Don't Ignore This Chart

February 2017

Don't Ignore This Chart

Biotech ETF BBP Moves Into The Top 10 - CandleGlance and RRG

by Greg Schnell

Biotech's have been working their way higher over the past few months and the Technical Analysts at StockCharts have been documenting the breakout.  This breakout shows up in a multitude of ways. Now one of the Biotech's is on the Top 10 SCTR list. So the ETF that is breaking into the Top 10 is : This one has low volume, so we might need to trade some other ones. For the educational segment, here are the places that you can look to find these winners. The Top 10 List shown below is from February 27th, 2016. Where is this Top 10 list? Right on the home Read More 

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TJX Companies Looks Poised to Extend Uptrend $TJX

by Arthur Hill

TJX Companies (TJX), which operates TJ Maxx and Marshalls, recently broke out of a corrective pattern and this argues for a continuation of the bigger uptrend. It has been a rough year for most retail stocks with the Retail SPDR (XRT) down around 1% year-to-date. In contrast, TJX is up around 4.5% year-to-date and showing relative strength within its group. On the price chart, I think the long-term trend is up because the stock ultimately held support in the 72-74 area and the 10-week EMA is above the 40-week EMA (PPO(10,40,5) is positive).  With the Read More 

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Weekly Candle Argues For Further Weakness Ahead For Oclaro

by Tom Bowley

Oclaro Inc (OCLR) is printing several warning signals as it appears to be topping after a stellar advance.  OCLR has nearly quadrupled since the beginning of 2016, but it's difficult to ignore the heavy volume reversal last week - especially when you consider that a negative divergence has been in place on the weekly chart since highs printed in November. That bearish engulfing candle was accompanied by over 60 million shares, suggesting a near- to intermediate-term top is in place.  To the downside, the October low near 7.00 and the rising 50 week SMA at 7.19 - a likely Read More 

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The Transports ETF (IYT) Struggles To Hold A Breakout

by Greg Schnell

The Transportation ETF (IYT) is struggling to hold the recent breakout. The new three-month lows in Relative Strength in purple suggest being very careful with the Transportation stocks here after failing to hold the breakout above December highs. In this roaring bull market, Transports have traded sideways since Commodities spiked on December 8th. For newcomers to StockCharts.com, Intermarket Analysis through charts is one of the bigger advantages for looking at the stock market differently than Price Earnings ratios. I spent a considerable amount of time on the Read More 

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Eli Lilly Breaks 18 Month Downtrend

by Tom Bowley

Eli Lilly (LLY) printed an exhaustion gap in November on massive volume, marking a significant bottom and over recent trading days broke a downtrend line that spanned 18 months of action.  Based on this combination and improving momentum, it certainly appears that LLY has seen its worst and has begun to experience much better technical action.  Check out the exhaustion gap on the daily chart: The short-term picture has certainly improved, but more importantly it appears as if the longer-term downtrend on the weekly chart has broken.  Take a look. Read More 

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The Noose Tightness as T-Bond ETF Prepares for Next Move

by Arthur Hill

The 20+ YR T-Bond ETF (TLT) is consolidating within a long-term downtrend and this favors a bearish resolution to the current pattern. TLT fell sharply from July to November and broke through its 40-week EMA. The ETF is currently consolidating below the falling EMA and a consolidation within a downtrend is a bearish continuation pattern. The blue trend lines mark a triangle formation and chartists can watch this pattern for a break. A weekly close below 118.5 would break triangle support and signal a continuation lower. Another leg down in TLT would imply another leg up in long-term Read More 

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Weyerhaeuser (WY) Pushes Through The Forest Canopy

by Greg Schnell

Every week on the Commodities Countdown recording, we look at lumber prices. For the last week $LUMBER has pushed up and the lumber stocks are all on a big broad push. Weyerhaeuser (WY) is pushing through the previous highs or the forest canopy if you will. One thing supporting is the huge volume as the stock is breaking out.  You can see it clearly on the zoom panel on the right. The rest of the week had light volume as the stock consolidated. However, this does appear to be well supported by a lot of other forestry stocks joining the surge. Read More 

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Mondelez Takes Big Hit, But Remains in Bullish Triangle Pattern

by Tom Bowley

Mondelez International (MDLZ) had a rough week, tumbling over 5.5% after Kraft Heinz (KHC) made a bid for Unilever (UL).  That suggested to many investors that the likelihood of a MDLZ acquisition was significantly reduced and the stock was priced lower accordingly.  The technical pattern on MDLZ remains quite bullish, however, so I'd argue that last week's weakness is opening a door for entry.  There are two bullish possibilities here so let's look at the chart: While last week's losses were obvious, the overall uptrend here is just as obvious.  Weekly RSI in the Read More 

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Cypress Semi (CY) Tries To Join The Party

by Greg Schnell

Cypress Semiconductor (CY) rallied 2 weeks ago to new 52 week highs. It is still consolidating the breakout but looks well positioned. The volume last week was very low on a pullback compared to the volume on the breakout. That is a really nice bullish sign. This semiconductor stock also kicks out a yield of 3.44% which is a nice value for tech stocks. Some of the leadership in the Semiconductors have recently started to perform in line with the S&P 500 after outperforming for almost a year. Watch closely, but with a nice tight stop around $12, CY appears to be setting up to move Read More 

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SRCL Wastes No Time Breaking To Six Month Highs

by Tom Bowley

Stericycle (SRCL) has been under rather intense selling pressure over the past 16 months, losing half its market cap.  The waste management company disappointed Wall Street on several occasions and we've seen major gap downs on heavy volume three times over those 16 months.  The stock seems to have put in at least a near-term bottom with its latest quarterly earnings, which were released Wednesday after the closing bell.  SRCL beat on both its top and bottom lines and it's gapped up on heavy volume today, closing above key six month price resistance.  Check out the Read More 

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WBA Turns Up after Deep Correction

by Arthur Hill

Walgreens Boots Alliance (WBA) has traded quite choppy over the last 12 months, but I think the bigger trend is up and the recent wedge breakout is bullish. First, notice that WBA broke above a major resistance zone with the November-December surge. This move forged a 52-week high and set the bullish tone for the long-term uptrend. Second, note that the 200-day slope turned positive in late August. This indicator measures the slope of a 200-day linear regression, which is the line of best fit for 200 data points (closing prices). See our ChartSchool article for more details.  Read More 

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Bank Of America (BAC) Ends Consolidation Pattern With A Big Bull Push - SCTR

by Greg Schnell

Bank of America (BAC) has been consolidating recently. Today that consolidation ended as BAC made a big bull push out of the consolidation pattern. With a strong SCTR, this was on the radar anyway. Click on this link to understand more about what the SCTR is. However, today BAC broke out to new highs in Relative Strength in purple, price broke to a new high and the volume was well above a high average. The MACD made a nice bullish cross after resetting down near zero. Nice. One of the stronger values for our membership is the Read More 

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Celgene Stalls within Trend - What's Next?

by Arthur Hill

Celgene (CELG) has not made much headway the last twelve months, but the overall trend is up and the current consolidation looks like a bullish continuation pattern. Taking a step back, notice that CELG doubled from the April 2014 low to the July 2015 high (~70 to ~140). The stock then retraced around 61.18% of this advance with a 30+ percent decline into January 2016. Even though a 30+ percent decline seems long-term bearish, the retracement amount is actually normal for a pullback within an uptrend. Signs of a long-term uptrend are emerging as the stock bounced off the 95-100 area Read More 

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Costco Finally Breaks Out Above Its 15 Month Consolidation Range

by Tom Bowley

After long basing periods, breakouts can be very significant technical events that lead to powerful gains.  Those invested in or trading Costco (COST) are hoping last week's breakout signals a nice advance in the months ahead.  Three months ago, COST bulls successfully defended key price support and the rally that ensued finally broke major price resistance.  Check out the chart: The last two weeks did see increasing volume to confirm this latest move higher.  The two key levels of support are now price support near 169 and the rising 20 week EMA, currently at Read More 

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Is Alibaba BABA Ready To Pop?

by Greg Schnell

Alibaba (BABA) has been building a consolidation pattern recently. After pulling back for four months, BABA started to turned higher. In the zoom box you can see the gap up on earnings. Now the stock is trying to break through the top of the cup and handle setup at $104.57. BABA trades big volume with the average over 10 Million a day. The MACD is up in positive territory and the typical cup and handle pattern is setting up for a strong move to the upside with the handle structure a small percentage of the overall cup size.  If you would like to Read More 

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Mohawk Reports Strong Earnings, Looks To Break Out On Friday

by Tom Bowley

Mohawk Industries (MHK), a flooring designer and manufacturer, just reported quarterly earnings that exceeded Wall Street consensus estimates.  The initial reaction in after hours is very bullish as MHK has been consolidating in sideways fashion for the better part of a year and the after hours price would constitute a significant breakout.  Here's a look at the current technical picture: MHK has been bouncing off rising 20 day EMA support and its SCTR rank has been trending higher since the stock put in a double bottom in early November.  Volume trends are strong and Read More 

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Expeditors Hits Reversal Zone and Turns

by Arthur Hill

Expeditors International of Washington (EXPD), a logistics services provider, is part of the Dow Transports and the Industrials SPDR. The stock caught my eye because it is in a long-term uptrend and recently pulled back to a potential reversal zone. First, the long-term trend is clearly up because the stock hit a 52-week high in early December. Also notice that the 50-day EMA is above the 200-day EMA and the stock is above its rising 200-day EMA. The stock pulled back from early December to early February, and this pullback is viewed as a correction within Read More 

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Working With Parabolic Setups - Webinar Skim 2017-02-07

by Greg Schnell

I spent the webinar discussing the Canadian sectors as well as working with parabolic surges. The Energy chart is broken. The real question is does it get support here around the 40 WMA? The Canadian Industrials are still trying to hold their trend line. The chart is on shaky ground this week. Utilities are doing just the opposite. Real Estate and Income Trusts are also breaking out. Here is the Income Trust chart. A major portion of the webinar was spent on the Read More 

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NetScout (NTCT) Breaks Through Resistance

by Greg Schnell

NetScout has been climbing for a while but a few months ago stalled at resistance. The price action this week pushed the chart through resistance. The volume last week was well above average and the price action this week looks to confirm the action. Tom Bowley and I will be doing a webinar this weekend to help our members get a fresh outlook on the market. Tom and I both have some exciting ideas we would like to share with you for the months ahead. If you are a member, you can follow this link to register. If you are not a member yet, click on this Read More 

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Oil & Gas Equipment & Services SPDR Stalls after Big Surge

by Arthur Hill

The Oil & Gas Equipment & Services SPDR (XES) surged to 52-week highs in November and early December. It is clear after this surge that the bigger trend is up. First, the 40-week Slope turned positive in late July and remains positive. Second, the ETF broke out of a large triangle consolidation in late November. Third, 52-week highs happen in uptrends, not downtrends.  XES became quite overbought after a 40+ percent surge. Overbought is not necessarily bearish, but it does increase the odds of a pullback or a consolidation. It looks like XES Read More 

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Investors Tap VISA (V) To New Highs

by Greg Schnell

Visa has been trapped below $84 for a while. There has been a slight upslope on the highs but they were all within 5% of the high in November 2015. Today, Visa popped well above the previous highs. The stock has been consolidating around this $80 +/- $4. With todays move, this is a shift in pattern. Visa moved up off the February lows last year, but so did everything else.  The overall weakness in Retail/apparel seems to have missed Visa. Yesterday had the highest volume in a month and a six day trend of lower highs and lower lows so weak hands were probably sweating the Read More 

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AMD Completes Right Side Of Cup

by Tom Bowley

Advanced Micro Devices (AMD) was one of the best performing stocks in 2016 and the bullish pattern that's printed in the first five weeks of 2017 suggests the rally hasn't ended just yet.  One bearish development today was that AMD broke out above its late December high on an intraday basis, accompanied by extremely heavy volume, only to fail to hold it into the close.  Those late day sellers may be setting AMD up for some short-term weakness back to test its rising 20 day EMA to complete a handle.  Here's the current technical picture: The rising 20 day EMA is Read More 

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Waters Corp Turns Up and Leads in 2017

by Arthur Hill

Waters Corp (WAT) was hit hard with a double-digit decline in October, but the stock ultimately firmed in November-December and turned up in 2017. Waters Corp is in the top 20% of S&P 500 stocks for year-to-date gain. The chart also looks rather promising. Even though the October decline was rather dramatic, notice that the stock found support in a logical area. First, resistance levels from June-2015 to April 2016 and support levels from April 2016 to June 2016 combined to mark a big support zone in the 130-138 area. Second, the decline retraced 50-61.8% of the prior advance, was over Read More