How Can I Track Contango and Backwardation in Oil Futures? (w/video)

While we cannot plot the complete shape of the futures curve, chartists can plot the difference between near-term futures prices and forward futures prices to find out if market structure is in contango or backwardation. This is important to markets like oil because market structure reflects current and future demand prospects. 

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How To Save A Blog Writer's Annotations In Your ChartLists

There is an interesting little technique that can help you save a writer's annotations when you save the chart into your own ChartList. Here is how I do it.

In the Don't Ignore This Chart article from last week, Arthur highlighted some simple support / resistance areas. Here is the chart.

Now, if you wanted to save that chart without Arthur's annotations, just click on it and use the save menu at the top centre of the chart. You can see I used the Save As tool. This will erase the annotations though.

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How Can I Find Winners using the SCTRs?

There are several ways chartists can use the StockCharts Technical Rank (SCTR) to find winning stocks and ETFs. First, note that we have SCTRs for US large-caps, US mid-caps, US small-caps, Toronto stocks and ETFs. Leveraged and inverse ETFs are excluded from the ETF group. The securities in each group are ranked against each other. The rankings, therefore, do not overlap and are not comparable outside the group.  

The SCTRs in each group range from zero to one hundred. Using large-caps as an example, stocks scoring between zero and ten would be in the bottom decile (10th percentile). Stocks scoring between ninety and one hundred would be in the top decile (90th percentile). Chartists looking for the strongest stocks or ETFs should focus on the scores between 80 and 100. 

Chartists can also sort the SCTR tables by clicking each column heading. Sorting by "change" will reveal the biggest movers, which is a great way to find stocks making big relative gains. Chartists can click the icons on the left of each symbol to see different charts. The icon with the bars is for your default chart style, the icon with lines shows a gallery chart and the XO icon shows a Point & Figure chart. You can read more about the StockCharts Technical Rank (SCTR) in our ChartSchool article

How Can I Compare Several Symbols on One SharpChart? (w/video)

Chartists can show the performance for several symbols on one SharpChart by entering a comma-separated list (spy,xly,xlk,xli,xlf). Note that free users can chart up to five symbols on one chart, Basic and Extra members can chart up to six symbols and Pro members can chart up to ten symbols. Click here to see the different subscription packages.  

Simply enter these symbols in the symbol entry box and click go to create a performance SharpChart. The example below shows the performance for SPY and four sector SPDRs over the last six months. All five are up, but one is clearly up more than the others. The Consumer Discretionary SPDR (pink) is up over 13% and the clear leader. The Finance SPDR (XLF) is up less than 5% and the clear laggard. SPY is up around 6.5%. 

Chartists can also create a relative performance chart by checking the box at the top left to set the first symbol as the benchmark. In this example, SPY is the benchmark and the chart shows relative performance for the four SPDRs. Relative performance is simply the change in the SPDR less the change in SPY. Relative performance is positive when the SPDR is up more than SPY (relative strength). Relative performance is negative when the SPDR is up less than SPY (relative weakness). In this example, XLY shows the most relative strength and XLF shows relative weakness.  

What is the Sector Summary and How Can I Use it? (w/video)

The Sector Summary page is designed to help chartists find the best performing sectors, industry groups and stocks. Using a top-down approach, users start with the sectors to see a break down of the broader market. Click on a sector to see the industry groups in that sector and click on the industry group to see the stocks in that group. Chartists can also adjust the timeframe, sort the various columns, apply PerfCharts, use MarketCarpets and use some symbol groups in a Relative Rotation Graph (RRG). 

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How Can I Get Intraday Updates for the McClellan Oscillator? (w/video)

There is a little indicator "hack" that chartists can use to update the McClellan Oscillator during the day. First, note that StockCharts has end-of-day (EOD) symbols for the McClellan Oscillators. Simply search for the term "mcclellan" in the symbol catalog. The symbols beginning with an exclamation point (!) come from the DecisionPoint merger and these indicators are also updated after the close. The ratio-adjusted McClellan Oscillator uses the ratio of net advances [(advances less declines) divided by total issues]. The traditional McClellan Oscillator simply uses net advances (advances less declines). 

This hack works for the Nasdaq and NYSE McClellan Oscillator because StockCharts has intraday data for Nasdaq Net Advances ($NAAD) and NYSE Net Advances ($NYAD). First, create a chart for NYSE Net Advances ($NYAD), which is the base indicator for the NYSE McClellan Oscillator. Note that I made this base indicator invisible in the main chart window and added the 19-day EMA and 39-day EMA because the McClellan Oscillator is the difference between these two EMAs. For reference, I also added $NYAD as an indicator in histogram format below the main window and the NY Composite Index for reference. 

Click this image for a live chart

Chartists can now create the McClellan Oscillator by adding MACD(19,39,1) as an indicator. This will plot the difference between the 19-day EMA of $NYAD and the 39-day EMA of $NYAD. For reference, I also added the NY McClellan Oscillator ($NYMOT) in the lower indicator window. The values are not exact, but they are very close and the line shapes are exactly the same. More importantly, the MACD version is updated during the day and the crosses above/below the zero line are the same for both indicators. 

How can OBV and the Accumulation-Distribution Line be so Different? (w/video)

It does not always happen, but sometimes On Balance Volume (OBV) and the Accumulation Distribution Line (ACDL) diverge to paint completely different pictures. These two can diverge because they are calculated differently. First, note that both indicators use price and volume to detect accumulation and distribution. OBV, which was developed by Joe Granville, rises when the close is higher than the prior close and declines when the close is lower. On a daily chart, the period's volume is added on an up day and subtracted on a down day. Down days on big volume, therefore, will push the indicator lower. 

The Accumulation Distribution Line (ACDL), which was developed by Marc Chaikin, measures the level of the close relative to the high-low range for the period. A close above the mid point of the high-low range indicates accumulation and the volume multiplier is then positive. A close below the midpoint indicates distribution and the volume multiplier is then negative. A stock, therefore, can close below the prior close and still have positive accumulation for the Accumulation Distribution Line. 

Click this image for a live chart

The chart above shows Chevron (CVX) with the Accumulation Distribution Line (blue) rising from mid December and On Balance Volume (OBV) falling during this same timeframe. The red price bars and red volume bars show when the stock closed lower. These high volume declines pushed OBV lower. The green ovals on the price chart show two examples when prices closed lower, but the close was near the high of the day. This means the volume multiplier for the Accumulation Distribution Line was positive and these high volume bars pushed the indicator higher.  You can read more about these indicators in our ChartSchool.

How Can I Find and Chart International Bond Yields?

StockCharts users can do a simple database search to find symbols for 10-year government bond yields for the United States, Germany, Japan and the UK. Go to the symbol catalog and enter "yield and 10" (without quotation marks). The "and" means that both words are required in the results. Users could also search for "yield and indx" to see all of our index symbols related to yields. The term "indx" insures that an index symbol will show up in the results. 

Chartists can plot these yields on the same chart using the "price - same scale" overlay. The chart below shows a scale ranging from .20% to 3.2%.  German and Japanese 10-yr yields are near the bottom. US and UK 10-yr yields are just above the mid point. The US 10-year yield is the highest of the group. The Japanese and German 10-year yields are duking it out for the lowest. 

Click this image for a live chart

What Is an Island Reversal? (w/video)

An island reversal is a reversal pattern that forms with two gaps and price action in between the two gaps. These gaps tell us that the island reversal marks a sudden, and sharp, shift in direction. Even though they are relatively uncommon, island reversals are potent patterns that warrant our attention. 

The alignment of the gaps holds the key. First, note that a bullish island reversal forms with a gap down and then a gap up. A bearish island reversal forms with a gap up and then a gap down. These gaps overlap to create an island of price action, hence the term "island reversal". The island is above the gaps on a bullish island reversal, and below the gaps on a bearish island reversal. 

The first example shows Chipotle Mexican Grill (CMG) with bearish island reversal. Note the gap up in early January, the consolidation into early February and the gap down in early February. Prices gapped above 696, held above 696 and then gapped below 696 to create the island. Traders establishing long positions on the island are now trapped with losses. 

The second example shows Raytheon (RTN) with a bullish island reversal. There is a gap below 104, a three day stall and then a gap above 104. There were no trades at 104 because of the gaps. Thus, traders establishing short positions on the island are now trapped with losses. 

Which Oscillators are Good for Overbought and Oversold Indications? (w/video)

In general, momentum oscillators with a fixed range are best suited for identifying overbought and oversold conditions. These include RSI, the Stochastic Oscillator and StochRSI. RSI and the Stochastic Oscillator fluctuate between zero and one hundred, while StochRSI fluctuates between zero and one. Momentum oscillators like MACD and the Percentage Price Oscillator (PPO) do not have fixed ranges and this makes it more difficult to identify overbought and oversold conditions. 

The QQQ chart below shows RSI(10), the Slow  Stochastic Oscillator (14), StochRSI(14) and MACD, which is just shown for reference. First, notice that RSI is the least sensitive of the three fixed-range oscillators because there were only two oversold readings in seven months. I even shortened the look-back period from 14 to 10 in order to increase sensitivity. Second, notice that an oscillator can become overbought and remain overbought in a strong uptrend. The Stochastic Oscillator moved above 80 on October 24th and remained above 80 until December 3rd. Third, notice that StochRSI is by far the most sensitive of the three. This is because StochRSI is an indicator of an indicator. 14-period StockRSI is the 14-period Stochastic Oscillator applied to 14-period RSI, which means it is measuring the momentum of momentum.  

There are two things chartists should keep in mind. First, look for oversold readings when the bigger trend is up and overbought readings when the bigger trend is down. An oversold reading in an uptrend signals a pullback. Second, set a trigger to signal an end to overbought or oversold conditions. Each oscillator has a centerline that can be used for such a signal. For example, a move below .20 triggers an oversold condition in StochRSI. This condition ends when StochRSI surges above .50, which puts it in the upper half of its fixed range.