Don't Ignore This Chart

September 2015

Don't Ignore This Chart

Corn ETF Attempts to End Wave 2 Correction

by Arthur Hill

Corn is showing signs of firming near the June lows and a possible wave 2 could be ending for the Corn Trust ETF (CORN). I will first start with December Corn Futures (^CZ15) because this is the most widely traded instrument for corn. Note that StockCharts provides end-of-day (EOD) data for dozens of commodities and these symbols begin with a caret (^). Chartists simply need to search the symbol catalog for ^ to see them all. I will include an example at the end of this commentary. Turning back to corn, the futures contract surged in June-July and then fell all the way back to the June Read More 

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The Big Dog Barks - XOM

by Greg Schnell

Exxon Mobil (XOM) has been a dog since the price of oil dropped a year ago. In the 2008 bear market, Exxon was a go-to stock when everything else was cratering. Exxon (XOM) was a company that would be able to come out the other side of the GFC. Is that what is going on now or is it something different? Exxon has surged on the SCTR rankings from the bottom third of the pack to put in the highest SCTR reading in a year. While 50 means it's just middle of the pack, it also suggests the stock is behaving better that it has been. The RS line has also broken above the downtrend which Read More 

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Biotech SCTRs Crater as XBI Breaks Neckline Support

by Arthur Hill

The biotech ETFs have gone from leaders to laggards as the StockCharts Technical Rank (SCTR) plunged double-digits over the past week. The image below shows the ETFs with the biggest decline in their SCTR over the past week. You can set the time period using the drop down at the top and then sort by clicking the column heading. Also note that our ETF universe for the SCTRs does not include leveraged or inverse ETFs. As the table below shows, the SCTRs for the Biotech iShares (IBB) and Biotech SPDR (XBI) were above 95 just a week ago. We can deduce this because their SCTRs are down some 77 Read More 

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Healthcare ETF (XLV) Seeking First Aid

by Tom Bowley

Healthcare stocks led much of the market's rally off the 2009 lows - especially since early 2011.  That was then.  This is now.  Technical conditions have deteriorated immensely since the Spring of this year when warning signs emerged (see "Healthcare Stocks Are Vulnerable To Weakness Ahead").  Negative divergences on the weekly MACD warned us of potential momentum issues.  Now we're seeing the confirmation in terms of major support breakdowns on the weekly chart and very bearish behavior as resistance was recently tested.  Take a look at the chart: Read More 

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Amerco (UHAL) Is Movin' On Up To The Right Corner

by Greg Schnell

Amerco (UHAL) is the parent company of U-Haul. We have all seen them or used them driving our stuff across North America. The stock has had a very important consolidation that is not unique. The stock has been on an unbelievable up trend off the 2009 lows. At this point it is up almost 2000 % off the 2009 lows. Earlier this year it went into an extremely flat consolidation where the 'market' held the stock in a very tight range for well over 4 months. This can point to accumulation according to IBD. Institutional investors sit and buy up all the open shares but they don't allow Read More 

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Comparing NKE vs. SKX Using The Seasonality Tool

by Tom Bowley

One cool feature at StockCharts.com is the ability to check the seasonal tendencies of stocks.  For instance, I can tell you that Amazon.com (AMZN) performs its best during the month of September, which is odd because September is the worst month of the year historically for the S&P 500.  But the seasonality tool goes beyond just looking at performance of a stock or index by calendar month.  You can compare stocks within that seasonal perspective.  Let's take Nike (NKE) and Skechers (SKX) as an example.  The picture below illustrates how much better NKE Read More 

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Aetna, I'm Glad I met Ya, and Your Chart

by Arthur Hill

In addition to this successful ad campaign, Aetna sports a bullish looking chart that argues for higher prices. First note that it has been a tough month for stocks with the S&P 500 down around 1.5% month-to-date. Aetna, in contrast, is holding up rather well and up over 4% in September. On the nine-month price chart, the stock hit a 52-week high in late June, gapped down in early July and then formed a triangle over the last few months. Triangles are continuation patterns and the prior uptrend favors an upside breakout (watch 120). Also note the rising 200-day moving average and Read More 

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Is Your Broker Suggesting Bonds Are The Place To Be?

by Greg Schnell

While the various investment managers talk about how bullish this pullback is, the ETF's with the best price action are all in the bond arena. I have made a concentrated ETF list and commonly refer to it for webinars and ideas for allocation. Almost all of the ETF's on my list that have the best price action are in the Bond and income space. Here is a screen shot of the top 10% of the list (SCTR's above 90 within that chartlist). A blue arrow points to anything with a bond or preferred share. Talk about a quiver full of clues. Another way to see a list of the Read More 

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Facebook and Amazon Lead the Big Five

by Arthur Hill

There are lots of technology-consumer companies out there, but few are bigger than the big five: Apple, Amazon, Facebook, Google and Microsoft. While I am not sure if it is a zero-sum game for these behemoths, two are emerging as the leaders over the last few weeks. The SharpChart below shows the performance of these five and QQQ since the end of August. Facebook and Amazon are up more than double their next competitor, which is Google (+2.64%). Google is up more than QQQ and outperforming, but it is lagging Amazon and Facebook this month. Microsoft and Apple are up over this timeframe Read More 

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Expedia Taking Road Less Traveled

by Tom Bowley

U.S. equities have been very weak since mid-August with many sectors, industry groups and individual stocks broken down technically.  In recent days and weeks, many high profile stocks have struggled to clear falling 20 day EMAs.  So it's always nice to see industry groups or stocks bucking that trend and actually performing well.  Travel and tourism ($DJUSTT) is one such industry group and Expedia (EXPE) is one such stock.  In late July, EXPE extended its multi-year rally with solid quarterly revenues that matched Wall Street estimates and quarterly EPS that beat Read More 

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Is Gold Finally Ready To Run?

by Greg Schnell

Gold has been in a major funk along with the rest of the commodities. Recently it started to look a little better. We can see the SCTR ranking recently broke above 75 and pulled back. Now it looks set to charge up again.  This morning the price action is testing horizontal resistance around 109-110 but the wave form on the MACD looks very similar to the wave form back in December 2014. I think its time to watch gold closely. Any further weakness in the US Dollar ($USD) should really help this run. For more information on the setup in Gold, check out the Read More 

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Fed Holds Steady; Treasury Bulls Send Stocks Bad Signal

by Tom Bowley

Well, the Fed meeting and announcement has come and gone.  All the drama is over.  At the end of the day, Fed Chair Janet Yellen decided to leave interest rates unchanged for now, citing weakness abroad as one of the reasons for such delay.  It's not often that the world's chief central bank looks outside its borders to determine monetary policy, but such was the case this afternoon.  While there was a bit of back and forth in U.S. equity markets when the announcement was first made, stock prices finally surged higher - until the bond market closed.  In fact, it Read More 

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Is UAL Ready to Fly?

by Arthur Hill

The weekly chart for United Airlines (UAL) is looking bullish as the stock firms in a key retracement zone and weekly MACD turns up. The green text on the chart marks five technical features over the last 15 months. First, the stock broke out to new highs in October 2014. After surging above 70, the stock corrected with a 50-62% retracement that returned to the breakout zone. This looks like a classic advance-correction sequence because the retracement amount is typical for corrections and the stock firmed at broken resistance. Signs of strength began to emerge as the stock formed a big Read More 

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Cruising Might Be The Best Holiday (Investment) This Year

by Greg Schnell

Royal Caribbean Cruise Lines (RCL) has been living on the high seas for a while. This stock broke out to new highs on Monday and continues to be a steady ship in rough waters. In late July, RCL gapped up and then worked sideways. After testing the major horizontal support at $85 on the 'Dow Down A 1000 Day' the stock has really accelerated. The stock is up 50% since May which is a very rapid advance. The volume looks good as it is running very close to the average volume. With an SCTR of 98, price hitting new highs and the relative strength shown in Read More 

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Hasbro: The Force is Strong on This One

by Arthur Hill

Star Wars fans may remember that quote from Darth Vader in Star Wars Episode IV (A New Hope). In any case, it came to mind when looking at the chart for Hasbro, which holds the merchandising rights for Star Wars toys. I see three reasons to be bullish on the price chart and expect higher prices in the coming weeks. First, the overall trend is up as the stock hit a 52-week high in July and held the support zone in the 70-72 area in August. Second, the stock is recovering nicely after the August plunge and moved above its early September high today. Third, the two biggest volume bars of the Read More 

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Correlation: Banks And Treasury Yields

by Tom Bowley

As we await the Fed's interest rate decision this week, it's a good time to review a key area of the market that is heavily swayed by the direction of interest rates - banks ($DJUSBK).  As the 10 year treasury yield ($TNX) rises and the yield curve steepens, the net interest margin (key profit driver) for banks grows.  The chart below illustrates that there's a fairly tight positive correlation between the direction of the TNX and the direction of the DJUSBK.  Recently, the TNX came under some pressure and that took a toll on bank stock prices.  Over the past few Read More 

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Is Priceline (PCLN) Worth Bidding On At $1300 A Share?

by Greg Schnell

Best wishes to all of our American readers on this historic date in history. My heartfelt thoughts and best wishes go out to all of you.  Charts can fool you when you look at a chart like Priceline (PCLN). Everything looks normal until you look at the scale on the right and see that the swings are hundreds of dollars / month.  Talk about a well travelled roller coaster! Let's look at the chart here as it has many of the traits of a bullish stock except one. The SCTR has soared above 90. Performing better than 90 % of the large cap stocks is an outstanding metric Read More 

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Diebold Bounces Off Support...Again

by Tom Bowley

Computer hardware ($DJUSCR) led the technology sector to outsized gains on Thursday and Diebold (DBD) benefited by bouncing off price support.  The 29.50-30.00 area has served as excellent support in 2015.  Consider the trading range to be 29.50-32.50 in the near-term until either support or resistance breaks.  Volume turned up today on the renewed strength and DBD's MACD is just now crossing its trigger line.  The MACD histogram has also been moving higher suggesting that the selling momentum has begun to slow.  Here's the chart: Happy Read More 

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Plotting the Nasdaq 100 Breakout on an Intraday Point & Figure Chart

by Arthur Hill

StockCharts users can create intraday P&F charts to shorten their time horizon and identify key levels to watch. The chart below is a 60-minute P&F chart with 10 points per box and a classic 3-box reversal. After plunging to 3790 in mid August, the Nasdaq 100 rebounded with a bounce back to the 4300 area in late August and then consolidated into September. A triangle formed over the next several days and the index broke out with a surge above 4300 this week. Notice that the index broke the red bearish resistance line, broke the triangle trend line and exceeded the late August Read More 

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Who Is Checking In To Apple Hospitality (APLE)

by Greg Schnell

Recently, a new REIT was launched with the incredible name of Apple Hospitality REIT (APLE). While I think the world of investing has enough focus on a different Apple (AAPL) as the world's largest company, I'll let you decide what you think of this REIT. This company invests in Real Estate under the Hilton and Marriott hotel universes. The reason I am bringing this recent IPO to our daily blog is the price action looks pretty good here. With solid brands to rely on for consistent revenue, investors seem to like this REIT.  The average volume is 800,000 shares/day Read More 

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20 Day EMAs Are Huge Technical Weapons

by Tom Bowley

Moving averages are lagging overlays by definition as we use historical data to determine their position on a price chart.  But many traders use moving averages as support during periods of trending prices.  Personally, my favorite is the 20 period EMA.  Obviously, it can't guarantee us support in an uptrend or resistance in a downtrend, but if you follow price action closely, you'll see that it does a nice job of helping to minimize risk.  Mitigating risk is paramount to a successful trader.  On the AAPL daily chart below, you'll see that the 20 day EMA provides Read More 

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Culp (CFI) Wakes Up To New Highs

by Greg Schnell

Culp Industries (CFI) is a small cap company making mattress cover fabric as well as upholstery fabric. The stock has really been climbing out of the bed it made last summer. Culp has all the attributes of a nice run and it climbed higher today on a day where the big market was faltering. The SCTR broke above 75 as it broke out of the bed base in December last year. It backtested the mattress support/resistance level in early February. With the exception of the 'Dow down a 1000' day, the moves in the stock have been small intraday ranges even though it's a small cap which can Read More 

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Has Carl Icahn Timed His FCX Investment Correctly?

by Tom Bowley

One week ago activist investor Carl Icahn disclosed that a group he belongs to owns nearly an 8.5% stake in Freeport-McMoran (FCX).  Rumors suggest Icahn may seek representation on FCX's board of directors and is calling for changes in some of the Company's business practices.  FCX saw a pop in its stock price last week, but has since retreated well below its key 20 week EMA.  Has Icahn timed this correctly?  Well, it's much too early to tell and the chart below shows the direction of FCX is tied in large part to the direction of copper prices ($COPPER), which Read More 

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One Group and 3 Stocks Showing Relative Strength on Tuesday

by Arthur Hill

Selling pressure was quite intense on Tuesday as some 497 stocks in the S&P 500 declined on the day. This means there were only three winners on the day: CableVision (CVC), American Airlines (AAL) and Sigma-Aldrich (SIAL), which is going to be acquired by Merck. Cablevision, which is the green box on the MarketCarpet image, rose on news of a "content carriage" deal. American Airlines, which has an extremely pale green box, was up after an upgrade.  Overall, the stocks with the red boxes were down and showing weakness, while stocks with the white boxes held up better than the Read More 

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Is Valeant Pharma (VRX, VRX.TO) About To Cause Heartburn?

by Greg Schnell

Valeant Pharmaceuticals (VRX)  has been a very popular stock in North America with its acquisitive business model. The chart is showing some changes in trend, so it bears watching closely. The SCTR ranking has started to wobble recently, which is not a problem in itself. My concern shows up in the Relative Strength trend line breaking. I don't like to see something like Valeant that was outperforming the $SPX so strongly,  start to perform with or under perform the $SPX on a monthly basis. We can see the price has broken the uptrend line after a 73% gain from January Read More