Welcome to the recap of Friday's MarketWatchers LIVE show, your antidote for the CNBC lunchtime talking heads. Listen and watch a show devoted to technical analysis of the stock market with live market updates and symbols that are hot.
Information abounds in our Monday/Wednesday/Friday 12:00p - 1:30p shows, but we will give you a quick recap. Be sure and check out the MarketWatchers LIVE ChartList for many of today's charts. Your comments, questions and suggestions are welcome. Our Twitter handle is @MktWatchersLIVE (#mktwatchers), Email is marketwatchers@stockcharts.com and our Facebook page is up and running so "like" it at MarketWatchers LIVE.
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What Happened Today?
Talking Technically: On Friday Tom and Erin focus on interesting earnings news, social media questions, etc. Today Tom brought up the jobs report which came in under expectations. Both Tom and Erin thought it was curious that the market was flying despite this news. Treasury yields were also down which helped bonds today, but could be a problem for the Financial sector.
Anatomy of a Trade: Tom and Erin showed the charts of two recent trades they had done to give the audience a feel for what these two technicians analyze and consider before entering a trade and how to leave it. Tom reviewed DR Horton (DHI). He entered the trade then left. But, he re-entered after the MACD reset and is watching for high volume breakouts or pullbacks.
Erin discussed the last trade she made. She entered when momentum began rising for three days in early May. The SCTR was (and continues to be) in the "hot zone" above 75 and confirmed it as good entry. Despite falling below support along April tops, she stayed in...SCTR still looked good. A new double-bottom formed and today the neckline was broken. Unfortunately it doesn't look as if the close will come in below the previous top (limits were likely hit at $18 and triggered some selling), but as long as support holds and the SCTR remains high, it's a keeper. At this point, the OBV will give us a big clue if it tops below the previous top. At that point an exit might be appropriate.
ETF Watch: Tom and Erin looked at the ETF summary and targeted EWW. Tom noted overhead resistance and a possible breakout coming in above the declining tops trendline.
Erin noted a positive PMO configuration with a bottom above the signal line. SCTR isn't that impressive, but after the airing of the show, Erin noted the bullish declining wedge as well. Need to see a significant breakout and follow-through. With the 20-EMA below the 50-EMA on a IT Trend Model Neutral, we do have to weigh bearish outcomes in the intermediate term higher.
Ten in Ten Before One: In this regular segment, Tom reviews ten charts in ten minutes with Erin's comments and comments from the Twitter "peanut gallery" peppered in there. Send in your symbol requests via Twitter (@mktwatcherslive) before the show and we'll try and add them. If we missed them this show, we have many of them in the queue for Monday. Today Tom looked at JASO, CPT, HD, ECI.TO, SYRS, NRG, KMI, NTNX and JNPR. To see his annotated charts, go to the MarketWatchers LIVE shared ChartList. Erin commented on NRG that the PMO is configured quite nicely and the SCTR is in the "hot zone". Look for price to breakout above declining tops line resistance.
Sentiment: Erin went through sentiment charts on AAII, NAAIM and Rydex Ratios. Remember that sentiment is contrarian, so if we see too many bears, we should expect a bullish result and vice versa. Erin pointed out on AAII that almost 40% of respondents were "neutral". That is a sign of indecision and complacency to some degree. You'll note when there is a preponderance of bears, the ratio moves closer and closer to zero. When these extremes are met, typically you'll see an upturn.
The National Association of Active Investment Managers (NAAIM) shows they are highly exposed to the market. Typically you'll see declines after these readings, but this particular bull market that began after the election is not getting the expected results. This is a sign of internal strength in the SPX.
Rydex ratio shows investors are exposed right now as well. The ratio is very low which implies the denominator (bull assets) is very large in comparison to numerator (bear & money market assets). Typically after a period of a very low reading, you'll see a corrective move. However, since the election, the assets have remained mostly the same with investors heavily positioned in bull funds.
Mailbag Segment: Each show Erin and Tom answer questions received via Twitter, Facebook and Email. Tom discussed false signals on the MACD and the philosophy of the "MACD reset". For more information on the MACD, you can read Tom's article here. Regarding the MACD reset, here is another article. Erin was asked if she used intraday data to trade. Quick answer: NO. "My trading timeframe works best with daily charts. I don't time my entries or exits based on an intraday chart." She was then asked about how you calculate "minimum upside targets" on chart patterns. Typically after a breakout from a pattern (H&S, flag, rectangles, triangles), you add the height of the pattern to the breakout to the highs of the pattern. If you'd like to know more, Erin recommended the book, Visual Guide to Chart Patterns by John Bukowski in The StockCharts Store.
It's a Wrap! This week, Tom and Erin are in slight disagreement about how the market will end the week. Erin believes the market will finish higher next week, while Tom believes it will finish somewhat lower. What do you think? Our viewer poll will be open on Twitter until showtime on Monday at noon EST.
Looking Forward:
Tune in on Monday at 12:00p - 1:30p EST on 06/05 for Monday Set-Ups. Tom and Erin will discuss which charts look hot or not for the upcoming week.
The regular segments, DecisionPoint Report, Ten in Ten to One and Mailbag are also on tap for Monday, where we look at your recent questions and symbol requests.
Don't miss it!!
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