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It's Not Wise To Chase Gaps

by Tom Bowley

You have to keep in mind that when everyone wants to buy a stock (or sell a stock), it's the market makers job to provide liquidity and take the other side of the trade.  That's why so often we see stocks gap higher or lower from the previous close, only to "fill the gap" and return to that prior day's close.  As an example, check out Citrix Systems (CTXS).  After reporting better than expected earnings results, CTXS gapped substantially higher and opened at 86.50.  Its intraday high was 90.00 before hitting a low of 80.38 just six trading sessions later Read More 

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PACCAR (PACR) Moves Above Resistance - Why You Should Know

by Greg Schnell

PACCAR (PACR) represents an important link in the movement of goods. PACCAR is the parent company of Kenworth, Peterbilt and DAF. Trucking companies buy new trucks to replace the old fleet as it wears out and they add additional units when they have new demand. When investors are anticipating a build on the PACCAR order book, this can be an early indicator of new trucking demand. The chart below shows the SCTR jumping up making PCAR one of the best stocks in the market based on price movement. The Relative Strength is breaking out to new 7 month highs which has not happened since Read More 

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This Small Technology Company Is Drifting Back To Support

by Tom Bowley

When a stock breaks out to fresh highs with light volume, a negative divergence and overbought oscillators, you need to be on high alert for a period of selling.  That's exactly the signal that ORBCOMM (ORBC) provided astute traders as we entered April.  Since that time ORBC has pulled back approximately 9% and is approaching key price support and its rising 50 day SMA.  I would expect buyers to begin lining up near the 9.50 level.  Check out the chart: Volume on breakouts has been extremely heavy with pullbacks accompanied by much lighter Read More 

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Jacob's Engineering Hits That Line In The Screen - JEC

by Greg Schnell

The story that stocks stop at resistance couldn't be demonstrated more clearly than reviewing this Jacob's Engineering (JEC) chart. This stock has stopped 9 times rallying to $45.00 and broke through it once in April 2015 only to gap down below it and get stuck under $45 for a year!  Today we are testing it again. With the steadily improving trend on the SCTR, this looks interesting here. The Relative Strength is nearing a 1-year high, so this could pop significantly if it can break out. Why? Institutional firms that scan for new 52-week highs in relative strength would be Read More 

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The Other QQQ is Still Holding Up

by Arthur Hill

The Nasdaq 100 ETF (QQQ) is one of the weakest of the major index ETFs right now because of several large-caps within the ETF. Note that Apple (-10%), Facebook (-6%), Google (-6.5%) and Microsoft (-8%) are all down sharply this month. Amazon (+2%) is the only one of the big five that is up.  The four losers account for around 35% of QQQ and AMZN accounts for 5.5%. Weakness in these four is clearly affecting QQQ as the ETF gapped down last week and broke below its mid April low with another gap on Wednesday. Despite short-term weakness, the recent decline puts the ETF as an important Read More 

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Can This Chemical Company (FMC) Start To Accelerate With Lithium?

by Greg Schnell

FMC Corp is a large cap specialty chemicals manufacturer in the materials sector. With three business divisions now, the agricultural arena dominates their earnings but the Lithium business is starting to perk up. The FMC chart below rolled over in June 2014. After breaking below the 40 Week MA, the price dropped by more than 50%. After a rough couple of years, is there any hope that this picks up soon? Working through the chart, the SCTR (StockCharts Technical Ranking) has moved above 75. That puts it on my radar. The Relative Strength in purple is improving as it is up slightly to Read More 

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Micro-caps Take the Lead

by Arthur Hill

The appetite for risk has increased over the past month with small-caps, mid-caps and micro-caps leading the market higher. The PerfChart below shows one-month performance for the S&P 500 SPDR (red) and seven other broad market index ETFs. The S&P MidCap SPDR (green), S&P SmallCap iShares (pink) and Russell 2000 iShares (teal) are outperforming SPY with bigger gains. The Nasdaq 100 ETF (black) is lagging with the smallest gain of the group. The Russell MicroCap iShares (purple) is the clear leader with a 6.07% gain over the past month.   Read More 

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Helix Energy Breaks Out, SCTR Surges Above 90

by Tom Bowley

Energy stocks have been strengthening throughout 2016 and Helix Energy Solutions (HLX) is a small $900 million market cap company that just broke out his past week.  Its SCTR rank has quickly soared to above 90 after recently printing SCTR readings in the single digits for several months.  Check out the chart: The breakout occurred near the 7.00 level with volume expanding.  A pullback to that 7.00 level with lighter volume would represent a solid reward to risk entry point.  The rapidly rising 20 day EMA, currently at 6.47, should also provide solid support Read More 

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Five Prime Therapeutics (FPRX) Makes New All Time Highs

by Greg Schnell

Five Prime Therapeutics (FPRX) is a small cap that trades about 600,000 shares per day. This week it is poking up to new all-time highs. In the wild world of Biotech, this stock has built a wide-ranging but solid uptrend. While all biotechs are volatile, the group has been under pressure since the biotech top last July(see SBIO, XBI, IBB). There has been a tendency to stay away from the area but all three of the ETF's look like they are trying to break out from the bases they have formed (Not shown). Arthur Hill showed a renewed push in Healthcare as a sector in Thursday's Don't Ignore Read More 

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A Dramatic Shift in Sector Rotation this Month

by Arthur Hill

There has been a clear changing of the guard in April and chartists can see this change with a PerfChart on two different timeframes. The first PerfChart shows performance for the nine sectors SPDRs and SPY for the first three months of the year. Notice that the Consumer Staples SPDR and Utilities SPDR were the leaders. The Technology SPDR and Industrials SPDR were also performing well. The Finance SPDR and the HealthCare SPDR were the clear laggards because both were down around 5% in the first quarter.  The situation changed quite dramatically in Read More 

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Petrobras (PBR) Breaks Above A Major Support Resistance Line

by Greg Schnell

Petrobras (PBR) has been pummelled on the back of a weak Brazil and a weak oil price. Scanning through the charts today, this looks pretty interesting here as it breaks above a major support and resistance level. On Monday, all the oil stocks gapped lower and then traded higher throughout the day. On a lot of charts, this intraday low was the major backtest of support. Petrobras looks strong here. After generating an SCTR of 90% in March, pulling back and surging back up again, this looks very promising. The relative strength trend is strong as the $SPX has been rising as well, so this Read More 

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Accumulation Distribution Line Leads Big Move in EA

by Arthur Hill

Electronic Arts (EA) got a big bounce off support with expanding volume and a strong Accumulation Distribution Line. On the price chart, EA plunged in late January and early February on high volume and this looks like a selling climax. The stock quickly recovered with pretty good volume and then moved into a consolidation with lots of support in the 62-63 area. A breakout was in the making in late March with the move above 66 (red resistance), but the stock fell back to the support zone in mid April. Just when it look like a support break was in the offing, EA forged a hammer and surged Read More 

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Slowing Momentum WAS A Problem For This Insurer

by Tom Bowley

Negative divergences that appear on daily charts tend to take a couple weeks to play out before we see momentum potentially resume back to the upside.  That seems to be where Progressive Corp (PGR) currently stands.  On PGR's most recent price high, its MACD did not follow suit, resulting in a negative divergence.  I generally look for the previously-holding 20 day EMA to fail and a trip down to test the 50 day SMA, together with a MACD centerline "reset".  Below you can see how PGR has followed this pattern: At the time the negative divergence printed Read More 

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Bank Of America (BAC) Shows The Bull Bear Debate

by Greg Schnell

Much has been made of the stock market's recent strength with the $SPX continuing to push above the 200 DMA. One of the underlying concerns for the rally has been the lack of participation for the banks. A seasoned New York Money Manager told me in my first MTA conference that if the bank charts are healthy, you are in a bull market. If the bank charts are suspect, you are not in a bull market. His reasoning was sound. They assign managers to review their customer books. When the bank stocks turn down, it is usually because they see weakness in the broader economy. Tom Bowley did an Read More 

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Banks Ignore Earnings Shortfall, Challenge Price Resistance

by Tom Bowley

The Dow Jones U.S. Banks Index ($DJUSBK) soared on Wednesday after JP Morgan Chase (JPM) delivered better than expected quarterly earnings results.  The strength in JPM sent the DJUSBK to the doorstep of a significant price breakout above 300.  However, Bank of America (BAC), PNC Bank (PNC) and Wells Fargo (WFC) all had disappointments with their quarterly results (either light revenues or an earnings miss) before today's opening bell and it appeared we'd see another clear failure in banks today.  Instead, the group shook off the bad news and continued pushing higher Read More 

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FTSE Leads Europe and Turns Positive Year-to-date

by Arthur Hill

Today's stock market rally started in Asia, extended into Europe and carried through to the US this morning. The major European indices were sharply higher with the London FTSE ($FTSE) leading the charge. On the price chart, the FSTE surged to a trend line extending down from May 2015 and consolidated in the 6100-6200 area for five weeks. This consolidation looks like a flag and this is a bullish continuation pattern. The flag breakout signals a continuation of the February surge and solidifies the trend line breakout.  The indicator window shows the Read More 

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Has The Starbucks SBUX Chart Got A Leak?

by Greg Schnell

Starbucks has been one of the strongest stocks in the last 5 years. It's been a fantastic uptrend. Recently the stock has started to show some signs of investor deterioration as the price action has started to underperform. The SCTR has been deteriorating lately and today marks a classic fail at price resistance. The RS in purple is threatening to break to 6-month lows. Volume is accelerating on the downtick today and its midday at the time of writing. The MACD has given a momentum sell signal today as well.  Here is an Read More 

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Alcoa Stalls at Resistance as Earnings Kickoff Looms

by Arthur Hill

Alcoa (AA) kicks off first quarter earnings with its report today after the market close. I have no idea about earnings or how the stock will react, but price is at a most interesting juncture as a consolidation takes place just below resistance. This weekly candlestick chart shows AA breaking support in January and quickly recovering with a surge back above the break in February (bear trap). The stock surged all the way to resistance from the December highs and then stalled with a pennant like formation the last four weeks. A move above the red resistance zone would trigger a breakout and Read More 

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Asset Managers Failing At Price Resistance And Rolling Over

by Tom Bowley

Last week was horrible for financial stocks as the XLF tumbled 2.86%.  Investment services ($DJUSSB) and asset managers ($DJUSAG) were at the bottom of the heap with losses of 6.00% and 3.94%, respectively.  The losses were technically damaging for both industry groups as both now appear to be rolling over and staring at further potential losses ahead.  The DJUSAG recently hit price resistance, could not break through and closed at four week lows.  The approximate trading range for the group is 145-155.  A close below 145 would likely signal a retest of February Read More 

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Are You Aware Of The Rubicon Project (RUBI)?

by Greg Schnell

The world of advertising is evolving dramatically. We all know how Google and Facebook have changed the online ad world. The Rubicon Project (RUBI) is trying to change the way corporations buy advertising. The company name is The Rubicon Project. So as this stock rallies, there appears to be a huge level of conviction towards the stock. The rally off the February low has been 65%. The SCTR has popped up above 75% which is my level for interest. The Relative Strength is breaking out to fresh 1 year highs. Now the price has broken out to new 52 week highs, but has not broken out above the Read More 

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This Food Company Serving Up A Cup With Handle

by Tom Bowley

Kraft Heinz Co (KHC) has been uptrending for several years.  On its high in August, however, a negative divergence appeared on its weekly chart and, as a result, KHC sideways consolidated for the past 8 months.  The good news is that it appears to be consolidating in a bullish cup with handle continuation pattern.  A handle forming down to the rising 20 week EMA could provide solid reward to risk entry for those interested in a consumer staples company that currently yields 2.91%.  Here's the chart: Happy trading! Tom Read More 

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Harley Davidson (HOG) Goes Off Road

by Tom Bowley

Volume is triple its normal daily volume and Harley Davidson (HOG) is down more than 7% today, but technical analysis flashed many warning signs on both the daily and weekly charts.  First, let's look at the daily chart where price and gap resistance and a negative divergence all suggested HOG reached a pivotal level and possibly a top: Furthermore, the weekly chart shows a clear downtrend in play over the past couple years and that was just tested as well: HOG simply appears to be out of gas. Happy trading! Read More 

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Intercept Pharmaceuticals (ICPT) Breaks From A Base

by Greg Schnell

Intercept Pharmaceuticals (ICPT) has started to look a little more promising. After going ballistic back in January 2014 where the stock went up 7X in a few days, Intercept has been in a slow decline from those fairytale heights. Today, the SCTR ranking broke above 75.  The Relative Strength in purple broke the major downtrend  and price was able to climb above resistance around $130.  Chart 2 shows the recent price action a little better. With the volume acceleration and the MACD turning up, this chart is starting Read More 

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Raytheon (RTN) Breaks A Continuation Wedge

by Greg Schnell

Raytheon (RTN) and Northrop Grumman (NOC) both have SCTR's above 75 and are looking strong in the face of many charts trying to get back above their 200 DMA's. I like Raytheon a little bit more today because of the conditions of the chart. Raytheon has been in a multi year uptrend and pulled back in Relative Strength (purple) for the last 6 weeks. This break in the trend is important. I like the re-acceleration of the SCTR back above 75. In terms of raw price action, it just keeps testing this $126.50 to $128.50 range.  This looks like it probably has the potential Read More 

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American Tower (AMT) Makes New 52 Week Highs

by Greg Schnell

American Tower (AMT) has traded in a wide range over the last year. However, this week starts off with a fresh kick to new highs. The SCTR ranking is pushing up to 86 which I like. The relative strength broke to new highs. The MACD has lots of separation which makes the momentum very strong at this point. If it can't stay above $100, I'd move on to a new ticker, but this looks good here. Good trading, Greg Schnell, CMT   Read More 

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March Rotation Doesn't Support Rally

by Tom Bowley

In order to determine the sustainability of market rallies, following the rotation between certain sectors or indices can be quite helpful.  The chart below shows red shaded areas to highlight warning signs that appeared at the end of the prior bull market in 2007 and also warned of the 2011 correction.  Currently, the S&P 500 is in the midst of a very solid rally off the February 11th bottom.  The rally in February was supported by rotation to "risk on" areas of the market.  The March rally, however, has lost its luster in terms of relative ratios as money has Read More 

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What Was I Thinking (LAMR)?

by Greg Schnell

In the world of advertising, few things distract you as much as the billboard. The job of the billboard is to get your attention and change your thinking. Lamar Advertising (LAMR) broke through to new highs back in December, drawing my attention to the stock. I wrote about it back then in a DITC article. When Advertising Dollars Fall From Helicopters. Well, right after that, the overall market plummeted 10% or more, and LAMR was no exception. Now, it is back at the top breaking out on higher volume than the last 2 weeks. As long as the Relative Strength in purple stays Read More