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Sector Carpet Shows a Preference for Risk

by Arthur Hill

Stocks moved sharply higher on Friday with the Technology sector leading and the Utilities sector lagging. As the Market Carpet shows, the average utilities stock is down .05% and the average technology stock is up 1.82%. This shows a preference for higher risk stocks (offense). Notice that the tech sector is dark green because it is the leader. Financials and materials are also showing leadership today. Click this image to see a live Sector Market Carpet. Double click on any of the sector spaces to see the individual components.    Read More 

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Intel Gaps Down to Lead Semis Lower

by Arthur Hill

Intel (INTC) weighed on the semiconductor group Thursday with a gap down and high volume decline. The chart below shows the stock reversing near broken support, which turned into resistance. This is classic technical analysis: broken support turns first resistance and broken resistance turns first support.  Read More 

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Revving Up The Multi Utilities Industry Group

by Greg Schnell

Here is a great looking industry group based on the RRG Charts. The Utility Sector has started to accelerate and this industry group looks great. I have deleted the lines on the other charts that are not that strong by removing the check marks on the list below. This chart has three things going for it. The stocks are accelerating in unison  There is clear acceleration in the tails. They are very long which means they are moving quickly in price. They all have a very positive direction. Both up for momentum and to the right for improving outperformance of the $SPX. Read More 

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Never mind QE, the Yield Curve Reflects a Dovish Fed

by Arthur Hill

The end of QE may be on the table, but the yield curve shows that the Fed remains dovish overall. The image below comes from the Dynamic Yield Curve. Notice that short-term yields are the lowest and the yields rise as the maturities extend. This is a "normal" or positively sloped yield curve and it means the Fed is accommodative right now. The trouble starts when short-term yields rise sharply and the yield curve flattens. Click the image below for a live chart and move the vertical red line to 2007 and 2000 to see what a flat yield curve looks like.    Read More 

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Louisiana Pacific Hits the Bearish-Signal-Reversed Scan

by Arthur Hill

A failed signal is sometimes as good as a signal. In other words, a failed bearish signal is sometimes just as good as a bullish signal. StockCharts users can find failed P&F signals on the Predefined Scans page. The example below shows LPX with a bearish signal when the last O-Column moved below the prior O-Column. This signal was reversed when the current X-Column moved above the prior X-Column. LPX is currently at the bearish resistance line and a break above this line is needed to trigger the next bullish signal.  Read More 

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GoPro Gaps with Uptick in Volume GPRO

by Arthur Hill

GoPro (GPRO) came under pressure last week as a lower high formed and the stock gapped down. Even though the Nasdaq 100 moved higher the last two days, GPRO moved lower and formed three black (filled) candlesticks. With the decline and gap over the last two days, the stock broke flag support and this targets a move to the 63-65 area. Chartists can use the gap to mark resistance at 80.    Read More 

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New Highs Surge on the S&P 500

by Arthur Hill

The surge in the S&P 500 over the last six days was accompanied by a surge in new highs the last few days. Notice that Net New Highs exceeded 40 the last three days and new highs exceeded 45 the last three days. There were only two new lows: Amazon (AMZN) and Southwest Enegy (SWN).    Read More 

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P&F Chart Nails it for the S&P 500

by Arthur Hill

The chart below shows a long-term Point & Figure chart for the S&P 500. Each box is 10 points and a 30+ point move is needed for a reversal (3 boxes). This chart starts with the rally off the November 2012 low. The blue bullish support line was drawn as soon as the X-Column surged above the red bearish resistance line (in November 2012). Rising at a 45 degree angle, this line defines the uptrend until broken. There was had a triple bottom sell signal with the break below 1930, but this occurred above the line and was countered with an immediate surge back above 1930. Support in the Read More 

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The Hang Seng Gears Up for a Move

by Arthur Hill

Protests and weakness in global markets weighed on the Hang Seng Composite ($HSI) in September as the index fell to its prior resistance zone. The index stabilized in October and got a nice bounce on Wednesday. This is an interesting area because it also represents a 50-62% retracement of the prior advance. If the Hang Seng is going to reverse, this is as good a place as any. The Percentage Price Oscillator (PPO) is turning up from oversold levels and a break above the early October high would be quite bullish.     Read More 

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L Brands (LB) Gets A Lift

by Greg Schnell

L Brands (LB)  has been trying to break through previous highs over the last month. After chopping around it finally broke out conclusively yesterday and continued the acceleration today. There are just so many comments to make for a company with brands of La Senza and Victoria Secret. We'll let you laugh about those on your own. Some of the consumer discretionary stocks are starting to break out heading into the gift season. This one was highlighted in the webinar last week. There will be a webinar on Friday at 4:30 EST.  In a market where so many things Read More 

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Homebuilder and Retail ETFs Make Big Relative Moves

by Arthur Hill

The table below shows the StockCharts Technical Rank (SCTR) for our ETF universe. This table is sorted by "change" with the biggest gainers at the top. In particular, the SCTR for the Home Construction iShares (ITB) surged 23.5 points and moved above 75 and the SCTR for the Retail SPDR (XRT) surged 15.1 points and moved above 60. These two are suddenly showing relative strength and this is a positive sign for the consumer discretionary sector. You can read more about the SCTR calcuations in our ChartSchool article.    Read More 

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Microsoft Bounces off Key Retracement

by Arthur Hill

The chart below shows Microsoft (MSFT) falling to broken resistance, firming for two days and bouncing over the last two days. Also notice that this bounce occurred at the 62% retracement. Even though the decline looks steep, support held where it should and the stock is above the rising 200-day moving average (long-term uptrend). The indicator window shows 10-period RSI becoming oversold for the first time this year and moving above 30 on Friday.    Read More 

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Alibaba (BABA) Stops Resting And Steps Above The Trend Line

by Greg Schnell

Alibaba (BABA) has been sliding sideways since the IPO. The $SPX made its high on Alibaba (BABA) initial public offering day which was September 19, 2014. Most stocks have been pulling back since the quadruple witching day of September 19, 2014. The stock has gently pulled back while other sectors fell faster than stones on a mountainside. Today, Alibaba gapped up and broke above the horizontal resistance. It also gapped above the Volume Weighted Average Price (VWAP) which I have circled in the full quote panel above. At the time of writing it has pulled back below the VWAP level Read More 

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Hammers, Hollow Reds and Dragonflies Hit the Predefined Scans

by Arthur Hill

With weakness in early trading and a strong close, a number of bullish candlestick patterns formed on Wednesday. These include hammers and dragonfly doji. There were also hundreds of hollow red candlesticks. These form when the close is above the open, but the close is still below the prior close. This candlestick reflects a bounce after a weak open. One day does not a trend change make and this is why one and two day candlestick patterns require follow-through to confirmat a reversal. Also keep in mind that candlesticks are short-term in nature and these patterns will not affect the Read More 

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EOG hits Big Volume-by-price Bar

by Arthur Hill

Most energy stocks have been in a free fall this month and EOG resources is no exception. The stock plunged over 25% from its summer highs and retraced 50-62% of the prior advance (Apr-2013 to July-2014). The stock shows signs of capitulation as downside volume surged for three days and the stock advanced on the fourth day with even higher volume. Also notice that the longest volume-by-price bar resides in the 82-86 area. Combined with the Fibonacci retracements, this area could offer support and lead to at least an oversold bounce.    Read More 

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USO Prepares to Test 2011 Lows

by Erin Swenlin

United States Oil Fund (USO) is one of the "big four" that I analyze on a daily basis in the DecisionPoint Daily Update which you can find in the "DP Reports" blog. The other three of the "big four" are UUP (Dollar), Gold and TLT (20-yr Bonds).  USO has been in a very long basing pattern since 2009 following the parabolic price move and subsequent crash. Right now price is preparing to test long-term support along the 2011/2012 lows. Next stop would be the all-time low in 2009. The weekly Price Momentum Oscillator (PMO) has a clear range of +5 to -5. Unfortunately for USO Read More 

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Energy-related ETFs Hit Historical Extremes

by Arthur Hill

By most metrics, the energy related ETFs have hit oversold extremes with big declines over the last 31 days. The Oil & Gas Equip & Services SPDR (XES) is down around 25%, the Oil & Gas E&P SPDR (XOP) is down almost 30% and the FirstTrust Natural Gas ETF (FCG) is down around 34%. Note that 14-day RSI for FCG and XES is below 10, while 14-day RSI for XOP is below 15. These RSI readings are the lowest since the ETFs began trading, which was in 2006 and 2007.    Read More 

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The HomeBuilders ETF (XHB) Breaks Down to 52 Week Lows

by Greg Schnell

The Homebuilders ETF (XHB) is usually considered a broad indicator of the housing market. The housing market is usually associated with being an indicator of overall economic strength in the USA. We can see all of the major pullbacks in the $SPX have also shown up on the XHB. The XHB was a new ETF in 2006. It immediately started a downward slide leading into the the sub prime fallout in the USA and the global financial crisis. This was a significant precursor to the overall pullback the market ($SPX) suffered later in 2007. In 2010 and 2011, the top of the XHB coincided with the Read More 

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Consumer Staples Stocks Lead the Market

by Arthur Hill

The Consumer Staples SPDR (XLP) shows more "chart" strength than the S&P 500 SPDR (SPY) because it broke out to new highs this week. SPY, on the other hand, remains well below its September high. The CandleGlance chart below shows six leading consumer staples stocks. Five surged above their September highs and show chart strength. Procter & Gamble, the sixth, is less than 2% from its September high. Relative strength in the consumer staples sector shows a penchant for defense in the stock market.    Read More 

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Twitter Starts To Outperform

by Greg Schnell

Twitter (TWTR)  has been an interesting IPO. It showed great promise coming to the market and the stock behaved much better technically in the first few months than Facebook. After that, the two appeared to be the same pain for buyers. Twitter lost 60% from its highs. Now we are almost a year into the Twitter trade and it has resumed the upside momentum much like Facebook did. Facebook built more of a base, but nonetheless both are now trading above the first day of trading close. We can see that TWTR now has an SCTRT ranking better than 97% of the stocks in the large cap Read More 

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The Noose Tightens on Apple

by Arthur Hill

After a big advance from April to August, Apple (AAPL) turned dull as a tight consolidation takes shape. Notice that the Bollinger Bands are narrowing and a triangle is taking shape. The indicator window shows BandWidth below 5% for the first time since early July. This volatility contraction suggests that traders should prepare for a volatility expansion. Watch 103 for an upside breakout and 97 for a downside break.    Read More 

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Brazil Launches Higher

by Greg Schnell

With all the red on the board today, I couldn't help but notice the strength of the Brazil based stocks as a follow on from their election. The only stock in the most active list that was not based in Brazil was Twitter..Who knew 140 characters could make you one of the most active stocks on the stock market today? Back to Brazil. Petrobras (PBR), Vale (VALE), and Itau UniBanco (ITUB) really bounced yesterday and continued to add today. This looks very election result oriented and could quickly swing the other way as there is going to be another election on October 26th. Investors Read More 

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Healthcare is the Healthiest Sector

by Arthur Hill

It has been a rough ride for stocks since September began. The market carpet below shows performance for the sectors as a whole. The average healthcare stock is up 1.17% since 29-Aug and the average consumer staples stock is flat. The average stock for the other seven sectors is down. Notice that the average energy stock is down 13.63% in less than five weeks.  Charting notes: click the arrow at the top left to move up or down a level, double click on any sector to see the whole market carpet, double click again to drill down in that sector, and right click to see more options Read More 

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And the Winner for Most Oversold Is.....

by Arthur Hill

The CandleGlance chart below shows six broad-market ETFs with 14-day RSI. Notice that RSI is below 30 for the Russell 2000 iShares, the Russell MicroCap iShares and the S&P MidCap SPDR. With an RSI below 26, the S&P MidCap SPDR is the most oversold of the six. In fact, 14-day RSI is the lowest it has been since May 2012. How's that for oversold? The Nasdaq 100 ETF and Dow Diamonds are holding up the best because their RSI values are above 37. As the image below shows, chartists can chart 12 symbols in CandleGlance format and add different indicators to these charts.  Read More 

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Oversold Readings On The TRIN

by Erin Swenlin

The TRIN or Short-Term TRading INdex, better known as the Arms Index, is a breadth indicator that was developed by Richard Arms in 1967. The index is calculated by dividing the Advance-Decline Ratio by the Advance-Decline Volume Ratio. Because it is an oscillator, we can use it to identify short-term overbought and oversold conditions. Looking at the TRIN chart below, I've identified areas of oversold readings (red bars) and then annotated the corresponding oversold readings with price using the blue bars. I used a reverse scale on the TRIN so it is more intuitive. I was mostly Read More 

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JO Leads the Commodity ETFs

by Arthur Hill

Commodities have been slammed over the last few weeks, but the Coffee ETF (JO) is holding up quite well. JO is up over 20% from its July low and showing relative strength again today. The image below comes from the Market Summary (ETF version), which is a great place to get an overview of the entire market. Notice that JO is up over 2% and leading the other commodity ETFs.  Read More