Don't Ignore This Chart

September 2016

Don't Ignore This Chart

Parker-Hannifin (PH) Moves To New Highs

by Greg Schnell

Parker-Hannifin (PH) is one of America's great industrial companies. The chart looks great too. The SCTR has transitioned from staying below 50 to staying above 50 for most of the last 8 months. The relative strength is pushing to new highs and the stock is trying to break out of a two-month consolidation. The volume has been steady for two months as well. With the MACD looking like it wants to turn higher, the stock looks interesting here. The recent improvement in the transportation stocks also lends well to some positive inspiration for the industrials. Good Read More 

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Looking For A Breakout Stock In Energy? Listen Up Nabor

by Tom Bowley

Energy stocks (XLE) have been lifted the past couple days due to OPEC agreeing to stem production in an attempt to balance supply and demand.  It's difficult to say whether it'll actually work, but thus far the stock market likes what it's hearing.  Energy already was one of the best performing sectors as it's risen more than 15% over the last six months.  The second best sector?  Technology, which is up 9.12% over the same time frame.  One oil stock just making a significant breakout is Nabors Industries, which surged yesterday above key price resistance at 11.00 Read More 

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McDonalds Breaks Triangle Trend Line to Signal Trend Continuation

by Arthur Hill

McDonalds shareholders are certainly not "lovin it" right now because the stock is in a long-term downtrend and it is one of the worst performing stocks in the Dow Industrials. The chart below shows the 50-day SMA below the 200-day SMA and the stock below the 200-day SMA. The breakdown started with a lower high in mid June and a big gap down. The stock then consolidated with a triangle and is breaking the triangle trend line today. More after the jump.  A small triangle is considered a continuation pattern and the prior move was clearly down. This Read More 

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XLF SCTR Plummets To Bottom Quartile On DB News

by Greg Schnell

The news of Deutsche Bank (DB) breaking well below the Brexit lows can not be comforting for the broader financial community. Today the XLF lost its momentum and dropped to the bottom quadrant. While this is a weekly chart, the first day of the week sent a chilly message. We broke to 2-month lows today and this week is important as it will mark an end-of-quarter and end-of-month close. Having a very weak financial chart is troublesome and the SCTR suggests some caution is warranted after the price failed to breakout above resistance. It is early in the Read More 

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Crude Oil And Energy Stocks Remain Bullish

by Tom Bowley

Crude oil prices ($WTIC) have been hovering between $40-$52 per barrel for the past six months, but the bottoming reverse head & shoulders pattern is telling us to watch closely to see if we can get a confirming breakout on this pattern above neckline resistance at $52.  In the meantime, the energy sector ETF (XLE) remains in a very bullish pattern with rising 20 week EMA support holding on every pullback since breaking above this key moving average in late February.  Check it out: The energy SCTR has fallen back to the 50 level, but still remains elevated from where it Read More 

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Etsy (ETSY) Looks Crafty Here

by Greg Schnell

Etsy.com (ETSY) is a website focused on the craft community. This user community is a large group with very unique and creative products. As a retailing website, ETSY is bringing craft providers to craft buyers. Etsy went public in April 2015. The stock has been in decline and built a base for the first 6 months of this year. Recently, ETSY broke above the $10 base and went sideways at $15 for about 8 weeks. This morning, ETSY broke out above the trading range. The stock has all the traits of a proper base. As Wyckoff talked about base structure, this has Read More 

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Renewable Energy Stock Fills Breakaway Gap

by Tom Bowley

It's nice to see a heavy volume gap higher to break a downtrend.  It can be a very strong signal that sentiment has changed on a particular stock or industry group.  While renewable energy stocks ($DWCREE) remain technically-challenged, one of its components - Sunrun (RUN) - has certainly begun to show improving technical signs that could be considered by aggressive traders.  Take a look at the chart: The bottom of gap support close to 5.40 has been filled and RUN is beginning to turn higher again.  Ultimately, a breakout above 6.50 on a closing basis would indicate a Read More 

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Retail SPDR Hits Moment-of-truth

by Arthur Hill

The Retail SPDR (XRT) is at its moment-of-truth with a long-term bullish pattern battling a short-term bearish pattern. Long-term, the ETF formed a double bottom and broke resistance with the July surge. This breakout zone turned into support with a successful test in early August. After a sharp decline from late August to early September, the ETF formed a flat consolidation near this support zone. Technically, a consolidation after a sharp decline is a bearish continuation pattern. Thus, we have the bullish double bottom breakout battling the potentially bearish flag. More after the Read More 

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Fifth Third Bank Corp (FITB) Breaks Above A Long Down Trend

by Greg Schnell

Fifth Third (FITB) is a bank with an upward bias above the previous peaks. After spending almost 2.5 years building a ceiling on the stock, FITB is finally pushing through. The SCTR started pushing up above 75 back in July. Last week was the break above the trend line. With the Fed meeting tomorrow, it will be important to see how the bank stocks react. Some of the overseas situations on bank stocks are not as favourable, but this primarily US bank looks good. I spent an hour chatting with Martin Pring this morning and we worked through a Read More 

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Financials iShares Bounces off Breakout

by Arthur Hill

Chartists looking to track the finance sector can turn to the iShares Financials ETF (IYF). Note that the Finance SPDR (XLF) is in the midst of a metamorphosis this week so chartists can consider watching IYF for clues on the finance sector this week. IYF is in a long-term uptrend because the 50-day EMA is above the 200-day EMA and the ETF hit a new high in early September. Since hitting this new high, the ETF pulled back to broken resistance and this area turns into the first support level to watch for a bounce. Also notice that the 20-day Commodity Channel Index (CCI) became oversold Read More 

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Here Are The Four Technology Industry Groups You Don't Want To Ignore

by Tom Bowley

After technology stocks (XLK, +2.70%) clubbed the energy sector (XLE, -2.64%) last week, the former group is now the leading sector over the past six months, widely outperforming the benchmark S&P 500 index.  Within technology, there are four industry groups that have been outperforming the benchmark technology sector ETF (XLK).  Here's a chart that summarizes all of this relative strength: The relative strength of each of the industry groups is fairly obvious, although the relative performance of internet stocks ($DJUSNS:XLK) is a bit suspicious.  However, this group Read More 

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XLI SCTR Drops To New 52 Week Lows

by Greg Schnell

The Industrial Sector (XLI) SCTR has gone from top to bottom in the last few months. One of the reasons this is a little concerning is when the SCTR for the XLI dropped into the bottom quadrant in 2015, it marked a 6-month struggle for the index and the sector.The industrials are a good economic gauge of the economic activity and the chart suggests this is getting quite weak. One the left-hand side, we can see where the XLI broke down last year and how poorly the ETF performed after that. At this point it is cautionary, but this is very weak. Friday, September Read More 

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Live Nation Chart Is Like Music To My Ears

by Tom Bowley

Live Nation Entertainment (LYV) is a $5 billion consumer discretionary company that in late July reported excellent quarterly results and gapped higher to touch the 28.00 level.  The stock's all-time high came in October 2015 just beneath 30.00.  It's consolidating just above its rising 20 week EMA and volume trends have been strong.  Here's a look at the weekly chart: Volume trends have improved, while both the MACD and SCTR are surging.  A high volume close above 28 would represent the breakout of a bullish inverse head & shoulder pattern.  Currently Read More 

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A Bad Chart Review for TripAdvisor

by Arthur Hill

The chart for TripAdvisor (TRIP) shows bearish patterns on two different timeframes and the stock looks poised for a breakdown. First, note that the long-term trend is down because the 50-day EMA is well below the 200-day EMA. Also notice that the stock hit a 52-week low with the sharp decline in January-February. The rising wedge looks like a corrective advance within a bigger downtrend, which makes it a bearish continuation pattern. With a sharp decline below 62 today, the stock is on the verge of breaking the wedge trend line and continuing its long-term downtrend.  Read More 

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Las Vegas Sands (LVS) Ups The Bid

by Greg Schnell

Las Vegas Sands (LVS) has been moving higher for a while. The news now is that LVS is breaking out to 52-week highs. Even more interestingly, it has been rising while the markets have been selling off the last few days. It closed last week near the highs while Friday was a Dow-down-390 day. This week it is making higher highs. The SCTR reading shooting up into the 90's is very bullish.   The idea would be, when a stock refuses to drop while the market drops, that is usually a pretty good signal of underlying strength. Rising against a falling market is even better. Read More 

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Wynn Resorts Bucks the Selling Pressure

by Arthur Hill

It is always interesting to find out which stocks advance when the market falls sharply, such as Friday. The S&P 500 was down over 2% with heavy selling pressure, but 11 stocks managed to buck the selling pressure and close higher on Friday. How's that for some short-term relative strength. A list of these stocks is provided at the end of this commentary. Looking through the charts, Wynn Resorts (WYNN) jumped out because the stock is trading within a big bullish continuation pattern. WYNN reversed its downtrend with a big double bottom breakout in February and then consolidated Read More 

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Apache's (APA) Alpine High Reminds Me Of Caroline - Must Read

by Greg Schnell

In the oil business, rarely are huge new fields found as the geophysical technology gets better and better. Usually, oil exploration companies find smaller new plays, but the large ones are pretty well mapped. Every now and then, a surprise shows up. This week Apache announced a huge find. While there has been very little champagne flowing in the oilpatch lately, this find might have been big enough to crack a President's smile and get a little bubbly. Just a little background on what it takes to pull this off. When you are drilling an exploration well Read More 

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Will This Paper Company Hold Key Gap Support?

by Tom Bowley

Domtar Corp (UFS) has returned to a key support zone between 37.00-37.50.  A close below this level would be bearish as Domtar's longer-term chart is neutral at best.  I'd be looking for the top of the earnings-related gap higher in late July to hold.  That day, the open was 37.50 and the intraday low was 36.93.  Since then, UFS has fallen back below 37.50 on multiple occasions with its only intraday low beneath 36.93 coming on August 31st when UFS touched 36.86.  A reversing hammer candlestick formed, though, and UFS quickly recovered to near 39.00 just three days Read More 

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2016 is becoming the Year of Small Caps

by Arthur Hill

The year started weak for small-caps, but their fortunes quickly turned around in February and this group is now leading the market. The chart below shows the Russell 2000 relative to the Russell 1000 using the price relative ($RUT:$RUI ratio). The Russell 2000 represents the 2000 smallest stocks in the Russell 3000 and the Russell 1000 accounts for the largest stocks. This ratio rises when small-caps outperform large-caps and falls when small-caps underperform large-caps. The green lines mark periods of relative strength and the red line marks a period of relative weakness (April 2015 to Read More 

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Yelp Is In The New High Neighbourhood

by Greg Schnell

Yelp (YELP) has recovered nicely under the radar. With over 400 new highs today, YELP was in the same neighbourhood. The stock has been climbing nicely and the SCTR shows it being one of the top performers. The breadth today was big with lots of stocks participating. There were over 400 net new highs today. The market continues to rally and lots of the tech names are moving. This month, Chartcon 2016 is coming to you via live stream broadcast! Rather than have customers spend all the money to travel to the event, we have arranged for all Read More 

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This Homebuilder Is Testing Major Gap Support

by Tom Bowley

One of my favorite trades is looking for a bounce off of gap support.  Many times, the top of gap support will provide great support and the stock will never "fill" the entire gap back to the prior close.  PulteGroup (PHM) lost the top of its gap support at 21.03 at Friday's close for the first time and now appears set to completely fill its gap back to 20.42.  There's also price support close to 20.50 that should encourage buyers to emerge.  Take a look: Since that gap higher and follow through buying in mid-July, PHM has been consolidating and that's allowed its MACD Read More 

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BB&T (BBT) Strikes New 52 Week Highs

by Greg Schnell

The financial charts are broadly breaking out to new 6-month highs. Some are breaking out to new annual highs like BB&T (BBT). With the SCTR trying to get above 75, this stock is starting to show leadership. The SCTR is at new 52-week highs, the price hit new 52-week highs this week and the Relative Strength to the $SPX is at new 7 month highs. The volume this week is very solid considering the broad discussion about low trading volumes across the exchanges. The majority of my articles for the last few weeks on the Don't Ignore This Chart blog have Read More 

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Haliburton Weakness Setting Up Strong Reward To Risk Trade

by Tom Bowley

Haliburton (HAL) had risen close to 70% from its February low to its early June high, but since that time has simply consolidated those gains.  Over the past two weeks, HAL has declined close to 10% and is nearing a very important short-term price support level.  The closer it gets to that level, the better the reward to risk appears on the long side.  Check this out: Note also that throughout this 2016 rally, the daily MACD has been mostly positive and every trip on the RSI into the 40s has resulted in a near-term bottom.  Currently, the RSI resides at 43.  If Read More