I spend a great deal of time evaluating the financial sector because I believe it's the most influential group in terms of leading the market. Financials underperformed miserably in 2007 and 2008 and overall market performance followed suit. In 2009, financials outperformed and the market recovered a lot... READ MORE
Great question. There are as many arguments saying "no" as there are those saying "yes". Who do you believe? In August, our major indices were tumbling and it seemed like every media outlet was touting our doom and gloom. By the end of September, psychologically it... READ MORE
Let's do a case study. Wouldn't it be great to find the next Google (GOOG) or Apple (AAPL) in the early stages, before the meteoric rise? It's definitely possible, but it takes homework and TONS of patience. Every great long-term performer goes through similar... READ MORE
Semiconductors. Financials. Small Caps. 10 Year Treasury Yields. Take a look at the following chart as the relative performance of each of the above is plotted against the S&P 500: These are four of the biggest reasons why the market hasn't been able to sustain a... READ MORE
With a myriad of "under the surface" problems, the S&P 500 simply ran out of gas at a very inopportune time. The bulls were on the threshold of a major breakout on the S&P 500 above its June highs near 1131. For seven consecutive... READ MORE
Yep, you read the headline correctly. I want to personally congratulate you if you're able to successfully trade this market. Because it ain't easy. Friday was yet another example. Not only did the report fall well short of expectations on the July jobs, the revision to... READ MORE
Divergences are among the most misused technical analysis tool anywhere, in my opinion. The first step in successful trading using divergences is understanding both their strengths and their limitations. My preference is to focus on divergences as they relate to the Moving Average Convergence Divergence (MACD). Others use divergences on... READ MORE
In the life of a technical analyst, a month seems like a week, a week seems like a day and a day seems like minutes. Time flies and so do the charts and various technical patterns. I think it's always a good idea to periodically take a step... READ MORE
The market is at a crossroads short-term. We've been bouncing back and forth after that early May drubbing. So is the rally ending or is it just starting? Well, we can only look at the technical, sentiment and historical indicators and come up with a "highest probability&... READ MORE
Technically, this hasn't been brain surgery. Our major indices broke down in early May on very heavy volume and, as technicians, we can never ignore that lethal price/volume combination. The weakness also came on the heels of some of the most extreme complacency that I've... READ MORE
Many traders look at volatility and think huge potential rewards. I look at it and think huge potential risks. I know I'm conservative, but it's two different ways of viewing the same market. I concede that if you're on the right side of each... READ MORE
Global stock markets have been quite volatile of late and significant gap ups and gap downs are becoming the norm. While trading gaps may seem impossible at times, there is good news technically from the market selloff that resulted from the debt crisis in Europe. In recent articles, I'... READ MORE
In my last article I suggested the financials were topping and that would make any further advance in the market difficult. Well this past week the action on the NASDAQ and Russell 2000, home of the high beta stocks, confirmed the bearish action. We've seen several warning signs... READ MORE
In my first article of 2010, I indicated that financials would need to lead on a relative basis in order for us to see strength in overall equity prices this year. Until late last week, financials have performed very well on a relative basis. Take a look visually at what... READ MORE
If you're looking for sector leadership in 2010, look no further than the industrials. While other sectors have performed admirably, especially financials and consumer discretionary, none top the 13.13% year-to-date gain that industrials are sporting. Compare that return to the paltry 0.57% gain in technology. Because... READ MORE
Candlesticks and candlestick patterns are the foundation to trading in my view. I use them on every charting timeframe, whether it's a one minute, hourly, daily, weekly or monthly chart. If you're a daytrader or swing trader, trading without the knowledge of reversing candlesticks is doing... READ MORE
Happy Anniversary! It was one year ago, on March 6, 2009, that the S&P 500 made that unforgettable 666 low, completing an amazing drop from above 1300 in August 2008. That represented nearly a 50% decline in the market capitalization of 500 of the largest U.S. companies... READ MORE
History is a valuable tool in the stock market as we witness cycles repeating themselves all the time. Our major indices and the various sectors and industries rotate back and forth as our economy moves from strength to weakness and back to strength again. Certain sectors perform better during strong... READ MORE
Relax Chicago. You're not in the Super Bowl this year. I'm just applying a little Super Bowl-mania to the current state of the stock market. The bears are calling the plays. From a sentiment and technical perspective, this market is really making sense right now. The... READ MORE
Ask any NFL coach and he'll tell you unequivocably that defense wins championships. If you're looking for market-beating returns, then you'd better improve your defense first, then your offense. Plain and simple, Invested Central did everything possible to prepare defensively for last week'... READ MORE
Happy New Year!!!! It's been awhile since I've spoken about the financials in a positive light. As sector rotation continues though, it appears as if the financials may get their turn after all. I've been watching bank after bank, financial after financial, either moving... READ MORE
In my last article I wrote about the recent disconnect between crude oil and oil services stocks. On a relative basis, oil services stocks had severely underperformed the S&P 500 from mid-October to early December despite crude oil prices trading flat to slightly lower. Since that article, oil... READ MORE
When I see a relationship in the market that tends to hold true over time, it always peaks my interest when the market varies from that "norm". That seems to be the case right now with oil services stocks. Generally speaking, when oil prices rise, money flows to... READ MORE
While there are lots of questions surrounding the sustainability of the stock market advance, there seems to be little resistance ahead for commodities, specifically gold and silver. The U.S. dollar is the primary variable. As you can see from the charts below, gold and silver seem to have no... READ MORE
In my latest article on October 18, I provided a very cautious tone but noted that volume trends remained strong - good news for the bulls! Well, short-term volume trends now have turned negative, though the really key long-term price support levels remain intact. A couple damaging technical developments make... READ MORE
It's very easy to get caught up in the euphoria of this market run. I'd be careful to do that. Invested Central turned from aggressively optimistic to cautiously bullish in early May and we've maintained that more cautious stance since. Call us conservative if... READ MORE
I've cautioned recently about the risks of being long in the market. There were too many warning signs. Yes, the market could have kept its head down and pushed to higher levels. But that wouldn't have been the healthy way to extend the recent uptrend. Many... READ MORE
Autozone (AZO) is setting up rather bearishly in a bear flag formation. Divergences on the MACD within the retail space are weak at best and AZO has been a relative underperformer with its MACD unable to climb above the centerline, one of the few stocks having that difficulty. Watch the... READ MORE
In a perfect world, we'd all invest every dime in winning stocks each and every trading day. Unfortunately, I haven't seen that kind of trading world yet. So as we approach each day, we must assess the risks in the market and determine an appropriate trading... READ MORE
The cup with handle formation is a powerful continuation pattern. A prior uptrend must exist in order to rely on the cup with handle pattern. Below are two examples of cup with handle patterns that show the cup formation and the powerful breakout moves. In the case of ADSK, we&... READ MORE
China's Shanghai Composite index is swinging wildly in both directions, reminiscent of the 1999-2002 moves by the NASDAQ. From a long-term perspective, you can clearly see that trends in both directions have been exaggerated. Any time that we've seen impulsive moves in one direction or the... READ MORE
Once the SOX broke below the March and July lows of 2008, a new low close of 312 was established in mid-Sept 2008. After a move higher to quickly retest the earlier breakdown area, the SOX fell precipitously into late 2008. After months of trending higher, the SOX had climbed... READ MORE
Two weeks ago, I pointed out what appeared to be the early stages of a new trend of outperformance by the financials and suggested they might be primed for a move higher to rescue the stumbling stock market. Right on cue, money rotated back into financials and we saw the... READ MORE
During the initial phase of the market recovery, from the March lows to the early May highs, financials were a primary driver of the move. Since that time, financials have lagged badly as sector rotation has caused money to flee to other, better-performing sectors over the last 8 weeks or... READ MORE
This first chart really says it all: Semiconductors are trying to break out on a relative basis. They're trying to do it at a time when the major indices are attempting breakouts of their own. A combination of a relative price breakout in semiconductors while at the same... READ MORE
I believe it's the former. Thursday's selloff after the June Employment report was a bit scary, particularly if you're only looking at the magnitude of the point losses. But, in my opinion, no key support levels have been violated. That means the beginning of... READ MORE
The tech-laden NASDAQ 100 showed considerable relative strength prior to the market bottom in March 2009. Should the NDX:SPX relative ratio break above 1.625, I believe it could lead to additional market strength. -Tom Bowley Join Tom and the Invested Central Team at www.investedcentral.com. Invested Central... READ MORE
There are lots of questions in the market regarding possible inflation, deflation, and general market weakness. One way to hedge against all three is to play gold. Below is a long-term weekly chart that shows gold in a very bullish inverse head & shoulders continuation pattern. The current pattern is... READ MORE
The semiconductor group has been very influential during the recent rally. In fact, the SOX has been outperforming the S&P 500 since late in 2008. A key relative resistance area has been approached, however. Whether the market can sustain a move higher could hinge significantly on how semiconductors... READ MORE
I've been bullish for several weeks now, but the tide is changing. We are running out of historical bullish periods until later in 2009. We have a few periods that are a bit more optimistic, but by and large the stock market remains either neutral or bearish through... READ MORE