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AIRLINES THRIVE ON FALLING OIL PRICES -- PLUNGE IN CATERPILLAR SHOWS WEAK HOUSING IS HAVING A NEGATIVE IMPACT ON CYCLICAL STOCKS -- CONSUMER STAPLES ARE BENEFITING FROM FEARS OF A SLOWING ECONOMY -- COCA COLA SURGES TO 52-WEEK HIGH
by John Murphy,
Chief Technical Analyst, StockCharts.com
AIRLINES BENEFIT FROM FALLING OIL ... One of the cliches of the market is that the transportation sector is very energy sensitive. Over the last few years, however, that hasn't necessarily been the case. Rails and truckers have done reasonably well in the face of rising energy prices. Part...
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MARKET MAY BE TURNING A BIT DEFENSIVE AS GOLD AND OIL BOUNCE -- HEALTHCARE AND UTILITIES ARE SHOWING NEW STRENGTH -- A POINT & FIGURE LOOK AT THE VIX
by John Murphy,
Chief Technical Analyst, StockCharts.com
BOUNCE IN ENERGY SECTOR ... With the Nasdaq starting to slip a bit, and the Dow struggling with psychologicl resistance around 12,000 (in a generally overbought market), one of our readers if there were any new signs that the market was turning a bit defensive. Actually there are, but they&...
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TRADERS SELL THE SOX BUT ARE BUYING DRUGS -- NASDAQ 100 HAS SECOND LOSING DAY ON RISING VOLUME -- DOW FAILS FIRST TEST OF 12000 LEVEL
by John Murphy,
Chief Technical Analyst, StockCharts.com
DRUGS REACH NEW FOUR-YEAR HIGH ... Drug stocks were the day's strongest market group today. That's coming at a very good time for this formerly neglected group. The weekly bars in Chart 1 show the AMEX Pharmaceutical Index (DRG) breaking through its early 2004 peak to reach...
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INTEL WEIGHS ON OVERBOUGHT NASDAQ MARKET -- SOX INDEX BACKS OFF FROM 200-DAY AVERAGE -- LOW VOLATILITY INDEXES SUGGEST OVERBOUGHT MARKET -- BONDS RALLY AS STOCKS WEAKEN
by John Murphy,
Chief Technical Analyst, StockCharts.com
NASDAQ LEADS MARKET LOWER ... Yesterday I wrote about the Nasdaq market being up against potential chart resistance at its spring high and the possibility of at least a pullback from that level. Adding to that concern is the fact that the Nasdaq (and the rest of the market) is over-extended....
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NYSE COMPOSITE INDEX HITS NEW RECORD - SMALL STOCKS ARE PLAYING CATCH UP -- COMMODITIES AND THEIR STOCKS CONTINUE TO BOUNCE -- SO DOES CANADA -- LATIN AMERICA BOOSTS EMERGING MARKETS
by John Murphy,
Chief Technical Analyst, StockCharts.com
NYSE HITS NEW RECORD ... The market passed one test today and has another one right behind that one. Chart 1 shows the New York Composite Index clearing its May high to reach a new record. That puts it in upward sync with the Dow and the S&P 500....
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NASDAQ NEARS TEST OF 2006 HIGH -- MICROSOFT BREAKOUT GIVES LEADING SOFTWARE GROUP ANOTHER BOOST -- SEMICONDUCTOR HOLDERS EXCEED 200-DAY LINE
by John Murphy,
Chief Technical Analyst, StockCharts.com
NASDAQ NEARS ITS SPRING HIGH ... It seems like the market has to prove itself every time a major stock index approaches a previous peak. With all of the attention being given to upside breakouts in the Dow and the S&P 500, it shouldn't go unnoticed that...
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COMMODITIES AND THEIR STOCKS BOUNCE OFF SUPPORT AS THE DOLLAR INDEX BACKS OFF FROM 200-DAY AVERAGE -- A LONGER-RANGE LOOK AT THE DOLLAR, CRB, AND BOND YIELDS -- COMMODITY BOUNCE BOOSTS CANADA
by John Murphy,
Chief Technical Analyst, StockCharts.com
ENERGY SPDR BOUNCES OFF 2006 LOWS ... With oil prices starting to bounce, money is flowing back into the energy sector. Earlier in the week I showed the Energy Select SPDR (XLE) stabilizing above chart support formed along its 2006 lows. I suggested that the group looked oversold. Chart 1 shows...
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VARIOUS MARKET MEASURES SHOW AN OVERBOUGHT STOCK MARKET
by John Murphy,
Chief Technical Analyst, StockCharts.com
BOLLINGER BANDS SHOW OVER-EXTENDED MARKET... There are several ways to measure when a market has moved into overbought territory and is vulnerable to some profi-taking. One way is to use longer-range Bollinger bands. I've written in the past about converting weekly and monthly signals into daily ones. That...
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RETAIL HOLDERS NEAR RECORD HIGH -- GAP HITS 52-WEEK HIGH BUT STILL LOOKS CHEAP -- TARGET AND KOHLS ARE RETAIL LEADERS -- RISING DOLLAR KEEPS COMMODITIES UNDER PRESSURE
by John Murphy,
Chief Technical Analyst, StockCharts.com
RETAIL HOLDERS ARE TESTING 2005 HIGHS... A lot of attention has been paid lately to upside breakouts by the Dow Industrials to record highs and the S&P 500 to a five and half year high. Chart 1 shows a market group that may be on the verge of...
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KLA-TENCOR LEADS STRONG SEMICONDUCTORS -- GENENTECH JOINS BIOTECH RALLY -- NVIDIA AND GOOGLE HELP BOOST NASDAQ --- NASDAQ 100 STILL SHOWING UPSIDE LEADERSHIP
by John Murphy,
Chief Technical Analyst, StockCharts.com
GENENTECH TURNS UP... Last week I showed upside breakouts in the biotech group. I focused on Amgen which is the bellwether of the group and one of its biggest stocks. Here's another big one. Chart 1 shows Genetech (DNA) moving up to challenge its July high. The green...
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DOLLAR SURGES ON STRONG JOB REPORT -- DOLLAR STRENGTH EXPLAINS COMMODITY WEAKNESS -- AND WHY FOREIGN STOCKS ARE LAGGING THE US -- CANADA AND JAPAN ARE BEING HURT BY FALLING COMMODITIES
by John Murphy,
Chief Technical Analyst, StockCharts.com
EURO AND YEN TUMBLE ... The dollar is having one of its strongest days in months. Part of the reason is the drop in the U.S. September unemployment rate and some upward revisions in recent job creation. The report diminished hopes for rate reductions by the Fed in the near...
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WHY NASDAQ MAY PROVIDE GOOD VALUE -- LARGE CAP LEADERSHIP MAY HAVE STAYING POWER -- GE BREAKS OUT -- AMGEN LEADS BIOTECHS AND QQQQ HIGHER
by John Murphy,
Chief Technical Analyst, StockCharts.com
NASDAQ IS UNDERVALUED RELATIVE TO THE BIG BOARD ... Earlier in the week I wrote a piece on the relationship between the Nasdaq and the S&P 500. One of our readers suggested using the NYSE Composite Index in place of the S&P because of its smaller reliance...
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DOW COMPOSITE IMPROVES -- INTERNET LEADS NASDAQ TO FIVE-MONTH HIGH -- NEW CONSUMER DISCRETIONARY LEADERSHIP -- EARLY OIL PEAK MAY HAVE CAUSED EARLY FOUR-YEAR LOW
by John Murphy,
Chief Technical Analyst, StockCharts.com
DOW COMPOSITE BREAKS RESISTANCE LINE ... With all of the attention focused on the new record high reached by the Dow Industrials, I thought it a good time to revisit the Dow Jones Composite Index. The DJA includes all 65 stocks in the three Averages (30 industrials, 20 transports, and 15...
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A LOT OF NEGATIVE DIVERGENCES ARE STILL PRESENT ON THE CHARTS -- WATCHING THE NASDAQ RS LINE FOR SIGNS OF LEADERSHIP -- A REVIEW OF THE FOUR-YEAR CYCLE
by John Murphy,
Chief Technical Analyst, StockCharts.com
DOW TRANSPORTS AREN'T CONFIRMING INDUSTRIAL STRENGTH... Last Friday I gave a longer-term look at a lot of market indexes to demonstrate that the 2000 high hadn't been all that important to many of them. Some of them had already exceeded that long-term peak while several were...
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ALTHOUGH THE DOW IS TESTING ITS 2000 PEAK, SOME MARKET INDEXES HAVE ALREADY REACHED NEW RECORDS AND SOME AREN'T EVEN CLOSE -- THE DOW FELL THE LEAST AFTER 2000 AND HAS RISEN THE LEAST SINCE 2003
by John Murphy,
Chief Technical Analyst, StockCharts.com
THE TWO OTHER DOW AVERAGES HAVE EXCEEDED THAT HIGH ... Everyone's attention is fixed on the Dow Jones Industrials' challenge of the all-time high reached in January 2000. Which begs the question as to how significant that previous peak has been for the entire market. For a lot...
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A LOOK AT DOW LEADERS AS IT TESTS ALL-TIME HIGH -- MOST DOW STOCKS AREN'T EVEN CLOSE TO NEW RECORDS -- GE TRIES TO PLAY CATCH-UP
by John Murphy,
Chief Technical Analyst, StockCharts.com
DOW IS TESTING ITS ALL-TIME HIGH ... If you read newspapers or listen to radio or TV, you're no doubt aware that the Dow Industrials are within a hair of their January 2000 intra-day record at 11750. Chart 1 shows the Dow approaching that very important test. I thought...
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GOLD AND ENERGY STOCKS ARE BOUNCING OFF CHART SUPPORT AS DOW TESTS MAY HIGH
by John Murphy,
Chief Technical Analyst, StockCharts.com
ENERGY STOCKS BOUNCE OFF 2006 LOWS... Over the last couple of months, energy stocks have gone from one of the market's strongest groups to one of the weakest. At the same time, energy prices have fallen sharply. Charts 1 and 2 show, however, that both markets are attempting...
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A BULLISH AND BEARISH CASE FOR THE DOLLAR -- THE YIELD CURVE IS POTENTIALLY BEARISH -- GLOBAL MONEY FLOWS, HOWEVER, COULD SUPPORT THE DOLLAR -- WATCHING THE LOONIE
by John Murphy,
Chief Technical Analyst, StockCharts.com
INVERTED YIELD CURVE IS POTENTIALLY DOLLAR BEARISH ... Last Thursday I showed a potential "head and shoulders" bottom forming in the U.S. Dollar. I received a number of e-mails questioning a bullish case for the dollar. The main bearish argument for the dollar has to do with a...
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RELATIVE WEAKNESS IN EMERGING MARKTS AND SMALL CAPS SHOWS MORE RISK AVERSION -- SO DOES THE BUYING OF BONDS AND DIVIDEND-PAYING STOCKS -- DOW'S LEADERSHIP COMING FROM DRUGS AND TELECOM
by John Murphy,
Chief Technical Analyst, StockCharts.com
EMERGING MARKETS ARE UNDERPERFORMING ... Yesterday I wrote about how foreign markets had been underperforming the U.S. market since May. I also recently wrote that the peak in commodity markets could start to have a negative impact on countries tied to commodity markets like Canada as well as emerging markets....
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FIRMING DOLLAR PULLS COMMODITIES LOWER -- GOLD / DOLLAR LINK REMAINS STRONG -- HEAD AND SHOULDERS DOLLAR BOTTOM?
by John Murphy,
Chief Technical Analyst, StockCharts.com
STRONGER DOLLAR HURTS COMMODITIES... One of the constant intermarkets principles is that the U.S. Dollar trends in the opposite direction of commodity prices. Chart 1 shows how well that inverse relationship has worked over the last sixteen years. Notice in particular that the major peak in the Dollar Index...
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FIRMING DOLLAR IS CAUSING WORLD MARKETS TO LAG BEHIND THE U.S. -- WORLD INDEX HAS ALREADY REACHED MAJOR RESISTANCE BARRIER
by John Murphy,
Chief Technical Analyst, StockCharts.com
WORLD INDEX IS LAGGING BEHIND THE US ... I ended last night's message with the following chart to show that foreign stocks have been lagging behind the U.S. during the recent rally. The black bars in Chart 1 show the S&P 500 challenging its May peak....
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MARKET RALLIES ON FED INACTION -- NASDAQ REGAINS ITS 200-DAY LINE -- ORACLE BOOSTS SOFTWARE HOLDERS
by John Murphy,
Chief Technical Analyst, StockCharts.com
FED HOLDS RATES STEADY... To no one's surpise, the Fed left short-term rates unchanged today. The combination of falling commodity prices, lower inflation numbers, and the threat from a weak housing sector made another rate hike highly unlikely. The market was rallying into the news and stayed firm...
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WEAK HOUSING AND NEGATIVE PPI BOOST BONDS -- YAHOO PULLS NASDAQ BELOW 200-DAY AVERAGE -- S&P 500 STRUGGLES NEAR MAY PEAK
by John Murphy,
Chief Technical Analyst, StockCharts.com
BOND ETF HITS NEW HIGH ... Chart 1 shows the 7-10 Year Treasury Bond ETF (IEF) over the last eighteen months. I showed a similar chart last Friday to demonstrate how lower inflation pressures (signalled by falling commodity prices) were giving a boost to bond prices. We're seeing more...
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FALLING CRB BOOSTS BONDS -- ROTATION OUT OF ENERGY INTO CONSUMER DISCRETIONARY STOCKS -- BULLISH PERCENT INDEX TURNS UP -- FOUR-CYCLE LOW IS DUE THIS YEAR -- FALLING COMMODITIES ARE HURTING CANADA
by John Murphy,
Chief Technical Analyst, StockCharts.com
FALLING COMMODITIES BOOST BOND PRICES... The biggest story in the financial markets has been the breakdown in commodity prices and energy in particular. One of the immediate beneficiaries of falling commodities is usually the bond market. That's because bond prices are very sensitive to inflation trends. Historically, bond...
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BROKERS BREAKOUT TO THE UPSIDE -- THAT'S GOOD NEWS FOR THE MARKET -- RECENT ROTATIONS SHOW MORE OPTIMISTIC MOOD
by John Murphy,
Chief Technical Analyst, StockCharts.com
BROKERS PLAY CATCH-UP TO FINANCIALS ... The financial sector has been one of the market's strongest groups all year. That can be seen by the rising relative strength ratio of the Financials Sector SPDR (XLF) in Chart 1. Chart 1 also shows the XLF trading above its May peak...
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FALLING ENERGY PRICES BOOST RETAILERS WHICH SHOW NEW LEADERSHIP -- FALLING BOND YIELDS BOOST OVERSOLD HOMEBUILDERS -- DOW HITS NEW FOUR-MONTH HIGH
by John Murphy,
Chief Technical Analyst, StockCharts.com
FALLING OIL BOOSTS RETAILERS ... Over the last year, one of the market sectors most hurt by rising energy prices has been retailers. With oil prices falling to a five-month low, however, retailers have become one of the market's strongest groups. To show how closely the two markets are...
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GOLD BREAKS ITS SUMMER LOWS AS COMMODITY PRICES CONTINUE TO FALL -- CRB INDEX HITS NEW 2006 LOW -- THAT MAY BE GOOD NEWS ON INFLATION BUT HINTS AT ECONOMIC SLOWING
by John Murphy,
Chief Technical Analyst, StockCharts.com
GOLD TUMBLES BELOW SUMMER LOW... Gold and silver have succumbed to selling pressure that has weighed on most commodity markets over the last month. With energy prices falling, and the CRB Index having broken its summer low, the entire commmodity price structure is crumbling. I thought that a weaker dollar...
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SEPTEMBER SELLING CONTINUES -- MACD LINES TURN NEGATIVE -- MACD HISTOGRAM GAVE EARLIER SIGNAL OF A WEAK RALLY
by John Murphy,
Chief Technical Analyst, StockCharts.com
S&P GIVES SHORT-TERM SELL SIGNAL ... The market continued its early September slide today. Several of our short-term technical indicators have turned negative. One of them them is the daily MACD (which happens to be one of my favorite indicators). Chart 1 shows the S&P 500 sliding...
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GOLD FALLS ON FIRMER DOLLAR -- FALLING ENERGY PRICES PULL CRB EVEN LOWER -- COMMODITY ETF IS ALSO ON THE DEFENSIVE
by John Murphy,
Chief Technical Analyst, StockCharts.com
GOLD ETF GAPS DOWN ... The price of gold is falling pretty hard today. By early afternoon, the Gold ETF (GLD) is down the equivalent of $16. Silver is falling as well along with most other commodities. Chart 1 puts today's gold selling into the context of its two-month...
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MARKET PULLS BACK FROM OVERBOUGHT CONDITION -- SMALL CAPS AND NASDAQ ARE STILL BELOW 200-DAY LINE -- DOW TRANSPORTS REMAIN WEAK -- WATCH OUT FOR HEAVIER DOWNSIDE VOLUME IN SEPTEMBER
by John Murphy,
Chief Technical Analyst, StockCharts.com
SMALL CAPS CONTINUE TO LAG ... Last Friday I showed the Nasdaq Composite entering a resistance zone marked by its early July peak at 2190 and its 200-day moving average. I wrote that what the Nasdaq did in that zone would tell us a lot about its real strength and that...
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GOLD INDEXES BREAKOUT TO THE UPSIDE AS GOLD JUMPS $13 -- FREEPORT MCMORAN COPPER AND GOLD BREAKS OUT ON METAL GAINS
by John Murphy,
Chief Technical Analyst, StockCharts.com
GOLD INDEXES BREAK OUT... Both of the precious metal stock indexes that I follow are breaking out to the upside today. Charts 1 shows the AMEX Gold Bugs Index (HUI) breaking through its summer highs to the highest level since mid-May. Chart 2 shows the PHLX Gold & Silver Index...
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GOLD LOOKS UNDERVALUED RELATIVE TO OIL -- DOW COMPOSITE INDEX STILL IN TRADING RANGE -- NASDAQ NEARS MOMENT OF TRUTH
by John Murphy,
Chief Technical Analyst, StockCharts.com
GOLD IS DOING BETTER THAN OIL ... I've recently turned more cautious on the oil sector while turning more optimistic on precious metals. That may seem like a contradiction since both are commodity markets and do have some historical correlation. Part of my reasoning is based on fundamental considerations....
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SILVER REACHES NEW RECOVERY HIGH -- ANOTHER LOOK AT PRECIOUS METAL LEADERS -- GOLDCORP BUYS GLAMIS
by John Murphy,
Chief Technical Analyst, StockCharts.com
GLAMIS JUMPS 20% ... The announcement that Goldcorp (GG) is buying Glamis Gold (GLG) is causing dramatic swings in both gold stocks. Chart 1 shows Glamis Gold surging nearly 20% (on massive volume) to a new 52-week high. At the same time, Goldcorp is falling 8.5% on heavy volume. It&...
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ENERGY STOCKS BREAK 50-DAY AVERAGE -- CRB INDEX VIOLATES JUNE LOW -- ECONOMIC SLOWING FAVORS BONDS OVER STOCKS
by John Murphy,
Chief Technical Analyst, StockCharts.com
SHORT-TERM ENERGY TREND TURNS DOWN... With energy prices continuing to drop, selling pressure has intensified in energy stocks. On Monday, I warned that the Energy Sector SPDR (XLE) was headed for a test of its 50-day moving average. Chart 1 shows the XLE breaking that support line today. That'...
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BIG DROP IN OIL HELPS MARKET RALLY -- COMMODITIES CONTINUE TO SOFTEN -- HEALTHCARE ETF NEARS RECORD HIGH
by John Murphy,
Chief Technical Analyst, StockCharts.com
HURRICANE MISSES GULF COAST... News that a hurricane threat to oil refineries in the Gulf of Mexico had passed caused heavy selling in the energy pits today and took most other commodity markets lower as well. Crude oil prices fell more than $2.00. Chart 1 shows the nearby futures...
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DEFENSIVE STOCKS ARE 2006 LEADERS WHILE HOUSING IS YEAR'S WEAKEST GROUP -- PHARMACEUTICALS GET STRONGER WHILE TRANSPORTS SINK
by John Murphy,
Chief Technical Analyst, StockCharts.com
2006 LEADERS... If you glance at "John's Latest Performance Chart" you'll see the best and worst group performances for the first eight months of 2006. It shows the six top performers for the year compared to the four worst. The six winners have something...
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CRB INDEX STILL TESTING JUNE LOW -- A REVIEW OF SOME COMMODITY INVESTMENTS
by John Murphy,
Chief Technical Analyst, StockCharts.com
CRB INDEX TESTING JUNE LOW ... Last week I showed the Reuters/Jefferies CRB Index slipping beneath its 200-day moving average and warned that it was starting to look toppy. The real key to the chart, however, is the ability of CRB Index to stay above its June low at 329....
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CRB INDEX BREAKS 200-DAY AVERAGE AS CRUDE OIL FALLS TO TWO-MONTH LOWS -- FALLING COMMODITIES CARRY MESSAGE OF LOWER INFLATION AND A WEAKER ECONOMY
by John Murphy,
Chief Technical Analyst, StockCharts.com
CRB BREAKS 200-DAY AVERAGE ... I wrote yesterday about recent selling in commmodity pits pushing the Reuters/Jefferies CRB Index into a test of its 200-day average. Today's five point drop has pushed it below that long-term support line in pretty decisive fashion (see red arrow). Chart 1 shows...
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WEAK CPI REPORT BOOSTS BONDS AND STOCKS -- FALLING DOLLAR BOOSTS GOLD -- S&P 500 REACHES NEW THREE-MONTH HIGH
by John Murphy,
Chief Technical Analyst, StockCharts.com
JULY CPI HAS SLOWEST GAIN IN FIVE MONTHS ... The market got a second dose of good news on inflation in two days. On the heels of yesterday's weak PPI number, today's report showed a gain of only 0.2% in the July core CPI number which...
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JULY DROP IN CORE PPI STRENGTHENS BONDS AND STOCKS -- SOFTWARE AND CHIPS HELP PULL NASDAQ OVER 50-DAY AVERAGE
by John Murphy,
Chief Technical Analyst, StockCharts.com
WEAK PPI BOOSTS BONDS AND STOCKS... Core inflation at the producer level fell unexpectedly during July. Since inflation is the most closely watched figure these days (because of its impact on Fed decision-making), bonds and stocks rallied on the news. The dollar dropped. For the first time in awhile, today&...
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