support in the 14 area and the ETF firmed here with an inside week last week. Also notice that CCI is oversold. A break back above -100 in CCI would be positive for momentum and a break above 15.1 would be positive for the ETF.  Read More 

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USO Breaks Out

by Erin Swenlin

Today, USO broke out above overhead resistance from the bullish ascending triangle. This move confirms the PMO BUY signal that was generated two days ago when the PMO crossed above its 10-EMA.  This breakout came on high volume which is positive. The next area of resistance would be at the horizontal resistance line drawn across the September 2013 high around 39.50. Currently the 20/50/200-EMAs are bullishly configured. The 20-EMA crossed above the 50-EMA back in early Feburary which generated a DecisionPoint Trend Model intermediate-term BUY signal. This was followed by a 50-EMA Read More 

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Metals & Miners SPDR Breaks Support and Shows Relative Weakness

by Arthur Hill

After stalling in March and April, the Metals & Miners SPDR (XME) turned lower in May and broke a key support zone. Notice how XME held the 41 area for two months and then broke this zone twice in May. The indicator window shows the price relative (XME:SPY ratio) also breaking down in May as XME underperforms the S&P 500 SPDR.  Read More 

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Which way is VIPS trending? Using the SCTR to point you to a strong stock like VIPS.

by Greg Schnell

VIPS is an online shopping site for the Chinese market. Bottom left to top right is the simplest way to describe the chart action. What makes the story more compelling is the recent price action. This stock has closed higher almost every month. After having a $70 week (!) which coincided with the Nasdaq markets most recent top, Vipshop went into a sideways trading range. The stock is almost back to its early March highs, and the Nasdaq Composite shown in the bottom price plot is 5% off the highs. Last week, VIPS made its highest close since the sideways trading range started. Read More 

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The New Neutral is Well Underway

by Arthur Hill

Pimco's Bill Gross called his new secular investment theme "the new neutral". Gross expects slow economic growth and low real interest rates over the next five years, and this will fuel the hunt for yield. We can already see the hunt for yield playing out in the year-to-date PerfChart showing the Russell 2000 ETF (IWM), Nasdaq 100 ETF (QQQ) and three high yield alternatives. It is not even close. The Utilities SPDR (XLU), REIT iShares (IYR) and 20+ YR T-Bond ETF (TLT) are easily beating the stock market this year.  Read More 

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$TNX - The 10 Year Bond Yield Loses Support

by Greg Schnell

The 10 Year Bond Yield fell to new lows for 2014 today and made 6 month lows. This has been building for a while. There is one layer of horizontal support left for yields at 2.47% which is marked by the red line. Usually when the yield curve starts dropping, this is not as positive for stocks. The yields fall as investors bid up the price of bonds. The five year note chart ($FVX) also broke support today and the 30 Year bond yield ($TYX) has been falling for some time now. While the long bond has been rolling for a while, getting multiple breaks Read More 

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Bed Bath & Beyond Follows Bullish Candle with Gap

by Arthur Hill

Bed Bath & Beyond (BBBY), which is part of the important retail group, is showing strength with a gap and surge. Notice that this gap-surge came after the stock formed a doji and then a bullish engulfing. The doji signals indecision and the bullish engulfing is a bullish candlestick reversal pattern. Today's follow through confirms this pattern.  Read More 

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Electronic Arts (EA) Paints A Beautiful Picture

by Greg Schnell

For many investors, the large basing patterns with breakouts are favorites. In the case of Electronic Arts (EA), the stock built a text book consolidation formation at a high level and then broke out. It is commonly called a cup with handle. Many investors have heard about cup and handle patterns. This is pretty much a classic. The stock was in a strong uptrend for a long period of time, rising 100% from August 2012 to August 2013. This is important. It has to be a strong stock to begin with. In September, 2013 the stock started to soften. As it pulled back it formed a Read More 

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Symantec Goes for a Breakout With Multiple Scan Signals

by Arthur Hill

Symantec is popping after reporting earnings on Thursday. The chart below shows the stock with a selling climax in mid March, a recovery into early April and a consolidation the last few weeks. With today's gap, the stock is on the verge of a consolidation breakout. The left side of the chart shows a screen shot from the Pre-defined scans page. Notice that SYMC had a bullish MACD cross and CCI buy signal as well.  Read More 

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Russell MicroCap iShares Underperforms Russell 2000 ETF

by Arthur Hill

Small-caps are underperforming large-caps and microcaps are underperforming small-caps. Microcaps are similar to the momentum names in that they represent the high beta end of the stock market. The chart below shows the Russell MicroCap iShares (IWC) breaking below its February low with a 14% decline. The indicator window shows the IWC:IWM ratio falling to its November lows.  Read More 

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Russell 2000 Breaks 200-day. Is it a Buy Signal or Sell Signal?

by Arthur Hill

For the first time in over a year, the Russell 2000 closed below its 200-day moving average. This may seem like a long-term sell signal, but it really depends on the bigger trend. Notice how one would have been better off buying on breaks below the 200-day in 2004, 2005 and 2006. Of course, selling on the breaks in late 2007 and 2008 would have saved an investor quite a bit of money and worked out well. The index has been trending higher since 2009 and it would have paid to buy the breaks in 2010, 2011 and 2012. There were no breaks in 2013.  Read More 

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XLF Pauses In The Caution Zone

by Greg Schnell

The XLF ETF - Financial SPDR - is one of the most influential ETF's to support the long term bull market. Bank managers see financial issues before other sectors and the broad array of industries within the financial sector can mask the actual performance of XLF. The sector contains REIT's, Insurance, Regional Banks, and Brokers to name a few. Importantly, the Brokers and Banks are breaking their long trendlines from 2012. Sometimes the long term chart of an entire sector can help us the most as we start to micro analyze the trends. So here is a weekly view  of XLF.  The last Read More 

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Goldman Sachs Rolls Over Under The 40 WMA

by Greg Schnell

Goldman is one of the most prmoninent stocks in the market. Brokers are considered a leading indicator. Here we have Goldman trapped under the 40 WMA. Looking back we can see Goldman has been early in rolling over before markets correct. Goldman has topped before the $SPX tops on intermediate swings. The other perspective is that Goldman gets weak in April. That would also explain three of the last 4 years. Good Trading, Greg Schnell, CMT   Read More 

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Netflix, DirectTV and Abercrombie Lead Consumer Discretionary Sector

by Arthur Hill

The Consumer Discretionary SPDR (XLY) was leading the sectors at midday on Thursday. Trading in general was rather lackluster, but it is still positive to see some leadership from this economically sensitive sector. The Market Carpet below shows Netflix (NFLX), DirecTV (DTV), Abercrombie (ANF), TripAdvisor (TRIP) and Expedia (EXPE) leading with the biggest gains and the darkest green. Click here to learn more about MarketCarpets.  Read More