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Real(ly) Good Real-Estate (XLRE) But It Needs To Break Resistance

by Julius de Kempenaer

The Relative Rotation Graph for US sectors shows a remarkably steady rotation for the Real-Estate sector. This is a daily RRG showing a 15 day tail, or three weeks. Yesterday XLRE crossed over into the leading quadrant and is now the only sector inside the leading quadrant at a solidly positive RRG-Heading. Real Estate Select Sector SPDR Fund - XLRE The daily price chart for XLRE shows a steep rally from its late December low to current levels where it is running into overhead resistance. $34.10 (or $34.50 unadjusted) is the level to watch for a break higher. A Read More 

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Autozone Gets Back in Gear

by Arthur Hill

Autozone (AZO) is a leading stock because it recorded a 52-week high in December and remains above the rising 200-day SMA. The S&P 500, on the other hand, recorded a 52-week low in December and remains below its 200-day SMA. The chart below shows AZO with a falling wedge correction over the last six weeks. Even though this correction occurred when the S&P 500 moved higher, I still view it as a pullback within a bigger uptrend. The falling wedge is typical for a pullback within a bigger uptrend and the decline retraced around 50% of the prior advance. Think two steps forward and Read More 

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Is The Pressure Relief Valve Starting To Release? $SPX

by Greg Schnell

Well, what's it going to be - up or down? The market made its high on Options Expiration Friday and has been unable to take out that high for 6 days. With AAPL trading up in after hours and other tech names to report this week, will we be able to push through that high? The market is very sticky here. For technicians, the bright light we see ahead is a freight train loaded with resistance on daily and weekly charts. Fundamental investors, meanwhile, continue to see earnings downgrades. We have not had heavy volume on the selling days. However, the pressure got to me Read More 

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Another Gap for QQQ

by Arthur Hill

Last week (Monday) I featured an evening star reversal pattern in QQQ. This pattern did not foreshadow further weakness as QQQ firmed in the 161 area the next day and gapped up on Friday. This gap did not last long as QQQ gapped down on Monday morning and filled Friday's gap. We could probably call this an island reversal because the gap up and gap down match. Today's gap is still a work in progress and may or may not hold. Overall, QQQ has moved sideways the last eight days as two conflicting trends battle it out. Long-term, I think the trend is down because QQQ Read More 

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Bases Are Forming Inside The Great Wall

by Greg Schnell

There are a lot of bases forming currently inside the great wall of China. After suffering a huge downtrend, these charts are setting up for new buy signals each and every day. I'll be on StockCharts TV's MarketWatchers Live show (Monday, January 28th at noon ET) to talk about some of these setups, which have been particularly compelling given the recent pullbacks. Some have even started to move out of their bases with 10% moves each week! I want to give you an example of the kind of things that are starting to appear on these setups. Here is EDU, with Read More 

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Water ($DJUSWU) Is The Leading Group Inside The Utilities Sector (XLU)

by Julius de Kempenaer

One of the pages that I often visit on Stockcharts.com is the sector summary. It gives a tabular overview of the price changes that occurred over a certain period (you can choose). From that page, it is possible to open a Relative Rotation Graph that breaks the sector down into industries. This enables you to look inside the sector at the industry level and see which industries are driving or dragging the performance of the sector. To do that, simply click on the RRG icon (the four squares) at the end of the line. An RRG will open up, holding the industries Read More 

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A Rare Evening Star Forms in QQQ

by Arthur Hill

Despite a 15% surge the prior 17 days, the Nasdaq 100 ETF (QQQ) remains below its flattening 200-day SMA and the ETF formed a rare evening star candlestick pattern over the last three days. First and foremost, I think the long-term trend is down for QQQ. The ETF recorded a 52-week low in December and remains below the 200-day SMA. Even though a 15% advance is impressive, this advance is still in the shadow of an even larger decline (-16.9%). The early December high marks the last peak where the bulls lost control and a break above this high is needed to reverse the bigger downtrend Read More 

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Chipotle Fires Up The Mexican Grille

by Greg Schnell

Chipotle has been building a very large base over the last couple of years. With Tuesday's move, it is now trying to break out above the consolidation.  The SCTR has resumed its strong presence, while the relative strength in purple continues to run to the upside. The full stochastic is showing strength here as the price sits at the breakout level. One of the indicators I like the most here is the PPO, which is bouncing off the zero line after pulling back. This looks like a long runway for Chipotle. I think a tight stop in the high $480s should give it all the wiggle room you'd Read More 

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Can The Deere Start Running Again?

by Greg Schnell

There's been a nice surge in the Commercial Vehicles group over the past month. One of the leaders in the group is Deere & Co. (DE) which outperformed all of 2017 and consolidated through 2018. This week's price action on Deere looks like the highest weekly close in 9 months - and there are a few other technical clues that suggest there is more to come.  In November 2016, Deere broke out to a new 12-month relative strength highs compared to $SPX. That initial clue started Deere on a run, doubling the stock price. It continued to outperform - the SCTR ranking shows Read More 

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Long Tail And Strong RRG-Heading For IRM

by Julius de Kempenaer

The Relative Rotation Graph above highlights the rotation of IRM (Iron Mountain Inc.) in comparison to the other stocks in the S&P Real-Estate sector (XLRE). The sector itself is interesting to keep an eye on as it is positioned well inside the leading quadrant but rolling over, at high JdK RS-Ratio levels, on the weekly RRG. But it is inside the lagging quadrant and curling up on the daily RRG.  This setup suggests a longer-term (weekly chart) relative uptrend that goes through a pause/correction (daily chart). Assuming that the weekly trend is providing the Read More 

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Palo Alto Networks Breaks from the Pack

by Arthur Hill

Most stocks have struggled since November, but Palo Alto Networks managed to reverse at a key area and break above a resistance zone. The chart below shows PANW with weekly bars over the last 3 years. The stock broke to new highs in February 2018 and more than doubled from spring 2017 to autumn 2018. Notice how the stock recorded numerous 52-week highs from January to August 2018. Stocks recording 52-week highs are leading the market and attracting attention. The gray lines show the 52-week price channel to mark the 52-week high-low range. The blue zone marks a Read More 

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The Science Of Going Higher

by Greg Schnell

Edwards LifeScience (EW) had a big move this week - having been inside a trading range for most of 2018, EW is now testing the top of the consolidation. I have omitted the few days it experienced above the range as the stock gapped up, went on a euphoric surge and then gapped lower, quickly putting it back inside the range. The stock was ultimately up 20% last year, even though it was near the bottom of the range at the start of 2019. The SCTR shows the stock is very strong relative to other large-cap stocks, having spent most of 2018 above 75. Tuesday's high Read More 

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Coca-Cola Loses Some Fizz

by Arthur Hill

Stocks surged over the last 12 days with the S&P 500 gaining over 10% and moving above its late December high. Coca-Cola (KO) was leading the market with a new high in November, but did not partake in the broad market rally here in January. SPY is up around 3.63% year-to-date, but KO is flat for the year. Moreover, a bearish continuation pattern is forming on the chart. The price chart below shows KO breaking support with a sharp decline in the second half of December. The stock consolidated after this breakdown as a pennant formed. A consolidation after a sharp decline is a bearish Read More 

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Is General Motors Ready To Fire On All Cylinders?

by Greg Schnell

General Motors had a great week. The real question is whether it can fire on all cylinders? I like the chart as the whole industry group had a great week. This stock pays a 4% dividend! Hunting through the indicators, the SCTR suggests the stock is moving into the top quartile in price performance. The relative strength is is breaking out to six month highs which is a nice bullish trait. I particularly like the weekly full stochastic turning up just below 50. That can also be a bullish signal. One signal that looks particularly compelling is the PPO is also breaking a one-year Read More 

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This DOW stock is pushing to new relative highs and rotates back into the leading quadrant on the Relative Rotation Graph

by Julius de Kempenaer

Visa is showing up, just, inside the leading quadrant on the Relative Rotation Graph vs $INDU above. These images are zoomed in from the RRG holding all the 30 DJ Industrials stocks (benchmark $INDU). The tail in the chart on the left above shows 30 weeks of rotation and as you can see the week-to-week observations are all close together (the white dots on the tail) causing a relatively short tail compared with other stocks on the plot. Short distances on the tail indicate low strength(momentum) and as the rotation was pointing downward Read More 

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Netflix Leads the FAANGs as Facebook Quietly Outperforms

by Arthur Hill

Netflix was the first of the five FAANG stocks to peak in June 2018 and is now the first of the five to break its December high. Thus, Netflix is leading the FAANGs here in January because it is the only one with a higher high. Note that Netflix reports earnings next week (January 17th). The price chart below shows when all five peaked in the summer-fall. Netflix was first in June, Facebook and Alphabet followed in July, Amazon peaked in early September and Apple was the last to peak in early October. The vertical blue line marks the peak in the S&P 500 for reference. Google had the Read More 

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This Stock Hit New 3 Month Highs

by Greg Schnell

This pipeline business is a stable cash flow generator that also pays a healthy dividend of 6%. Enbridge is a large North American pipeline company with some projects in the works that should come on stream in 2019. Looking at the setup, the SCTR is suggesting the price action is better than most of the stocks with a reading of 88. The relative strength made new 10 month highs. Price popped to a new 3-month high after capitulation selling volume marked the lows. On the weekly chart it looks good too. That nice fat dividend on Enbridge is worth looking at Read More 

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VerSign Holds One Key Moving Average and Retakes Another

by Arthur Hill

The broad market environment remains rather negative overall with the S&P 500 well below its falling 200-day SMA and volatility increasing over the last few months. Note that the different environments were highlighted in ChartWatchers this weekend. After a sharp decline into Christmas, stocks rebounded over the last two weeks and this rebound remains in play. As such, I will focus on a bullish setup today. Also note that earnings season starts soon. VeriSign (VRSN) surged to a 52-week high with a big gap in early November and then corrected over the last two Read More 

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First Solar Starts To Shine Under A New Year

by Greg Schnell

First Solar has been a volatile stock. When it trends well, it can make incredible runs. However, the stock had been dropping into the fourth quarter.  One sign of enthusiasm this week off the lows was that First Solar made a higher low in December than in August, unlike much of the market. The price action this week has moved almost to the top of the October to December range.  With great price action like that, this stock looks ready to shine. There is still a 15% upside just to get to the 40 week moving average, but the overall relative strength shown by the surging SCTR Read More 

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NIFTY (India) As An Alternative For SPY (US Stocks)

by Julius de Kempenaer

With the US stock market declining investors (may) need to look for alternatives in order to preserve capital. Sure enough, there are good opportunities in the US with bonds, IEF is doing very well, and cash is a very viable alternative if you do not "need" to be invested. If you are in a position where you do need to be invested in stocks or you want to keep an allocation to stocks in your portfolio, even if it is an underweight position, you might need to look outside the US for alternatives. The Relative Rotation Graph above Read More 

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The Relationship between Trend Direction and Risk

by Arthur Hill

With December complete, chartists can now examine monthly close-only charts for an assessment of the long-term trend and stock market risk. Spoiler: it is not a pretty picture.   Before looking at the chart, let's review the concept behind Price Channels. Chartists can use Price Channels to mark the high-low range over a given lookback period. For example, the 12-period Price Channel on a monthly close-only chart shows the high-low range for closing prices over the previous 12 months, which excludes the current month's high-low range. A monthly close above the Price Channel means the Read More 

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A Summary of 2018

by Greg Schnell

It was a tough year around the globe. The indexes were hit with a downdraft. Notice the NASDAQ 100 finished marginally in the red. Two bright spots were Brazil and India; the little bar in India at 5.91% looks small, but North American markets would have been happy with a positive return like that amidst the global selling.  Commodities had a tough year. Gold shone in the 4th quarter, but even it couldn't quite swing positive. The rare earth metals sold off 50%. What's interesting about the rare earth metals is all of the bullish perspectives starting 2018 Read More