Don't Ignore This Chart

November 2014

Don't Ignore This Chart

XME Fails at Resistance and Lags Market

by Arthur Hill

The Metals & Mining SPDR (XME) got a bounce with the stock market in the second half of October, but struggled in November with a trading range between 34 and 36.5. This struggle turned to weakness as the ETF gapped down on Friday and fell sharply. A follow through support break would signal a continuation of the bigger downtrend and target a move to new lows. The indicator window shows the XME:SPY ratio hitting a new low already as XME shows relative weakness. Note that copper fell sharply on Friday, Caterpillar gapped down and gold is down sharply.  Read More 

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The Canadian Energy Market Shows The OPEC Fallout

by Greg Schnell

This intraday chart shows the drop on the OPEC announcement. With crude oil down hard into the high $70 level ($70.91 at time of writing) and the Toronto Stock Exchange moving marginally on the news (-40 on an index at 15000) it might be a contrary time to look for energy plays that hold up well over the next few weeks and months. It won't take much to push crude into the high 60's which should start to set the desperation level at exhaustive.  Good trading, Greg Schnell, CMT     Read More 

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The Noose Narrows on the Oil & Gas Equip & Services SPDR

by Arthur Hill

Oil remains weak overall and so do the energy related ETFs (XLE, XOP, XES). The chart below shows the Oil & Gas Equip & Services SPDR (XES) hitting a new low in October and then consolidating with a triangle. The pink lines show the Bollinger Bands narrowing like a noose around price action. The narrowing tells us that volatility is contracting and we can expect a volatility expansion to follow. Given the downtrend and the triangle, the odds favor a continuation lower.     Read More 

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The Rails Keep Rolling

by Greg Schnell

After pulling back in October, all the rails have gone on a major rally from the lows. Canadian National Railway (CNI) is one of the most efficient railways. This particular stock is returning back to some of the highest closes in September before it pulled back. We can see today was a big bullish wide ranging day. The SCTR has returned to be one of the top 25% and today it was just shy of being in the top 10% of the large cap stocks. We can see on the indicator panel below it continues to outperform the S&P 500 ($SPX).  After Bill Gates and Warren Read More 

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Fastenal Follows Through on Big Island Reversal

by Arthur Hill

Fastenal continues to improve on the chart with two bullish patterns and signs of accumulation. First, a big island reversal formed at the stock gapped below 43.5 in early October and gapped back above this level in late October. Second, the stock broke pennant resistance with a move above 45 last week. Third, the Accumulation Distribution Line (ACDL) bottomed in mid October and moved above its September high. FAST is looking bullish as long as support at 44 holds.    Read More 

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Three of Five Offensive Sectors Lead within Small Caps

by Arthur Hill

The PerfChart below shows the nine small-cap sector ETFs and the Russell 2000 iShares (IWM). Notice that the SmallCap Consumer Discretionary ETF (PSCD) and the SmallCap Technology ETF (PSCT) led over the last five days with bigger gains. Throw in the SmallCap Industrials ETF (PSCI) and three of the four offensive sectors are leading. The SmallCap Financials ETF (PSCF) is, however, lagging with a smaller gain (neon green). The other five sectors on the right side of the chart sport smaller gains and are lagging.    Read More 

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Alcoa (AA) Gaps Out To New Highs

by Greg Schnell

Alcoa (AA) has been a strong stock on the run for a while. Recently it consolidated for the last 150 days. This morning Alcoa pushed to new highs suggesting the consolidation is over. The powerful gap out of the consolidation is nice to see on a very liquid stock. This push to new highs after a sideways period looks very healthy for breakout buyers. With the SCTR ranking pinned to the top and the Relative Strength holding nice and high, this has all the characteristics of a strong stock continuing to climb.  Support looks to be $17. If it doesn't keep Read More 

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Big Blue Stays Red on the Relative Rotation Graph

by Arthur Hill

The S&P 500 is up over 7% the last five weeks, but IBM is down and flirting with new lows. The chart below shows the Relative Rotation Graph (RRG) with all thirty Dow stocks. With the Dow Industrials as the benchmark, we are seeing the relative performance rotations for all 30 stocks in this key average. The highlighted red line represents relative performance for IBM and it is pointing northeast, which is negative. Also notice that Chevron and Caterpillar are underperforming the senior average.    Read More 

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Natural Gas and Coffee Lead ETF SCTRs with Big Moves

by Arthur Hill

There is a little gem in the middle of the home page that shows the biggest moves for the StockCharts Technical Rank (SCTR). Clicking "Top Up" will show the biggest relative performance gainers, while clicking "Top Down" will show the biggest relative performance losers. Today we are seeing big relative performance gains in the Coffee ETF (JO) and the Natural Gas ETF (UNG). It must be so cold that people are staying inside with the heat on and a big cup of joe.    Read More 

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Potash Paints A Big Breakout Candle

by Greg Schnell

Potash Corp (POT) has made a huge bull candle today. We could understate it as just a trend line breakout.  The whole Potash group jumped today so it does not appear to be company specific. This chart has such nice technicals. MACD moving positive today. Relative Strength breaking out at the top of the chart. We can see a clear downtrend being broken today. I put this chart in monochrome so you can see how to print with only a black cartridge and lots of white space. The area chart at the top is light gray. You can click on the chart to see the settings. Read More 

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One Stock in the Energy Sector Hit a New High This Month

by Arthur Hill

The Energy SPDR (XLE) is by far the weakest sector in the market right now. Most of its 43 components are in downtrends and well below the summer-autumn highs. One stock, however, stands out from this crowd. The chart below shows Tesoro (TSO) breaking out to new highs in mid October and recording a new high on 3-Nov. The stock has since corrected the last two weeks with a falling flag. A break above 74 would signal a continuation higher. The indicator windows show TSO outperforming XLE and SPY.    Read More 

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Two All Beef Patties, Special Sauce, Let Us See... (MCD)

by Greg Schnell

You know you are old when you can recite a 14 word tag line twenty years later. McDonald's (MCD) popped up on the radar today as the dining stocks have really ramped up lately. Could it be the ability to buy McCafe coffee for home or an improvement in same store sales?  While McDonald's tested resistance today, it was the highest close since the gap down in July. Seasonality is also good for McDonald's in November and December. You can see that chart here. McDonald's Seasonality.  Good trading, Greg Schnell, CMT Read More 

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The 20+ YR T-Bond ETF Gets the Squeeze

by Arthur Hill

The 20+ YR T-Bond ETF (TLT) went ballistic in mid October with a surge above 125 and then sharply reversed with a close below 122 the next day. The ETF has since worked its way lower and volatility has seriously contracted. Notice that Bollinger BandWidth is at its lowest level in over six months. This means the distance between the two bands is the narrowest in over six months. The price pattern over the last three weeks looks like a small descending triangle, which is a bearish continuation pattern. A break below 118, therefore, would signal a continuation of the late October Read More 

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A BlackBerry Gets Picked

by Greg Schnell

Who thought growing a Blackberry (BBRY) could be so challenging? The new CEO seems to be capable of generating interest by investors in their platform. Here is the chart. With a series of rising lows and this continuing pressure on climbing out of the basing pattern in the stock, Blackberry is starting to show some interesting traits. A breakout above $11.65 would be new 52 week highs which has not been part of the chart resume for BBRY for some time. If you liked this article, feel free to forward it to Read More 

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Oil Citations and Sector Performance are Revealing

by Arthur Hill

The top chart shows sector performance since the beginning of September. The bottom chart, from factset.com, shows the number of times companies in these sectors cited oil in their earnings calls (from 1-Sep to 6-Nov). Oil fell around 10% from mid June to late August and around 20% from early September to early November. Unsurprisingly, companies in the energy sector cited oil the most and the S&P Energy Sector ($SPEN) is down around 10% since early September. The S&P Industrials Sector ($SPI) appears to be a big beneficiary because these companies cited oil 33 times and the sector Read More 

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Aroons Cross to Trigger a Signal in Tesla

by Arthur Hill

Tesla (TSLA) gapped down and fell sharply in early October, but ultimately held support from the July low and rising 200-day moving average. The stock moved higher the last four weeks and surged above the September trend line with a 3+ percent gain on Tuesday. Also notice that Aroon Up crossed above Aroon Down to trigger a bullish signal. Traders can mark support at the early November low and 200-day. You can read more about the Aroon indicators in our ChartSchool.    Read More 

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Industrials and Healthcare Lead the Big Recovery

by Arthur Hill

The stock market bottomed in mid October and then surged over the last 18 days. Chartists can find the leaders (and laggards) for this period by setting the PerfChart for 18 days. Simply double click the date tab and enter a number. The PerfChart below shows all nine sectors and SPY with big gains since October 15th. The Industrials SPDR (XLI) and HealthCare SPDR (XLV) are leading with double digit gains. The Materials SPDR (XLB) and Consumer Staples SPDR (XLP) are lagging with the smallest gains. The Finance SPDR (XLF) shows relative strength because it is up more than SPY.  Read More 

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Can Precious Metals Become Precious Again?

by Greg Schnell

Gold ($GOLD) is painting a bullish candle today and surging back above the recent gap down. We have had $20 rallies before, but the exhaustion in this particular move seems complete. Who could possibly want to own gold after the beating? That washed out sentiment might be the single most bullish signal. Is it a tradable rally? Probably. Will this mark the final low in $GOLD? That would be a stretch with the US Dollar ($USD) going vertical. For traders it's attractive as the gap structure demonstrates a complete exhaustion. I have used the tradable ETF's to show Read More 

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Minding the Gap on QQQ

by Arthur Hill

The London Tube is famous for its automated announcements reminding commuters to "mind the gap" between the train and the platform (don't fall in). QQQ has a gap that we should also mind. Notice how the ETF opened above 101 and closed above 101 the last four trading days. A close above 101 today would mark the fifth, but not the fifth of the fifth of the fifth. Sorry, I couldn't resist a little jab at Elliott. The ETF is clearly stalling, but the gap is holding and remains bullish as long as it holds. A close below 100 would fill the gap and provide the first sign of material selling Read More 

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New Highs in Key AD Line Affirm Long-term Uptrend

by Arthur Hill

The S&P 500 AD Line ($SPXADP) confirmed the new high in the S&P 500 by hitting a new high of its own. The chart below shows the AD Line holding its early August low in mid October and surging above its early September high on Friday. This means breadth is keeping pace with the market advance. A non-confirmation or lower high would be cause for concern, but this is clearly not the case right now.    Read More 

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Utilities Make A Strong Push Off The Lows

by Greg Schnell

After the recent pullback, the overall market has blasted higher. Over the last week, I have noticed some of the strong momentum stocks under performing the $SPX. While the $SPX is just marginally above the recent highs of September, the Utilities have absolutely launched forward. This pause by the momentum stocks but the continued ascent by the utilities seems to point to the cycle where materials and energy have topped and Utilities/ Consumer Staples start to lead. Here is the sector cycle. Here is a shot of the Read More 

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Predefined Technical Alerts Say it All - Gold, Oil, Dollar, Stocks

by Arthur Hill

Chartists can get a good idea of market conditions just by looking at the predefined technical alerts page. Today's alerts are at the top and users can view past alerts by scrolling down the page. Today, we can see several major indices and sector ETFs hitting multi-year highs, which indicates a long-term uptrend for the stock market overall. In addition, the Euro hit a 2-year low, the Dollar Index hit a four year high and gold hit a 4-year low. Note that oil hit a 2-year low on Wednesday, These are the major trends at work in the market right now.    Read More