Don't Ignore This Chart

Goldman Goes for a Breakout $GS

Goldman Sachs (GS) appears to be ending its correction as it bounces off the rising 200-day moving average. The chart shows GS hitting a 52-week high in March and then declining into June. I consider this a correction because the stock was entitled to a pullback after a massive advance and it retraced around 38.2% of the prior move. Goldman found support near the rising 200-day SMA and turned up the last six weeks with a move back above its 50-day SMA. A move above 230 would break a resistance zone and argue for a challenge to the March high. The indicator window shows the price relative (GS:SPY ratio) turning up as well and close to a breakout. As the highest-priced stock in the Dow, Goldman Sachs carries the most weight and a breakout in this stock would be positive for the Senior Average. 

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

Plan your Trade and Trade your Plan
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A Bullish Failure Swing for RSI on XLE

The Energy SPDR (XLE) continues to firm after an extended decline and RSI could trigger a bullish signal this week. On the price chart, XLE shows signs of stabilization with an outside reversal five weeks ago and an inside week last week. Notice that XLE is firming near support from last summer's lows and near the 50% retracement. XLE bounced early this week and move above 67.5 would trigger a breakout. 

Continue reading "A Bullish Failure Swing for RSI on XLE" »

Semiconductors: Goodbye or a Good Buy?

The Dow Jones U.S. Semiconductors Index ($DJUSSC) is an extremely volatile index.  When this index is trending higher, there aren't too many better places to be invested.  But when the fire goes out, you want to run, not walk, for the exits.  So where are we now, after a month of blood-letting in the space?  Should we be entering or should we be running away?

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Nike (NKE) Suggests The 2017 Race Is Not Over

Nike (NKE) popped up 8% this morning on earnings right at the mid point of the year. Nike accelerated straight up for 3 years before topping in 2015. After retracing 20%, the stock tried to climb and it looks like its working to take the lead.

The chart is setting up two classic patterns. The first is a breakout through a downtrending line. The second is the horizontal support/resistance area at $57.70 looks pretty important to get through. You'll also notice the blue dashed line also represents a neck line for a head and shoulders base. 

The MACD turning up after coming back to test the zero line from above is a classic setup. This looks like a nice consumer cyclicals company for the back to school and holiday shopping season.

To all the Canadians out there, Happy Canada day 150, and to all the American readers out there, Happy July 4th!

Good trading,
Greg Schnell, CMT, MFTA

 

Yields Soar, Banks Explode Higher

The stubbornness of treasury buyers has kept a lid on treasury yields and, as a result, banks ($DJUSBK) have struggled to determine which direction they should move.  Well.....this morning's reaction to an upwardly-revised GDP number (TNX up 7 basis points to 2.29% at last check) for the first quarter and the Fed's decision to lift restrictions on banks paying dividends and buying back shares seems to have resolved that issue.  The 10 year treasury yield ($TNX) is having its biggest spike in a few months and banks are benefiting.  Check out this chart:

That's a serious jump in banks and, barring a major reversal later today in both the DJUSBK and TNX, I'd look for further gains in banks this summer now.  Also, the 2.30% level has been a key pivot level in the past on the TNX and there's bullish wedge resistance at that level as well.  Therefore, view a break above 2.30% as a major upside breakout, further adding to bullishness in banks and life insurance companies ($DJUSIL).

Happy trading!

Tom

XRAY Traces Out a Classic Bullish Continuation Pattern

Dentsply International (XRAY) has a large cup-with-handle pattern forming over the last twelve months and the stock is on the verge of breaking rim resistance. Popularized by William O'Neil of Investors Business Daily, the cup-with-handle is a bullish continuation pattern. This means it forms as a consolidation after an extended advance, which runs from October 2014 to a 52-week high in June 2016. The handle is a smaller consolidation after the January-February surge. Either way you slice it, a breakout would be bullish and argue for a continuation of the uptrend. Traditional measuring techniques would target a move from rim resistance that is around the same as the height of the cup, which is 20%. Take this target with a bucket of salt because it is just a guesstimate. 

Continue reading "XRAY Traces Out a Classic Bullish Continuation Pattern" »

Valeant (VRX) Investors Putting In A Valiant Bid For Investor Interest

Valeant (VRX) investors watched their stock top out 2 years. Anyone still holding the stock from back then needs a return of 100's of % to get back to where they once were. Frustrated investors sold VRX to claim their capital losses. Hedge funds sold their shares in full public view, frustrated by the fall. While the company does not sell a potion for healing investor ills, it may be that they have a new group of investors that have not lived through the trauma. 

With technology stocks being the ride of the year for winning investing horses, it seems too long into the run for me to add new positions in that sector. While every day we are faced with choices, perhaps some days looking at what is rising out of the spring 2017 planting is timely. Valeant might fit that bill. This is not for the faint of heart. Bottom fishing is harder, but we can see the SCTR has now pushed up above 75. Positive volume is starting to return to the stock.


On the daily chart, the new base is easier to see. Looking to break out to 7-month highs, Valeant has started to outperform the $SPX to new 3-month highs. It would not take much to break out to new 6-month relative strength highs. Sometimes the SCTR surges up, backs off, then resurges into the top quartile. The volume surges on a daily basis are admirable. There are clues suggesting a change in view is warranted.

Investors could trade it on a breakout above $17.25. If it can't hold the level, I'd let someone else own the stock. 

Interestingly enough, we had a smaller breakout a year ago that failed, and I suggested trading it against $25. Here is a link to that article. Valeant 2016 I would suggest much the same strategy today.

Again, this is not for the faint of heart, but there are some encouraging signs here.

Good trading,
Greg Schnell, CMT, MFTA.

 

HCA Healthcare Bounces off Breakout Zone

HCA Healthcare (HCA) is turning up at a key level and showing signs that the long-term uptrend is resuming. HCA is in a long-term uptrend because it broke out in January and recorded a 52-week high. This breakout zone turned into support around 82 as the stock fell back to this area with a “throwback”. A classic tenet of technical analysis is that broken resistance turns into first support. HCA successfully tested this newfound support zone with a bounce the last two weeks. Also notice that the PPO(5,30,5) turned up, which means upside momentum is moving in the right direction.

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

Plan your Trade and Trade your Plan
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First Solar Starts Generating Some Power (FSLR)

First Solar (FSLR) has been down and out for a while. The SCTR ranking has been below 10 for a long time. The SCTR started to surge in early May but fell back. This week it kicked back up to 85. With Friday's high close, FSLR is starting to generate some price power.

With new volume hitting the stock recently and the MACD turning up while above zero, this looks like a stock that wants to move higher.

Good trading,
Greg Schnell, CMT, MFTA

 

BLUE Looking At Blue Skies Ahead?

Biotechnology stocks ($DJUSBT) were the second best performing industry group last week, trailing on renewable energy ($DWCREE).  Both groups appear poised to continue their rally based on their longer-term weekly technical outlook.  Therefore, it's probably not a bad idea to look at stocks in these groups that pull back to find critical price support levels from where they're likely to continue their push higher.  Bluebird Bio (BLUE) had a rough Friday (-5.49%) after a huge advance 60% advance over the three prior weeks.  For short-term aggressive traders, keep an eye on the following key levels:

The two green arrows mark what I consider to be the best support levels.  On Friday, BLUE's intraday low of 104.90 tested the rising 20 day EMA.  That moving average, along with price support near 98 should provide entry points for longs.  The initial target would be a gap fill to Thursday's close at 118.50.

Happy trading!

Tom