Don't Ignore This Chart

November 2016

Don't Ignore This Chart

Base, Breakouts and Consolidation Bode well for this Big Biotech

by Arthur Hill

Celgene (CELG) showed bullish price action throughout 2016 and recently formed a bullish pennant that could set up an even more bullish 2017. Let's work from left to right on this chart starting with the big base that looks like a double bottom. CELG broke the "thick" trend line extending down from the July 2015 high and exceeded its April 2015 high to confirm the double bottom. One would normally expect a double bottom breakout to hold, but the stock pulled back below 100 with a rather deep decline. Nevertheless, CELG managed to hold above the February-June lows and broke out with a Read More 

Don't Ignore This Chart

Hilton Hotels Books A Room A Little Higher Up (HLT)

by Greg Schnell

Hilton Hotels (HLT) finally broke above a base it has been building for a year. The new 52 week highs are important. The SCTR is breaking above 75 in concert with the breakout on the stock. The Relative Strength shown in purple is breaking out to new highs as well.  The volume has been above average almost every day since mid October. Volume was a little lighter during Thanksgiving week, but that is expected. The MACD appears to be cresting a little here, so you might get a chance for a lower entry. In general the markets posture has been very bullish as we climb a Read More 

Don't Ignore This Chart

Big Blue Notches a 52-week High

by Arthur Hill

Even though its bell-weather status diminished over the years, IBM is still a big blue chip stock and remains a titan in the technology sector. Thus, a 52-week high in IBM bodes well for the market overall and the tech sector. The chart below shows IBM surging with the market from late June to early August and then correcting with a pullback into early November. I drew a falling channel to define this correction and decided on an internal trend line for the upper trend line. An internal trend line cuts through a spike low or high, such as the 29-Sept spike above 163 (blue oval).  Read More 

Don't Ignore This Chart

Ignore Renewable Energy Stocks Until This Happens

by Tom Bowley

Renewable energy ($DWCREE) has been among the worst areas of the stock market to invest since topping over two years ago.  There could be reason for hope, however, as rising crude oil prices ($WTIC) could trigger interest in the group again.  There's a potential bottoming reverse head & shoulders pattern in play on the WTIC.  Should crude oil top $52 per barrel, it might be worthwhile to make an investment in renewable energy.  Take a look at the current chart of DWCREE, WTIC and PowerShares WinderHill Clean Energy Portfolio (PBW): This chart shows that during Read More 

Don't Ignore This Chart

General Motors (GM) Tests The Trend

by Greg Schnell

General Motors (GM) is testing the 3-year trend line it has been driving under since the release of the 2014 models. On the Trump jump, GM surged above previous 9-month resistance around $33. Last week it pulled back a little but this week resumed the pressure to the upside. The SCTR continues to test the 70 level. If GM breaks out, this should be an interesting ride.  The dividend yield is north of 4% and the stock closed near the high of the week. The MACD has a nice rising momentum and apparently the 'fundamental story' for the stock is great. judging by the 3-year trendline, it Read More 

Don't Ignore This Chart

Give American Express Some Credit

by Tom Bowley

After a double top and nearly two years of downtrending price, American Express (AXP) has finally turned the corner and its stock price is rising.  Based on improving volume trends, strengthening momentum, and a hot financial sector, I look for the recent price strength to continue.  Check out the AXP weekly chart: I wrote about AXP on this blog about five weeks ago, indicating that the breakout on heavy volume (blue arrows) suggested the table was turning.  Now we've seen key trendline resistance (red dotted line) cleared along with short-term price resistance Read More 

Don't Ignore This Chart

Exxon Mobil is Lagging, but MACD is Firming and could be Turning

by Arthur Hill

The Energy SPDR (XLE) hit a new 52-week high this week, but its largest component, Exxon Mobil (XOM) remains well below its summer high and is not participating. The second biggest component, Chevron (CVX), is leading the charge with a 6+ percent advance in November and a 52-week high. Note that XOM accounts for 16.82% of XLE and CVX weighs in at 14.78%. The performance SharpChart below shows performance for XLE, SPY and the top eight stocks over the last three months. HAL, CVX and COP are the leaders. SLB, XOM and OXY are the laggards.  Despite Read More 

Don't Ignore This Chart

Macy's (M) Lights It Up Before The Thanksgiving Day Parade

by Greg Schnell

Macy's (M) has been deflating for the better part of a year. However, in November Macy's has started to light it up before their famous Macy's Thanksgiving parade this weekend. Photo:Macy's.com The stock has has been sliding down Manhattan's list of favourites but the SCTR has recently perked up and the stock looks set to accelerate into the retail season. The price is testing horizontal resistance today, but the SCTR suggests Macy's is a top performer right now. The momentum shown on the MACD suggests Macy's has more momentum now than Read More 

Don't Ignore This Chart

Technology SPDR: Lagging for 3 Weeks and Leading for 3 Years

by Arthur Hill

Despite relative weakness the last few weeks, XLK remains in a clear uptrend and shows no signs of weakness on the price chart. First, note that XLK recorded 52-week highs throughout 2016 and is currently less than 2% from a new high. Second, XLK held the September low when the market swooned and SPY broke its September low. Third, XLK is showing signs of life with a surge off the support zone at 46.  The lower window shows the price relative, which is the XLK:SPY ratio. Overall, XLK outperformed SPY for over three years because this ratio rose. The blue rectangle shows Read More 

Don't Ignore This Chart

There's Only One Thing That Slows Starbucks

by Tom Bowley

One of the best stock market stories of this century has been the remarkable growth of Starbucks (SBUX) and over the past five years, I can only point to one thing that slows the price appreciation.  Coffee prices.  That seems simple enough to understand, but the chart below brings it to light visually.  Have a look: Those two red rectangles above highlight SBUX price stagnation during periods of rising coffee prices.  We're currently in one of those price rise periods so it makes sense to keep an eye on this trend reversing before we expect any major surge in the SBUX Read More 

Don't Ignore This Chart

This Ag Stock Appears To Be Bottoming

by Tom Bowley

It's been downhill for a long time for CF Industries (CF), but finally its downtrend was broken and volume has been pouring into the stock at these lower prices.  CF's short-term strength has taken it to a 50 week SMA test for the first time since August 2015.  What it does from here will likely determine it's future direction.  Let's take a look at the chart: CF's SCTR has surged 35 points today, which ranks as the largest up move among all large cap stocks.  Note that this is the first time in a year that CF has boasted a SCTR ranking over 20 as well.  During Read More 

Don't Ignore This Chart

Cyber Security Comes Back (HACK)

by Greg Schnell

One of the things about investing in Cyber Security is the preponderence of negativity around it. Between the discussion of  foreign governments hacking the election results, an election campaign suggesting that the election is rigged, Eric Snowden, bank hacking, and retail network security to name a few, there is more than enough attention to this area. The number of different approaches to Cyber Security are important. This variety of solutions makes it harder for network violators to hack in to networks. Without question, this area will see long term growth. Picking the Read More 

Don't Ignore This Chart

Watch this Key Stock for Clues on Housing and Retail

by Arthur Hill

Home Depot is the perfect cyclical stock because it sits at the crossroads of retail, housing and the consumer. The stock was a poster child of the bull market with a 200+ percent gain from 2013 to 2015. It did not stop there and even managed to hit new highs into 2016. More recently, HD fell on hard times the last few months with a move below the June low and relative weakness since May. Notice that the price relative peaked in May and the StockCharts Technical Rank (SCTR) has not been above 60 since early May.  Even though the current evidence is Read More 

Don't Ignore This Chart

SemiConductors (SMH) Break Above Recent Highs

by Greg Schnell

While the big moves on the back of the election have not included technology broadly, today represented a slight change. The Nasdaq was the best performing index today and the tech stocks were broadly bid. The Semiconductor ETF (SMH) is poised for its highest close in 5 weeks. The chart did not break down like some of the indexes to 4 month lows, so this group continued to outperform.  With the MACD resetting near zero and the technology area surging today, this is ready to test the October 10th high.  I'll be hosting a Read More 

Don't Ignore This Chart

Russian Index Looks Vulnerable after Breakdown in Brent

by Arthur Hill

The Russian Trading System Index has yet to break down, but it is positively correlated to Brent Crude and the recent breakdown in Brent could foreshadow a breakdown in the Russian Index. The chart shows the index stalling just above its rising 40-week EMA over the last few months. Meanwhile, Brent broke below a wedge trend line and exceeded its September low. The indicator window shows the Correlation Coefficient ($RTSI, $BRENT) in positive territory for most of the last two years. This means Brent and the Russian index tend to move in the same direction. The Russian Index is holding up Read More 

Don't Ignore This Chart

Don't Take This Stock For Granite

by Tom Bowley

President-elect Trump has suggested that his presidency will focus on infrastructure and, as a result, heavy construction ($DJUSHV) finished last week higher by 12.36% to lead all industrial groups.  While there are plenty of quality companies to choose from, Granite Construction (GVA) surged 23.80% to follow many small cap stocks higher in this industry group.  The breakout was notable as you can see below: Note that the SCTR ranking began to surge in late October and that's been followed by a very heavy volume breakout above price resistance, which was near 51.00.  GVA is Read More 

Don't Ignore This Chart

Bank Of America Moves Above A Major Resistance Zone (BAC)

by Greg Schnell

Bank of America (BAC) has moved above a major resistance zone that has frustrated the shareholders for 3 years. This surge is meaningful. As long as the $18 level holds, this looks like a classic breakout. The volume surge on the breakout is also very bullish support. This is an industry wide move that looks like the start of a major rally for financials. Don't ignore the surge in financials.  Have a great weekend. Good trading, Greg Schnell, CMT, MFTA.   Read More 

Don't Ignore This Chart

Surging Treasury Yields Paving The Way For Financials

by Tom Bowley

Over the past two trading sessions, treasuries are being sold hand over fist with corresponding yields soaring.  Financials have exploded higher on this development.  This is simply a continuation of what we've seen since the Brexit-related lows in June.  Those higher yields will add profits to the bottom lines of many financial companies, especially banks ($DJUSBK) and life insurance companies ($DJUSIL).  The relative strength in financials has been advancing along with the 10 year treasury yield ($TNX) since late June as you can see from the chart below: Read More 

Don't Ignore This Chart

Steel Stocks Lead Stock Market with New Highs

by Arthur Hill

The Steel ETF (SLX) is leading the stock market on Monday with a 10% gain in early trading. Notice that this gain is simply extending an existing trend. In other words, chartists would have done just find by looking at the chart and ignoring the news. Notice that SLX surged from mid January to late February and then embarked on a zigzag advance the last eight months. More recently, SLX corrected with a falling channel/flag in August-September and broke out in the second half of September. This breakout triggered the bullish signal that is active right now. SLX moved above its summer highs Read More 

Don't Ignore This Chart

Finance SPDR Leads Market with New High

by Arthur Hill

The Finance SPDR (XLF) is leading the sector SPDRs with a new 52-week high on the price chart and with the price relative. On the price chart, XLF triggered its first breakout in early August with a move above the red resistance zone. Even though the ETF did not seem to move much from early August to early November, XLF did hit 52-week highs in early September and late October. These highs confirm that the bulls were always in charge. With today's fresh 52-week high, XLF becomes the only sector SPDR to record a new high. This means it is the chart leader among the sectors. The indicator Read More 

Don't Ignore This Chart

Are Shareholders Withdrawing From PayPal?

by Tom Bowley

The past two weeks have not been kind to PayPal (PYPL) as the online payment enabler has dropped roughly 10% since reporting stellar quarterly results and witnessing a breakout to its post-IPO all-time high.  PYPL beat estimates on both revenue (slightly) and EPS (.29 vs .27) and the company was rewarded with a strong gap higher in late October.  Check out the initial reaction..and then the selling: Personally, I don't like the loss of price support, but thus far gap support (horizontal green line near 40) and the rising trendline (just above 39) has held.  For Read More 

Don't Ignore This Chart

FireEye Printing Bullish Candle On Weekly Chart At Support

by Tom Bowley

FireEye (FEYE) hasn't had much to brag about since June 2015, but for those traders with high risk tolerance levels, FEYE could provide very nice returns from its current price level.  The cyber security company reported better than expected revenues and EPS after the close on Thursday and promptly opened this morning above its 20 day EMA (not shown on chart below).  FEYE has hit long-term weekly support and with a decent finish today, we'll see a reversing candle in play.  Check this out: Volume in the first 40 minutes today is over 5 million shares.  FEYE's average Read More 

Don't Ignore This Chart

The Market Hunts For A Place To Bounce - SPY

by Greg Schnell

The $SPX has been drifting lower about a 1/2% a day for a couple of weeks now. No real menacing selloff, just a continued lack of buyers at higher levels. With the election fast approaching, we have some nervousness. However, from a technical perspective, there are reasons to expect a real bounce in the next few days. I'll use the SPY SPDR ETF to demonstrate to support. In the top panel, we don't usually see the SPY in the bottom 50 % of the ETF SCTR because it represents the average of the largest, more stable stocks in the S&P 500. We can see the test of 30 on the SCTR in September Read More 

Don't Ignore This Chart

Walgreens Bucks the Selling Pressure and Shows Relative Strength $WBA

by Arthur Hill

It's been a rough five weeks for the broader market, but a few stocks and groups are still shining. The S&P 500 SPDR (SPY) is down around 2.5% and eight of nine sectors are down since the end of September. The Finance SPDR (XLF) is the only sector showing a gain. Chartists looking for stocks or groups showing relative strength simply need to find the ones with a gain over the last five weeks. This is part of the reason why Walgreens Boots Alliance (WBA) came across my radar. The stock is up around 2.5% since September 30th and showing relative strength the last five weeks. The chart Read More 

Don't Ignore This Chart

Gold Makes A One Month High

by Greg Schnell

Gold (GLD) has been resting on the 200 DMA for the last three weeks. Today, GLD has gapped up above resistance and traded sideways throughout the day. GLD is sitting near the highs of the day at time of writing. This is a tough call directionally. While I usually like Gold over the month end and into the first week of the month, I am cautious on this trade. The main reason for my caution is the $USD broke out against most major currencies in October and I would expect that trend to resume in November. We can expect a bit more resistance on the GLD chart up to the $125-$126 level Read More