Don't Ignore This Chart

BlackBerry: Will This Rally Be Any Different Than The Last Several?

Blackberry's (BBRY) demise from 2008 through 2012 has been well documented and I'm not really interested in dwelling in that past.  More recently, however, BBRY has attempted on multiple occasions to clear price resistance in the 11-12 range.  Clearing such resistance would be technically significant and further the case for buying BBRY.  Here's the current technical view:

The blue circles above show that interest has definitely picked up in BBRY with volume the past six months much higher than at any point in 2016.  Also, the SCTR returning to the 90s is a very good sign as well.  But nothing is more important, in my view, than clearing that overhead resistance that's stymied the stock for four years.

Happy trading!

Tom

Alphabet Turns up with Increase in Volume

Alphabet, which some of you may know as Google, surged off a support zone with good volume and broke short-term resistance. This breakout could evolve into more because the big picture is also bullish. GOOGL advanced to a new high in May and then consolidated with a long consolidation. The blue trend lines converge slightly so we could call it a symmetrical triangle. Regardless, a consolidation after a 52-week high is typically a bullish continuation pattern and a breakout at 1000 would signal a continuation of the bigger uptrend. Short-term, the breakout in the 950-960 area is holding as broken resistance turns into support. A close back below 950 would negate this breakout and call for a re-evaluation. 

Follow me on Twitter @arthurhill  - Keep up with my 140 character commentaries.

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Thanks for tuning in and have a good day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan
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Airlines Begin Their Typical October Rally

Airlines ($DJUSAR) absolutely "took off" in today's action as buyers emerged to drive nearly every airline higher.  Spirit Airlines (SAVE) surged 7.10%.  JetBlue Airways (JBLU) popped 7.08%.  Delta Air Lines (DAL) jumped 6.62%.  One fundamental reason for the group's strength was DAL's announcement that it reaffirmed its third quarter unit revenue and margin guidance, excluding the costs associated with Hurricane Irma.  Perhaps more important, however, is the simple fact that it's October.  While many are fearful this time each year because of famed market crashes in 1929 and 1987 that occurred during October, don't count airlines as a group that worries too much about the month.  Seasonally, it doesn't get any better than October as the following seasonal chart shows:

Continue reading "Airlines Begin Their Typical October Rally" »

3M Holds the Breakout Zone $MMM

3M (MMM) is helping itself and the Dow Industrials with a breakout in mid September. As a price-weighted average, the stocks with the highest price carry the most weight and MMM, which is the third highest-priced stock, accounts for around 6.5% of the Dow. On the price chart, the stock broke out of a triangle consolidation with a sharp advance in mid September and then fell back over the last two weeks. Prices are holding above the breakout zone (gray area) and this means the breakout remains bullish. Short-term, a small falling wedge formed and MMM is on the verge of breaking the upper line. The indicator window shows the Accumulation Distribution Line (ACDL) hitting a new high today and this means buying pressure remains strong. A close below 205 on the price chart would warrant a re-evaluation. 

Follow me on Twitter @arthurhill  - Keep up with my 140 character commentaries.

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Thanks for tuning in and have a good day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan
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Bonds And Financials - Setting Up A Fourth Quarter Showdown

Bonds and Financials are correlated tightly. We all know that. But the trade appears to be getting set up for a fabulous fourth quarter again. This chart inverts the TLT 20 Year Bond ETF on the top panel so that it behaves the same as the financials. Notice the breakout in the 4th quarter of 2016 when all three charts broke above trend lines. The stage appears to be setting up again.

Continue reading "Bonds And Financials - Setting Up A Fourth Quarter Showdown" »

Watch these Yield Spreads for Clues on the Greenback

The US Dollar ETF (UUP) is made of five currency pairings. The Dollar/Euro ($USDEUR) pair accounts for 57.6%, Dollar/Yen ($USDJPY) weighs 13.6%, Dollar/Pound ($USDGBP) is 11.9%, Dollar/Canadian ($USDCD) is 9.1% and Dollar/Swiss ($USDCHF) is 3.6%. Clearly, the Dollar/Euro relationship is the big driver here and Dollar/Yen is a distant second. Chartists interested in the twists and turns of the greenback should also keep an eye on the yield spreads. The chart below shows UUP with the 10-year yield spreads for the US and Germany, and the US and Japan. Notice that there is a strong positive correlation between UUP (top window) and the spread between the 10-yr T-Yield ($UST10Y) and the German 10-yr Yield (middle window).

UUP and the US-German yield spread peaked in December and moved lower throughout 2017. UUP continued to a new low in early September, but the yield spread did not exceed its July low. Thus, a higher low could be forming in this key spread and a break above the August highs would suggest that the spread is widening again. This would mean the US 10-yr yield is starting to rise faster than German 10-yr yield and this would be positive for the Dollar. The bottom window shows the spread between the US 10-yr and the Japanese 10-yr turning up the last two weeks. A break above 2.3 would also be positive for the Dollar.

Follow me on Twitter @arthurhill  - Keep up with my 140 character commentaries.

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Thanks for tuning in and have a good day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan
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Is Expedia (EXPE) The Way To Pay For Your Next Holiday?

The Expedia (EXPE) chart demonstrates a lot of technical setups here. If the setup works, this could pay for your next holiday! Let's walk through them. First of all, the SCTR is a little weaker than I would like and needs to hold 50. The early half of 2016 has an SCTR below 50. When the rest of the stocks were rallying, Expedia was a little slow to take off. The crossover of the Full Stochastics back above 20 sets up a nice bounce location. Historically, this looks like a good signal.

The price action is finding support at horizontal support and trend line support. The confluence of both suggests a great place for an entry.

Last week's volume bounce looks very positive, but the price needs to get above the 10 Week Moving Average. This is also a reasonable place to expect a bounce off the momentum trend line on the PPO. 

With a lot of support right here, this looks like a nice entry point. A break below the up trend line would be a good exit for a trailing stop.

Good trading,
Greg Schnell, CMT, MFTA.

Costco Forms Bullish Pennant Near Breakout

Costco (COST) fell on hard times this summer with a plunge from the low 180s to the 150 area. Despite this gap and sharp decline, the stock firmed in July-August and surged above the red resistance zone in September. Notice that the stock found support in the 150 area with two bounces and this could be considered a double bottom (green zone). The intermittent highs mark a resistance zone in the 161-162 area and the stock broke this zone in mid September. Technically, there is a higher high and a double bottom breakout is in the making. 

COST was a bit overbought after a 9% surge from late August to mid September. It looks like the stock is working off this condition with a pennant formation. These are continuation patterns and a breakout at 163 would signal a continuation of the prior surge. Another 9% move would target further strength to the 174-175 area. 

Follow me on Twitter @arthurhill  - Keep up with my 140 character commentaries.

****************************************
Thanks for tuning in and have a good day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan
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Tesla Weakens But Chart Is On Cruise Control

Tesla (TSLA) remains a crowd favorite as the stock's 2017 advance has been accompanied by extremely heavy volume.  I see major accumulation when I look at TSLA's chart.  But like every other stock, momentum can become an issue from time to time and TSLA appears to be battling momentum issues.  Here's the latest weekly chart after TSLA dropped 7.56% last week:

Back in June, TSLA's weekly RSI moved above 80 and that's, quite frankly, an unsustainable level.  Consolidation began at that point and I expect to see one of two things moving forward.  Either TSLA continues to consolidate in a potential bullish ascending triangle with upcoming price lows in the 340-350 area or the slowing momentum results in a drop back to test recent lows and price support from the 280-300 range.

In either case, I'd be a buyer of TSLA.  Obviously, the best reward to risk would be that 280-300 test, but I'm not sure we get there.

Happy trading!

Tom