Don't Ignore This Chart

November 2018

Don't Ignore This Chart

Workday (WDAY) Puts In A Full Shift

by Greg Schnell

Workday has been a big performer but over the last nine months it has built a floor around $120. Friday saw the stock soar above the previous highs. While it is hard to buy after a 12% surge in one day, this stock looks like a good buying candidate on a pullback.  The SCTR shows it as one of the strongest stocks out there. The relative strength soared to new heights. The November double bottom was an important base and the $50 move off that is very impressive. The stock obviously attracted a lot of volume interest as well. With this volatile market, I would follow the stock Read More 

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Market is still playing defense!

by Julius de Kempenaer

The recent rally of the S&P 500 index off the lows near 2600-2625 is nice but is it sustainable? The Relative Rotation Graph above shows the rotation of the 11 SPDR sector ETFs against SPY and the message is very clear! There is a clear split between the sectors. Four sectors are inside the leading quadrant and they are all still heading higher on the Jdk RS-Ratio scale, i.e. gaining relative strength versus the S&P 500. There are six sectors inside the lagging quadrant and only one (XLF) is in the improving quadrant. Read More 

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Varian Medical Successfully Tests Breakout Zone

by Arthur Hill

Healthcare stocks are leading the market and many were featured in Tuesday's show, On Trend. See below for details. Today I am highlighting Varian Medical (VAR) because it seems to be in the early stages of an uptrend. Normally, I do not highlight stocks that trended lower for most of 2018. However, this stock is in a strong sector and some long-term indicators are turning positive. The 50-day EMA moved above the 200-day EMA and price has been above the 200-day EMA the entire month. The chart below shows the stock breaking out with a big surge in October that included Read More 

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TripAdvisor (TRIP) Consolidates

by Greg Schnell

TripAdvisor broke out to new 52 week highs in October. Since then, the broader market has been rocky while TRIP has pulled back and consolidated. Check out the chart.  The SCTR shows the stock outperforming its peers. The relative strength has pushed up and consolidated near the highs much like price. The full stochastic is a little problematic. Normally a full stochastic will accelerate into the top 80 % level. So far it has not done that and looks like it could potentially turn back down here. So with a stop nice and close, the rest of the chart looks stronger.  Read More 

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Hologic Doubles Down on Breakout

by Arthur Hill

While the S&P 500 toys with its October low, Hologic its flirting with its summer highs and showing strength over the last few months. The chart below shows Hologic (HOLX), which his part of the Medical Devices ETF (IHI), with its 50-day SMA above the 200-day SMA and price well above the 200-day SMA. Even though the stock has moved sideways for most of the year, the bias is now bullish based on these moving averages. Most recently, the stock managed to break above resistance twice in November. The first breakout did not hold as the stock fell back to the 200-day Read More 

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This Technology stock lost 50% of its value but is now hitting support levels.

by Julius de Kempenaer

The Relative Rotation Graph for the technology stocks in XLK (Technology select sector SPDR) shows one big outlier that recently went through a big rotation. It crossed from improving to leading in June then pushed to a JdK RS-Ratio value over 140 before rolling over. Three weeks ago the rotation went from the leading quadrant into weakening and is now showing the longest tail in this universe. After a high at $34 in the week of 14 September, the stock dropped to a low at $16 in the week ending 2 November. A loss of more than 50% The victim's name? : AMD (Advanced Read More 

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A Global Logistics Player Hits Resistance

by Arthur Hill

United Parcel Service (UPS) is a global player in logistics and package delivery. The outlook for the global economy is surely dimming with the Shanghai Composite ($SSEC) falling all year, the German DAX Index ($DAX) and French CAC Index ($CAC) hitting new lows, and the S&P 500 turning south over the last two months. Even though the stock has yet to hit a 52-week low, the long-term trend is down. The chart below shows UPS with a lower high from January to early September. The stock peaked a few weeks before the S&P 500 and broke its summer lows in late October. UPS broke the Read More 

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Semiconductors Surge On Huge Down Day

by Greg Schnell

The Semiconductor stocks were trying to lead to the upside in Tuesday's big down day. That's a short term bullish sign. Six semi stocks were in the top 22 from the S&P 500.  Considering how low in the hole they were to start the day, that is a big improvement.  Looking at NVDA, it was down 55% off the highs, but came back and at the time of publishing was above yesterdays close. That's a pretty big rebound. These big name stocks are trying to bottom. Facebook and Amazon both got back into positive territory after steep drops on the open. So this wild environment shows some Read More 

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Viacom Makes a Move with Big Volume

by Arthur Hill

Viacom (VIAB) is part of the broadcasting-entertainment industry group, which is part of the Communication Services SPDR (XLC). The stock acted more like a defensive share in the first half of the year by underperforming from January to May. VIAB bottomed in June and outperformed the broader market over the last five months. On the price chart below, we can see VIA correcting after a big surge from November to January. The correction formed a falling channel/wedge as the stock retraced 61.8% of the prior gain. A 1/2 to 2/3 retracement is fairly normal for a correction within a bigger Read More 

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This Is Not Just Icing On The Cake

by Greg Schnell

Through this wide ranging volatile period, it has been harder to find great trades. When the market pulls back, the skittishness of the investing community soars. I have had two different stocks in nice set ups plunge with 20% drops in a day. The earnings reports are literally implosion documents if they miss the consensus view. Apple is a case in point. Small position size helps. At the same time some stocks have been smooth and steady. I like the look of CME, but today I want to highlight ICE as it is just starting to break out. Starting at the top, the SCTR has surged to new 52 Read More 

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Small cap stocks are leading the market lower.

by Julius de Kempenaer

There are many indexes available to monitor and analyze the stock market. The S&P500, together with Daddy "Dow" being among the more popular ones. But the S&P 500, although covering 500 stocks, is only looking at one segment of the total market. Only large-cap stocks. A broader perspective can be gained from looking at the S&P 1500 composite index for example. Still not covering the entire US stock market, which nowadays counts around 4000, more or less actively traded, listed companies, but a pretty good gauge. Very often we break Read More 

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The First Death Crosses Appear

by Arthur Hill

A classic death cross occurs when the 50-day moving average moves below the 200-day moving average. On the flip side, a golden cross occurs when the 50-day SMA moves above the 200-day SMA. The 50-day SMAs have been above the 200-day SMAs for all major stock indexes this entire year - until this week. These indexes include the S&P 500, Dow Industrials, S&P Small-Cap 600, S&P Mid-Cap 400, Russell 2000, Nasdaq, Nasdaq 100 and NY Compsite.   The chart below highlights four indexes and two experienced death crosses this week. The 50-day SMA is green, the Read More 

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Oil Hits The Big Number

by Greg Schnell

Oil has fallen the last few days and really taken a significant move lower. After at least two weeks of falling, oil was down 6.3% at the close today. After topping October 3rd intraday, and falling for more than a month in almost a straight cascade, today saw massive volume to punctuate a bad day. It seems very hard to bet against the huge down pressure, but this might be the time to start adding names to consider on the long side with setups building over the next month. Today marked the potential for a significant low in many respects. On the USO chart Read More 

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Goldman Continues to Struggle

by Arthur Hill

Goldman Sachs is the premier investment bank and a key component of the Financials SPDR (XLF), as well as the Broker-Dealer iShares (IAI). The stock has struggled since March and lagged the market for over six months now. While the S&P 500 moved to a new high in September, Goldman remained below its 40-week moving average and did not come close to its March high. As with this image of their building in New Jersey, something is amiss on this chart. The chart below shows Goldman moving sharply higher in the third quarter of 2016 and advancing in the third quarter of Read More 

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Why The Disney (DIS) Ride Might Be Just Getting Started

by Greg Schnell

It is always hard to bet against the mouse house. The world enjoys the magic of Disney everywhere. With the plan for Disney to deliver its own over the top service, all eyes are on Disney to see if that can work. If any one company has the content to do it, it is probably Disney. Let's look at the chart, because Disney made fresh new all time highs when dividends are included on Friday. so This chart has multiple things that make it bullish. The stock has been outperforming since early October. While the rest of the market pulled back, Disney held up very well. That is really bullish. We Read More 

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It takes two to tango for TTWO

by Julius de Kempenaer

While browsing through some Relative Rotation Graphs, looking for DITC candidates, my eye fell on TTWO inside the Communications Services sector. XLC itself is inside the weakening quadrant vs SPY but very close to the benchmark, meaning that the performance of the sector is very close to that of SPY. TTWO against XLC, on the other hand, is showing a nice rotation (on the daily RRG) over the last two weeks, from lagging through improving and now entering leading at a steep RRG-Heading and increasing tail length. This signals power behind the rotation. Read More 

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This Big Pharma Stock is Closing in on a New High

by Arthur Hill

Johnson & Johnson (JNJ) started the year on the wrong foot with a double digit decline the first six months. After hitting a 52-week low in late May, the stock turned around and advanced some 20% the next four months. Even though the stock remains below the January high, the big trend is up and this is the path of least resistance. The chart below shows JNJ above the rising 50-day EMA and rising 200-day EMA. In addition, the 50-day EMA is well above the 200-day EMA and the stock is less than 2% from a 52-week high. JNJ caught my eye because Read More 

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Mosaic $MOS Is Pushing More Outperformance

by Greg Schnell

Mosaic shot to a fresh new high today, continuing the uptrend. While the broader market has been trying to bounce, we can see this stock has been on the move for a while. This beautiful uptrend was hardly interrupted by the recent broad market slide. Today the stock rocketed 10% to resume the push to new highs.  The SCTR has been trending higher over the last year. While the stock was rising, the SCTR was just middle of the pack, but over the last few months the stock has really started to be a top performer by being pinned near the top. The relative strength has been climbing. This Read More 

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How to (not) Trade the Elections

by Arthur Hill

The US elections are on Tuesday and the financial press is full of tips based on possible outcomes. Basing a financial decision on a news event means we must get two things right. First, we must successfully predict the news (election results). Second, we must then successfully predict the market's reaction to the news. Double parlays are hard to hit. More often than not, the market reacts and the press then picks the news twist that best fits the reaction. Bonds plunged on Friday and weakness was attributed to better-than-expected growth in non-farm payrolls, never mind the long-term Read More 

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Airline Stocks May Rise On Crude Weakness

by Greg Schnell

The airline stocks have been mudding around. They have stayed in a giant trading range. I noted on my chart last year Warren Buffet had been buying airline stocks. Well, its been a zero gain trade. The airlines bounced last week at support and are bouncing up. One consideration is the $15 drop in Crude could help the airline margins for the fourth quarter. One of the better airline charts is United Airlines (UAL). The chart has had a strong SCTR recently. It broke above horizontal support at $77.50 in mid October and has now bounced up to retest the highs. The improvement in relative Read More