Don't Ignore This Chart!

CBS Attempts to Buck Broad Market Selling Pressure


It was a rough January for stocks, but CBS held up quite well and shows a bullish looking chart. On the price chart, CBS sports a classic surge-correct-breakout sequence. First, the stock advanced over 20% with a move from ~39 to ~52. Second, the stock corrected by retracing around 62% of this advance. This correction appears to be ending as the CBS  formed a big hammer and followed through on this hammer with further strength.

The stock also shows relative strength since October and in January. The first indicator window shows the price relative (CBS:SPY ratio) forming a higher low and exceeding its mid November high last week. This uptrend in the price relative means CBS is outperforming SPY. The bottom window shows the 20-period Rate-of-Change, which covers the year-to-date period. SPY is down around 5% during this period and CBS is up a fraction. 

Even though the chart here looks promising for further gains, keep in mind that the broader market (S&P 500) is in a long-term downtrend. Also note that CBS reports earnings on February 11th and this adds a little more uncertainty next week. 

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

Plan your Trade and Trade your Plan

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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