Don't Ignore This Chart

Gambling Index Prints Reversing Shooting Star Candle

Over the past six months, the Dow Jones U.S. Gambling Index ($DJUSCA) has gained 27.35% to lead all consumer discretionary groups.  In fact, renewable energy ($DWCREE) is the only industry group among all sectors to outperform gambling stocks.  But the short-term outlook for gamble stocks changed on Thursday with a potential reversing candle printing.  Take a look:

Momentum has been very strong so I'm not looking for a significant long-term top.  However, any time a stock or index makes a new high intraday on increasing volume, and fails to hold it into the close, I'd look for at least a short-term pullback.  The rising 20 day EMA, currently at 851, would be a key support level to watch.  As a short-term trader, I'd consider taking profits on gambling stocks in the near-term and look to re-enter on weakness over the next couple weeks.

Happy trading!

Tom

Lowes Holds Support and Forms Potential Reversal Pattern

Lowes (LOW) successfully tested the 71 area twice in July-August and surged above short-term resistance this week. At the risk of jumping the pattern, the two semi circles show a double bottom taking shape and a break above the August high would confirm this bullish reversal pattern. Also notice that the stock gapped down on August 23rd and dipped below 71 during the day (red oval). The stock recovered that day and subsequently closed above 73. More importantly, the stock continued its recovery with a move above the gap high and a break above short-term resistance at 76. 

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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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Diamondback Energy (FANG) Coils

Energy is the most beaten down sector. The SCTR is hanging out at 3.8 and 75 is a good score. It couldn't get uglier? Who knows, but there are a ton of positive divergences setting up on the energy related charts right now. Diamondback Energy (FANG) is coiling for a move here and it looks tempting for bottom fishers. If you are a breakout buyer, this won't be your chart.

First of all, price is trying to hold above a long-term support resistance level. Price has to hold $85 so the risk is tightly defined. I am watching closely for the Full Stochastics to turn up from a higher low. Commodity related stocks can do real well, just surging above the 10 WMA. The PPO is turning up as well with a higher low, so I like these divergences where the Full Sto and the PPO are making higher lows. If the big trend down on the PPO breaks, I think this stock can really start to move.

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Auto Parts Getting Its Engine Revving; Approaching MAJOR Breakout

I have to admit I love breakouts of long-term basing patterns and the Dow Jones U.S. Auto Parts Index ($DJUSAP) is currently in the midst of the mother of all basing patterns.  Dating back to 2014, we've seen a number of price resistance tests that all finished the same way - with failure.  I don't know if we get through this time, but if we do, you might want to consider an auto parts stock or two in your portfolio.  Here's a visual look at the long-term consolidation:

The lows have been creeping higher for the past several years, but the highs have been stymied in the 340-342 area.  There was one intraday move to 345 in July.  Otherwise, 342 has been a brick wall.  Look for a solid breakout on above average volume for confirmation to enter the space.

A few stocks that look technically solid, recently reported better than expected quarterly revenues and earnings, and should benefit by a breakout in the industry group would be Dana Corp (DAN), BorgWarner (BWA), Lear Corp (LEA) and WABCO Holdings (WBC).

Happy trading!

Tom

Ebay Reverses Near Key Retracement

EBAY shows signs that the correction is ending and the bigger uptrend is resuming. First, the long-term trend is up because the stock hit a 52-week high in July. The stock then corrected with a move back to a support zone around 34-34.5. Notice that broken resistance and the June lows mark support here. Also notice that the decline retraced 61.8% of the prior advance with a falling channel (blue lines). Both the pattern and the retracement amount are typical for corrections within a bigger uptrend. The stock surged the last two days and looks poised to break the upper trend line. 

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
*****************************************

Valero (VLO) Pumps New Highs

Valero (VLO) is moving up on the back of the gasoline issues around the Houston flooding, but the chart was already at the top of the range before Monday. Monday it broke out to new highs and on Tuesday retreated off those highs once again. The chart has some very interesting technicals.

The Yield is very healthy at 4% so that keeps you interested. The SCTR is mid-range which is not my favorite. I want to see it become a top performer above 75. The RS broke out to new 5-month highs but is retreating slightly today which you can see in the zoom box on the right. Price is pinching between an upside breakout and the 200 Daily MA. We are going to see some price action soon, one way or the other. The reason is the momentum has a trend of rising lows and lower highs. The price pattern looks constructive to me, but usually will when the last data point is tucked in the top right corner. If it was at the bottom of the range, it might feel a little more bearish. 

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Target Reverses at Resistance with Big Engulfing Pattern

The Retail SPDR (XRT) is one of the worst performing industry group ETFs and Target (TGT) is one of the downside leaders. Even though the stock is up sharply since early July, it is down over 20% year-to-date and seriously lagging the broader market in 2017. Note that SPY is up around 10% year-to-date. Target is in a long-term downtrend because it is well below the falling 200-day SMA and it hit a 52-week low in June. More recently, the stock hit resistance in the 57-58 area four times since May and formed a large bearish engulfing pattern last week. This marks a clear reversal at resistance and I would use this to signal a continuation of the long-term downtrend. MACD is also weakening. 

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
*****************************************

 

Autodesk (ADSK) Sends Buy Signal Technically, Fundamentally, And Seasonally

It's rare when stocks line up bullishly from a technical perspective, in addition to both fundamental and seasonal perspectives as well.  But that's exactly what I see when looking at Autodesk (ADSK).  Let's start with fundamentals.  ADSK just reported its latest quarterly earnings and they beat both top and bottom line estimates.  Revenues were reported at $502 million, topping the consensus estimate of $495 million.  EPS came in at (.11), much better than Wall Street's expectations of (.15).

Continue reading "Autodesk (ADSK) Sends Buy Signal Technically, Fundamentally, And Seasonally" »