Don't Ignore This Chart

February 2016

Don't Ignore This Chart

US-German Yield Differential Drives the Dollar ETF

by Arthur Hill

The chart for the US Dollar ETF (UUP) is bit of a mess, but I think the overall trend is up and the US-German yield differential looks poised to move higher. The main chart window shows UUP hitting a multi-month high with the October-November surge.  The ETF then fell with two sharp declines in early December and early February, but held above its prior low and we can still make the case for a choppy long-term uptrend.  Chartists looking for clues on the greenback can watch the yield differential between the US and Germany. At ~57%, the Euro is Read More 

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NFLX Prints Shooting Star On Friday

by Tom Bowley

Over the past few months, traders have shunned risk and we've seen many high flyers begin to take big hits.  Netflix (NFLX) certainly fits that category and hasn't been immune to the selling.  Recently, NFLX traded at a high of 133.27, but has since fallen to a near-term low of 79.95 reached on February 8th.  It's since rallied 22% in less than three weeks as we've seen an oversold bounce in the U.S. market.  Friday's candle on NFLX may have ended the short-term run, however, as shooting stars off uptrends can mark short-term tops.  The stock's propensity to pivot Read More 

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When Markets Jiggle, Here Is Something Sticky (AVY)

by Greg Schnell

Avery Dennison (AVY) continues to be sticky to the upside. The label maker and specialty chemical company is one of the few to make higher lows and made a new 52-week high today. Every new high is a good thing, but it needs to show some conviction to the upside. The $65-$66 level has been difficult to break above.  A weekly close over $66 would be positive. Since the beginning of the year, the Relative Strength shown in purple has been tilting up, showing that Avery is performing better than most stocks. The SCTR continues above 90 and has been strong for the last 9 months. A Read More 

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Is The Current S&P 500 Rally Sustainable? Don't Decide Based On These Two Indicators Alone

by Tom Bowley

Everyone is trying to evaluate the strength and sustainability of the current U.S. equity rally.  StockCharts.com provides us the tools to do just that.  But not every indicator tells us the complete truth.  A look at the most recent drop in the S&P 500 and subsequent rally exemplifies this point.  The accumulation/distribution line (ADL) and on balance volume (OBV) both attempt to provide us an interpretation of the strength of directional movement in our major indices, ETFs, stocks, etc. by using volume-based analysis.  The problem is, they use different Read More 

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Four of the Big Five Tech Stocks Remain Weak

by Arthur Hill

Five stocks dominate the Nasdaq 100 ETF (QQQ) and traders should keep a close eye on these when trading or investing in QQQ.  Apple (10.97%), Alphabet (9.34%), Microsoft (8.5%), Amazon (5.39%) and Facebook (4.98%) account for almost 40% of QQQ. After Facebook, the next biggest weighting is Comcast (2.92%) and it is a distant sixth. I guess we could create an acronym to capture this group because they will likely be dominant players for a while (AMAFA perhaps). With this in mind, I created a separate ChartList with these five stocks and SPY to compare performance. The image below shows Read More 

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S&P 500 Nears First Test

by Arthur Hill

The S&P 500 is setting up for its first test as it nears resistance in the 1950 area. The chart below shows the index below the falling 200-day SMA and the 50-day SMA below the 200-day SMA. The overall trend here is clearly down, but the ~6% rally over the last six trading days has been quite strong. Even so, the index has yet to clear its first resistance hurdle. Notice that the early February high and 50-day SMA mark potential resistance in the 1950 area (give or take a few points). While a break above this high would be positive, it would still not be enough to reverse the overall Read More 

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Plotting Dividends On A Sharp Chart

by Tom Bowley

Just about one year ago, StockCharts.com unveiled a "dividend indicator" to allow you to plot the history of dividends on a particular U.S. or Canadian stock.  For those who are income-oriented, it's a great way to review the history of dividends that a company has paid.  To illustrate, let's look at Deere & Co (DE): Under chart attributes, if you choose "full quote", you'll be given all the information at the top of the chart, including the "annual dividend" and "yield" (blue circle at top).  The dividend indicator allows you to quickly see the rate of actual Read More 

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Verizon (VZ) Connects With New Highs

by Greg Schnell

In this primary bear market, finding rising stock prices is a difficult task. Verizon (VZ) recently moved up aggressively. With a 4% yield and impressive momentum, Verizon is holding up well against broader market weakness. The price action has sent the SCTR to above 94.  The MACD has recently pushed up and is showing nice momentum. In a world where machines and people are continuing to connect online, Verizon might stay in favor with dividend hunters and capital growth investors. If it fails to hold above $48, that would mark a failed breakout.  Have a Read More 

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Wal-Mart (WMT) Trending Higher Despite Post-Earnings Weakness

by Tom Bowley

Wal-Mart (WMT) based for more than a decade beginning in 2000 before it finally made a significant technical breakout in 2012.  WMT then nearly tripled over the next three years before stumbling over the past year.  Perhaps the biggest question is whether the selling has ended and WMT is now poised to move higher.  Well, the weakness we saw in 2015 was important because the low that was reached actually tested the breakout a few years earlier and also tested its rising trendline.  Since that test, WMT has been trending higher once again.  Check out the chart: Read More 

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A Troika of Bullish Signals for Taiwan Semi

by Arthur Hill

Taiwan Semiconductor is breaking out of a bullish pattern with good volume and the stock is showing relative strength. The price chart shows a cup-with-handle forming from December to mid-February. This is a bullish continuation pattern that was popularized by William O'Neil. There are three resistance levels marked with the recent highs and the stock is on the verge of breaking the third. A breakout would signal a continuation of the advance from mid-January to mid-February. The first indicator window shows upside volume (green) outpacing downside volume (red) over the past Read More 

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Could Wynn Resorts Be The Next Winner? (WYNN)

by Greg Schnell

Wynn Resorts has been on a train out of town for a while. After making a major high just under $250 back in 2014, WYNN has been the casino stock that continually cleaned money out of your wallet. However, some things have changed this year. This is the first time WYNN has had an SCTR above 75 in a while! It also broke to 5-month Relative Strength highs for the first time in the downtrend. There have been huge positive volume days since the October lows, which suggests some might be interested in owning this stock at about 75% off the highs. The MACD shows a lack of Read More 

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Is The Long-Term Run Over For Apple (AAPL)?

by Tom Bowley

It's difficult to argue that Apple has been one of the best performing stocks - if not the best - in the 21st century.  But every stock has its limitations and a good question is whether AAPL has reached its top.  AAPL has fallen 30% from its peak in May 2015.  So was that the top?  Well, betting against AAPL this century has been a losing proposition as it closed at just 3.40 on December 31, 1999.  It's currently up 30-fold and that's AFTER a 30% 9 month haircut.  Technically, AAPL appears to be a major support level, however, as reflected on the Read More 

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Centurylink (CTL) Sends Off A Flare

by Greg Schnell

Centurylink (CTL) is in the Utility Sector as a fixed communication broadband provider. While they have other operations, the chart is interesting today for a few reasons. It's in a top sector, it's in a top industry group, it pays a healthy dividend (7+%) and the SCTR roared above 75 for the first time in almost a year. I really like the positive divergence on the MACD on a weekly chart. The lower in early January 2016 and the higher low on the MACD (which indicates momentum) is why we call it a positive divergence. The momentum has improved even though the price is making a Read More 

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Volatility ($VIX) Nearing Key Breakout As S&P 500 Nears Support

by Tom Bowley

Volatility and S&P 500 performance tend to move in opposite directions.  As fear escalates and the VIX prices in higher expected volatility, equity markets sell off.  Currently, the VIX is nearing its recent resistance near 30, which is a very high level of expected volatility, one in which we can expect large, sudden directional shifts in stock prices - mostly impulsive moves to the downside.  Should the VIX clear 30 resistance, expect S&P 500 support just above 1800 to break.  That could potentially lead to more panicked market behavior as traders nerves are Read More 

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Chevron Stalls out Below Two Key Moving Averages

by Arthur Hill

Chevron (CVX) is a long-term downtrend and looks vulnerable to another leg lower. The price chart shows CVX trading below the falling 200-day moving average and below the 50-day moving average. Also notice that the 50-day is below the 200-day. These relationships indicate that the long-term trend is down. The stock recently broke support with a sharp decline in early January and then rebounded back to the broken support zone in late January. This zone turned into resistance as the stock failed to break back above 87.5 the last two weeks. At this point, Chevron looks vulnerable to further Read More 

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Oil Retests The Lows Of January ($WTIC)

by Greg Schnell

West Texas Intermediate Crude ($WTIC) fell back under $28 to retest the lows of January. So far, the trend in price still has a pattern of lower highs and lower lows. While it would be preferable to see this low tested and hold, all of the data regarding supply inventories of crude oil, gasoline, and distillate (Diesel fuel) are trending higher, which is bearish for crude oil. Unfortunately, all the demand data forecasts are not increasing at the same rate as the inventories. At this point, there is no evidence of a reversal in the supply / demand imbalance.  Read More 

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Three Big Sectors Hit New Lows for the Year

by Arthur Hill

There are nine sectors in the S&P 500 SPDR (SPY) and their weights range from 2.82% (materials) to 20.17% (technology). The technology sector is around seven times bigger than the materials sector and this means that not all sectors affect the S&P 500 the same. Looking at the charts today, I noticed that three of the nine sector SPDRs were trading at new lows for 2016. These are the Consumer Discretionary SPDR (XLY), the Finance SPDR (XLF) and the HealthCare SPDR (XLV). Together, these three account for 43% of the S&P 500.  On the close-only chart below, these three are Read More 

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Recreational Services Index Has A Bad Year......Last Week

by Tom Bowley

The Dow Jones U.S. Recreational Services Index ($DJUSRQ) fell more than 11% last week as traders completely ignored the consumer discretionary space (XLY).  The only industry group within consumer discretionary that performed worse was Business Training & Employment Agencies ($DJUSBE), which fell a staggering 28% on Friday after LinkedIn (LNKD) provided a very strong warning about 2016 prospects.  Royal Caribbean Cruises (RCL) has lost more than one third of its market cap over the past 5-6 weeks, leading the DJUSRQ to the downside.  Check out the chart: Heavy volume Read More 

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Is The Keystone Pipeline Finally Behind TransCanada Pipelines?

by Greg Schnell

After a brutal beatdown from the politicians about pipelines, TransCanada Pipelines (TRP) stock has started to demonstrate a change in trend. From a continuous decline starting in September 2014 (near oil's high), TransCanada has recently made a 5-month high. With an SCTR ranking above 75, this is really starting to outperform its peers. One particularly strong trait is the new 6-month high in relative strength. Currently, the 200 DMA is just above the price. If price moves through this moving average, the next level of resistance is up at $40 which is Read More 

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Disney Teetering At Critical Support

by Tom Bowley

First, it's not helping that the consumer discretionary sector is down more than 10% over the past three months.  This sector weakness has manifested itself in a very weak three month performance in Walt Disney (DIS) shares, which have fallen more than 15%.  Currently, DIS trades near a critical price support zone from 90-95 and its relative strength vs. the S&P 500 is closing in on its long-term uptrend line.  Loss of both price and relative support would be very bearish for the stock, especially if accompanied by heavy, confirming volume.  Take a look at the Read More 

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Dollar Breaks Wedge Support, but How Bearish is It?

by Arthur Hill

The US Dollar ETF (UUP) is getting whacked on Wednesday and breaking its January lows. The trading day is not over yet, but the Dollar is on pace for its biggest daily decline since early December. On the price chart below, notice how UUP fell sharply in early December and then worked its way higher with a rising wedge the last two months. The chart actually shows two rising wedges patterns. The first extends to late January (gray trend lines) and the second extends to early February (blue trend lines). UUP broke the lower gray trend line a week ago, but surged back above 25.9 almost Read More 

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Tesla (TSLA) Tests Tremendous Support

by Greg Schnell

Tesla (TSLA) seems capable of staying in the headlines almost every day. While the other car manufacturers have drizzled below some trendlines on the price charts, Tesla has been able to hold above. Today, the optimism towards Tesla is being tested. This is very important support for a company that loses money. If this starts to release below the trend line, this would be an important change in trend. Tesla reports on February 10, 2016. Usually, high-flying stocks like this have trouble in bear markets. Tesla is also being watched for its ability to become a significant player in China Read More 

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CBS Attempts to Buck Broad Market Selling Pressure

by Arthur Hill

It was a rough January for stocks, but CBS held up quite well and shows a bullish looking chart. On the price chart, CBS sports a classic surge-correct-breakout sequence. First, the stock advanced over 20% with a move from ~39 to ~52. Second, the stock corrected by retracing around 62% of this advance. This correction appears to be ending as the CBS  formed a big hammer and followed through on this hammer with further strength. The stock also shows relative strength since October and in January. The first indicator window shows the price relative Read More