Don't Ignore This Chart

TLT Moves To Test The 200 DMA

The long bond is an emotional beast. There has been lots of discussion about how the long bond price should be falling through the floor with the Fed raising rates.  The TLT ETF  represents the 20 + Year (Long) bonds. Today marks an interesting test of the 200 DMA from the bottom side. The 200 DMA has been an area of friction before. 

The SCTR is perking up from being one of the worst ETF's in the market to moving out of the basement now. Interestingly, an SCTR above 30 has been associated with uptrends. While the Relative Strength has not started to make higher highs, it wouldn't take much to get to 6-month highs. 

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Juniper Networks Trending Higher, Threatens Breakout

Recently, competitor Cisco Systems (CSCO) broke out to a 15 year high.  While Juniper Networks (JNPR) hasn't seen its price move to decade and a half highs, it is on the verge of breaking to a six year high amid very heavy volume.  JNPR traded more than 25 million shares on April 26th following its blowout quarterly earnings.  Both revenues and EPS handily topped forecasts and traders rewarded the company with a week long rally that nearly cleared resistance at 31.50 from November 2015.  Here's the chart:

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Minding Three Gaps for Three Big Banks

Banking stocks bounced on Tuesday as the 20+ YR T-Bond ETF (TLT) fell and the 10-yr T-Yield ($TNX) moved higher. These bounces reinforce the positive correlation with TLT and the negative correlation with $TNX. The chart below shows three big banks in long-term uptrends and six month stalls. Technically, Bank of America, JP MorganChase and Morgan Stanley are in long-term uptrends because they are above their rising 200-day EMAs and they hit new highs in March. 

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Utilities Take the Lead with a Triangle Breakout

The Utilities SPDR (XLU) is clearly one of the leading sectors in 2017 because it is trading at its highest level of the year. XLU, by the way, is the only sector SPDR that hit a year-to-date high on Monday. The chart shows XLU correcting into November 2016, breaking out in December and then consolidating from mid-March to mid-May. This consolidation just ended with an upside breakout and the breakout signals a continuation of the bigger uptrend. The indicator window shows the PPO(10,40,1) turning positive in December as well and remaining well above zero the entire year. This confirms the uptrend because it means the 10-week EMA is above the 40-week EMA. 

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Northrop Grumman Awaiting Bullish Triangle Breakout

Northrop Grumman (NOC) has risen ten fold since this bull market began in 2009 and its current bullish pattern suggests that this defense company is not ready to roll over just yet.  It's been a struggle to clear 250 price resistance the past 6-7 months, but the rising lows are an indication that we should expect another breakout - with this ascending triangle measuring to perhaps 280 or so in time upon a heavy volume breakout.  Here's the current technical view:

The entire defense industry group ($DJUSDN) has been steadily outperforming the S&P 500 the past few years and this interest should add sustainability to the NOC bullishness of late.

Happy trading!

Tom

The Swiss Franc Raises Its Flag

The Swiss Franc ($XSF) made a meaningful break of the downtrend this week. The correlation of the Swissie to other asset classes is worth noting. 

Reviewing some of the history on the chart, 2011 shows the Swiss Franc at the summit of a Matterhorn peak with  major momentum going in. But the sudden plummet soon after aligned closely with a meaningful top and plummet in Gold. Interesting enough, the Yen in the lower panel would need another couple of months to top out and roll over. 

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Caterpillar Tests Price Support, Nearly Fills Gap

Caterpillar (CAT) was one of many beneficiaries of the latest quarterly earnings season.  With its revenues and EPS topping Wall Street estimates, CAT surged higher on April 25 from its April 24 close of 96.81.  The recent market weakness enabled CAT to pull back to test key price support and nearly test that gap support as well, setting up the stock as a very solid reward to risk trade at the current price and down into that support zone.  Here's the chart:

Price support resides near 98.00 and the zone from that level down to the 96.81 gap is where I'd look for buyers to continue to step in during periods of weakness.  I would expect the high from April 26 to provide resistance in the near-term.  The blue arrow highlights the extremely heavy volume that accompanied the gap higher.  Because of this heavy volume, gap support should be quite strong.

Happy trading!

Tom