Don't Ignore This Chart

December 2015

Don't Ignore This Chart

A Good Year for Healthcare, Staples and Technology

by Arthur Hill

2015 has been about as mixed as a market can get. This split market can be seen by looking at two versions of the S&P 500. The Large-cap S&P 500 SPDR (SPY) is up around 2.5% over the past year and the Equal-weight S&P 500 ETF (RSP) is down around 1.5%. This split continues when we look at the nine sector SPDRs and nine equal-weight sectors. Six of nine equal-weight sector ETFs are down over the past year and five of nine sector SPDRs are down. Three sectors stand out in 2015: consumer staples, healthcare and technology. These three stand out because both the large-cap SPDR and Read More 

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When Advertising Dollars Fall From Helicopters

by Greg Schnell

As we set the stage for the next battle of Republicans vs. Democrats, the advertising world sets its sights on getting a piece of the action. Through Social Media, Billboard Marketing, Main Stream Media, NFL, NHL, NBA, MLS, PGA and MLB, we can be sure we'll see outrageous sums paid for putting political ads in our favorite shows or information channels. It seems like every election the PAC's get bigger, so the advertising budgets get bigger, and the constant fine tuning of the message will make sure every demographic has to endure the wrath of the political advertising budget from now to Read More 

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JP Morgan Chase Battles to Hold Breakout

by Arthur Hill

The Finance SPDR (XLF) and big banks led the market surge from late September to early November, but turned into laggards over the last seven weeks.  JP Morgan Chase (JPM) personifies big bank performance with a breakout around 64 and a seven-week pullback that is testing this breakout zone. This pullback puts the stock at a make-or-break point with the October breakout hanging in the balance. Notice that broken resistance turned into support in the 64 area and held with last week's bounce.  A break below the early December low would negate this breakout and be quite bearish for Read More 

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Are You Ready To Invest In Hong Kong? (EWH)

by Greg Schnell

The Hong Kong tracking ETF (EWH) has been immersed in a downtrend for a while. It moved above a 7-month trend line on Wednesday which makes it a very interesting candidate for review. The EWH also moved above a support/resistance line around $19.90.  There is also an important support /resistance zone at $21.50. I have shown that zone with very subtle dots so that chart does not look so busy. The last piece of information that is positive is the MACD has made a much higher low in momentum and could push above zero in the next few days. However, one of the major concerns on the Read More 

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Toys Bullish For The Holidays

by Tom Bowley

The Dow Jones U.S. Toys Index ($DJUSTY) is ending the year just about the same way it began - on a very bullish note.  Recently, the DJUSTY completed a bullish ascending triangle pattern in August and September before breaking out in October.  Since that time, the DJUSTY has printed another bullish ascending triangle pattern and is awaiting breakout near the 680 level.  For the year, the DJUSTY is up roughly 40%, making it the best performing industry group of 2015.  From the chart below, it's showing few signs of slowing: Merry Christmas, happy Read More 

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Alcoa Perks Up as CCI Breaks into Positive Territory

by Arthur Hill

Alcoa is showing early signs of relative strength and momentum is improving as the Commodity Channel Index (CCI) breaks into positive territory for the first time since February. 2015 was clearly a rough year as the stock fell over 35% from January to August. The overall trend is down, but the stock is showing signs of a base with two lows at 8 and two bullish candlestick patterns. The two lows near eight form a potential double bottom that would be confirmed with a break above the intermittent high. The first low formed with a bullish engulfing and the second with a piercing pattern Read More 

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BlackBerry Cracks A Major Down Trend Line (BBRY)

by Greg Schnell

Blackberry (BBRY) has been the most unloved tech stock in a cradle of optimism. After living in a massive downtrend for the last 7 years, Blackberry started to perk up recently. While there have been a few bear market bounces for Blackberry, this looks different this time. The SCTR shows a ranking above 90% which is very strong. The big 5-year downtrend line has been broken. The 4-year trendline that is much shallower in red has not been broken yet.  The volume has broken the down sloping trend line. The volume candle last week was one of the best of Read More 

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MarketCarpet Shows A Few Stocks Bucking the Selling Pressure

by Arthur Hill

Stocks were hit hard on Thursday and Friday with most closing down sharply. There were a few gainers amongst the carnage and chartists can use the MarketCarpet to find such stocks. First, note that the S&P 500 was down 3.26% on Thursday-Friday and down .34% for the week. This is because we saw a pop Monday-Tuesday-Wednesday and a drop on Thursday-Friday. The drop wiped out the pop as the index finished slightly lower for the week. Among the sectors, utilities held up the best as the average stock fell around 1% on Thursday-Friday. Healthcare was in second place with an average decline Read More 

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Great Fundamental Story, But Will Gap Support Hold?

by Tom Bowley

Last month, Ctrip.com (CTRP) posted both revenues and EPS well above Wall Street consensus estimates and it came on the heels of an earlier announcement where CTRP was involved in a share swap that resulted in Baidu (BIDU) owning a 25% ownership interest in the Chinese online travel company.  Volatility can be wild in CTRP, so only aggressive traders should consider the stock.  The 17% drop in four weeks since earnings were released is a perfect illustration of the volatility.  The weakness, however, could be presenting an opportunity as CTRP has seen its earnings gap Read More 

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Caution To Owning The Gas and Diesel Refiners

by Greg Schnell

US Distillate demand is down over 8% this year. That is huge. Gasoline Demand is up 0.7% Total Product inventories (Page 3) are eyeballed about 15% above the 5-year range for this time of year while product demand is inside the normal 5-year range and consistent with 2014. Those are some quick facts from a refining industry report this week that popped up from an internet search. My compliments to the Scotia Howard Weil  report for a concise snapshot.  The refiners have been having a party as of late, but recently the refining Read More 

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Apple Shows Positive Divergence on 60 Minute Chart

by Tom Bowley

Apple (AAPL) is breaking down beneath its November low and on the surface appears to be a broken stock, but its intraday 60 minute chart is telling a much different story.  Given the slowing volume this afternoon and near test of Wednesday's pre-Fed low, AAPL's turn higher in its hourly MACD has me hopeful that it's close to a short-term bottom.  Perhaps it's already been reached.  In addition to the slowing selling momentum, AAPL's RSI is close to 30 and that oversold indication has proven to be a solid entry point in the past few months as highlighted by the black Read More 

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Big Biotechs Lead in December

by Arthur Hill

December got off to a rough start for the broader market, but several big biotechs bucked the selling pressure and moved higher. The Perfchart below shows December performance for SPY and the nine biggest biotechs in the Biotech iShares (IBB). SPY is down a fraction over this period and this reflects weakness in the broader market, especially large-caps. Among the biotech stocks, seven are up in December and only two are down. Vertex is down sharply with an 8+ percent decline and Gilead Sciences is down around 2%. Biogen (BIIB), Celgene (CELG), Alexion (ALXN) and Mylan (MYL) are the upside Read More 

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Electronic Arts Takes Another Run At Breaking Out

by Greg Schnell

The Electronic Arts Company (EA)  has really been on a roll the last few years. Recently the stock started to consolidate in a tight range sideways. But this week, the momentum looks higher again. Today, it is outpacing the broader indexes and is on its way to the $75 level. The SCTR ranking surged back above 90 and is really strong.  Today marks a break of the two-month trend line within a sideways consolidation. It still looks bullish. I think as long as the general market holds up this should continue to find higher highs. Most of the pullbacks matched the Read More 

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Apple Fails at One Moving Average and Breaks Another

by Arthur Hill

Apple shows signs of a long-term downtrend because it failed at a key long-term moving average and just broke a medium-term moving average. The daily candlestick shows AAPL gapping down in early November, trying to fill that gap with a bounce in mid November and ultimately failing with a peak near 120 last week. Notice that the November-December peaks are just below the falling 200-day moving average, which suggest a long-term downtrend. AAPL fell sharply the last five days and broke below the mid November low today. Even though the stock is short-term oversold after a decline from 120 to Read More 

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Volatility Now Becomes Bulls' Enemy #1

by Tom Bowley

Conditions changed on Friday and the short-term market prospects grew significantly riskier.  Why?  Because in addition to price support breakdowns across many key indices, sectors and industry groups, the volatility index ($VIX) spiked 26% on Friday to close at 24.39.  Historically, the 20 level on the VIX has carried some rather meaningful implications.  This is a simplistic view, but take a look what the VIX above 20 has meant in the past to S&P 500 performance: When volatility remains below 20 with only an occasional quick spike Read More 

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TLT Presses The Tilt Button

by Greg Schnell

The long bond market (TLT) continues to climb higher in price, but today marks a move outside the trend. The long bond is breaking out to the upside and recently crossed above the 200 DMA. We are seeing the other bond ETF's like IEF moving above the 200 DMA. This move to safety is on the back of significant weakness in the commodity market that seems to be extending.  Good trading, Greg Schnell, CMT Read More 

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Dollar's Cup With Handle Appears Complete

by Tom Bowley

The U.S. Dollar index ($USD) saw a parabolic rise from mid-2014 through March 2015 and has been consolidating since in a classic cup with handle pattern.  The pattern doesn't confirm until we see a breakout, but there's a Federal Reserve meeting next week that could trigger buying in the greenback once again.  The following chart illustrates that nine month uptrend and a couple key tests along the rising 50 day SMA prior to the right side of the cup taking shape.  The ensuing weakness and test of the rising 20 week EMA has provided the handle.  Take a look: Read More 

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Global Government Bond ETF Continues To Show Strength

by Greg Schnell

From a chartlist of ETF's that I have built, the vast majority of the list is led by different bond/fixed income/income strategies currently. Currently, the PIMCO Strategic Global Government Fund ETF (RCS) has an SCTR of 99.8 and the ETF is breaking out to new 52 week highs. Scanning the top of the ETF SCTR list shows some crosswinds. While the list continues to be dominated by bond or income strategies, The Consumer Staples (XLP), The Technology ETF (XLK), and the Consumer Cyclicals (XLY) are high on the list, but the Financial ETF is not in the top 10%. The bond Read More 

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Texas Instruments Challenges Highs and Sports a Strong SCTR

by Arthur Hill

Texas Instruments (TXN) is leading the market with a strong StockCharts Technical Rank (SCTR) and the stock is consolidating near its 52-week high. TXN is part of the semiconductor industry group and the technology sector, both of which have been leading the market lately. On the price chart, TXN broke two resistance levels in October and then gapped to the upper 50s. The stock recorded a new intraday high in late October and then embarked on a consolidation, which looks like a triangle. A consolidation after a sharp advance is normal, and bullish. The consolidation allows the stock to Read More 

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Positive Divergence Suggests CA Likely To Resume Uptrend

by Tom Bowley

CA Inc (CA) topped in March 2015 and was in the midst of an 8 month downtrend - until last week's action.  Prior to the break of this downtrend and key 20 week EMA resistance, CA had printed a fresh weekly CLOSING low that was accompanied by a higher MACD, a classic positive divergence.  It wasn't easy to see the positive divergence, especially if you use candlesticks as I do.  Remember that the MACD uses CLOSING prices, not opens or intraweek lows.  One glance at a candlestick chart won't always reveal that positive divergence.  That's when a simple line chart has Read More 

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Gold Stocks Start To Roar In December Once Again

by Greg Schnell

The miners have been outperforming the gold bullion for a few weeks now. They really started to move in the last few days. Newmont Mining (NEM) is one of those. The gold mining stocks started to rally in December of last year as well. Not many have an SCTR above 75, but this one has jumped 40% in a few days. This could end up being a meaningful run as some of these surges have handed out 40% returns. Good trading, Greg Schnell, CMT   Read More 

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Adobe Losing Momentum One Week Before Earnings

by Tom Bowley

Negative divergences on the MACD and light volume on breakouts are two important criteria in identifying a possible top.  Accumulation requires volume so I'm always suspicious if advances begin to run out of it.  In the case of Adobe Systems (ADBE), it has these markers in place just one week before they release their latest quarterly results.  I would look for further selling prior to earnings or a possible selloff after results are released.  Be very careful if a failed breakout occurs on better than expected results.  Here's the chart: Read More 

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CA Forms a High and Tight Flag

by Arthur Hill

CA Inc (CA) remains in a downtrend, but a reversal could be brewing as the stock forms a high and tight flag just below key resistance. CA was trending down most of the year and then formed a selling climax with a sharp decline on high volume in August. The stock then moved into a trading range with support at 26 and resistance at 29. A break above 29 is needed to forge a higher high and complete a trend reversal here. Within the trading range, the stock surged off support and consolidated with a flag-like pattern. A break out of this flag pattern would provide the early indication that Read More 

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Why Is A Monthly Close Above 100 For The $USD A Big Deal?

by Greg Schnell

The US Dollar ($USD) is always one of the most important factors in the world markets. A strong dollar has been a major headwind for commodities and emerging markets since the 2011 lows. Many investors are watching for commodities to bounce off the oversold levels they are at, but most of the discussion has been on mean reversion, not any sort of new bull market. Both Crude Oil ($WTIC) and $GOLD made new monthly closing lows at the end of November continuing their downtrends as the US Dollar made new monthly closing highs. As the US Dollar approaches previous resistance, it is Read More