Stocks were down sharply in afternoon trading on Tuesday, but the Utilities (SPDR) was bucking the trend with a small gain. As this screen grab from the Market Summary page shows, XLU was the only sector in positive territory. Looks like utilities like low interest rates. Click this image for... READ MORE
TRANSPORTS LEAD INDUSTRALS LOWER ... We've been writing about a lot of negative stock market signals of late which include bearish chart action, as well as recent rotations out of small caps and technology and into traditionally defensive groups (that pay dividends). This morning's message will focus... READ MORE
Despite excessively bearish sentiment, the technical conditions in the stock market are clearly bearish for the short-term and medium-term. Sentiment is hard to quantify, but I get the feeling that sentiment is overwhelmingly bearish as we head into the September-October period. Consider the following. First, the NY Times reports that... READ MORE
Year-to-date sector performance shows five up and four down. In a rather strange twist, the consumer discretionary and industrial sectors are up, but the technology and finance sectors are down. Performance for the S&P 500 reflects the net result for the nine sectors (down 4.28%). Click this... READ MORE
A BEARISH ABC COUNT FOR THE S&P 500 ... Link for todays video. It is time to open Pandoras box with some Elliott Wave analysis of the S&P 500. To smooth the data and filter out the noise, I am using a 5-day exponential moving average for... READ MORE
The August trend remains down for the major index ETFs, but techs are starting to show relative strength with QQQQ edging higher on Friday. Despite some signs of firmness, we have yet to see any signs of significant strength that would warrant a bullish stance. The first chart shows the... READ MORE
It's usually a bad omen for the market when small caps and technology stocks are underperforming -- as they're doing at present. Chart 1 shows the Russell 2000 Small Cap Index trading closer to its July low than its July high. Its falling relative strength line... 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
Looking at a weekly chart of the U.S. Dollar Index we can see that it entered a steep correction off the June top when it encountered long-term resistance from a declining tops line reaching back to 2006. During the correction a rising trend line drawn from the December 2009... READ MORE
The Point & Figure chart for QQQQ shows clear support and resistance lines for 2010. The ETF advanced for 9-10 months with a long column of X's in 2009 and then embarked on a consolidation in 2010. Notice that the X's started in March 2009 and... READ MORE
Hello Fellow ChartWatchers! It's that time of year again: Now through the end of August, StockCharts.com is running it's "End-of-Summer-Almost-Fall" special and this is a very special special indeed. Here's the deal: Subscribe to any of our services for six months... READ MORE
QQQQ REMAINS ON P&F SELL SIGNAL... Link for todays video. The Nasdaq 100 ETF (QQQQ), S&P 500 ETF (SPY) and Russell 2000 ETF (IWM) capture three important market segments. QQQQ captures technology, IWM reflects the performance of small-caps. SPY covers large-caps and the broader market). As... READ MORE
The S&P 500 ETF (SPY) gapped up on Tuesday and then filled that gap with a long red candlestick on Thursday. The inability to hold the gap is clearly negative. Also notice that volume increased as the ETF declined last week and this week. Click this image for... READ MORE
The indicator summary would be much more negative were it not for strength in the NYSE breadth statistics. NYSE Net New Highs remain positive and the AD Line has yet to break down. Another decline next week would likely push these two indicators into bear mode. Another decline next week... READ MORE
SPY gapped up on Tuesday and then filled that gap with a long red candlestick on Thursday. Some traders apply a three day rule to gaps. A gap that holds three days is valid. One that fails within three days is not. Tuesday's gap has been invalidated. In... READ MORE
S&P 500 STILL ON SHORT-TERM SELL SIGNAL ... The last chart I showed on Tuesday was an hourly bar chart of the S&P 500 with Fibonacci lines drawn over the price. The point of the chart was to show where overhead resistance was likely to appear. [That&... READ MORE
It is one of those times when I can make pretty good arguments for both the bullish and bearish case - short-term and medium-term. This means we could be in for some choppy trading the next few days, weeks or even months. On the bullish side, sentiment seems to be... READ MORE
Half of the 10 most active NYSE stocks on Wednesday came from the finance sector. The Free Charts page at Stockcharts.com shows the 10 most active for the Nasdaq and NYSE. Even though the market was mixed today, nine were up and only one was down. All five financials... READ MORE
ISLAND REVERSALS VIE FOR SHORT-TERM TREND IN SPY... Link for todays video. Even though the month is barely half over, August is full of gaps. Chart 1 shows August starting with a big gap up as the S&P 500 ETF (SPY) surged above 112 to start the month.... READ MORE
Stocks bounced on Tuesday, but I was not impressed with the finish or with breadth. First, let's look at breadth. The charts below show the AD Volume Line and Net Advancing Volume for the NYSE and Nasdaq. NYSE Net Advancing Volume reached the +1000 level four times during... READ MORE
The Shanghai Composite ($SSEC) and the Materials SPDR (XLB) have been moving together in 2010. The moves in XLB are a little more exaggerated, but the positive correlation is clear. Most recently, both bottomed in early July and moved higher the last six weeks. Click this image for a live... READ MORE
SELECT DIVIDEND ISHARES SHOW RELATIVE STRENGTH... My last message suggested that dividend paying stocks (especially telecom and utilities) offered defensive protection in a slowing economy with falling interest rates. The DJ Select Dividend Index Fund (DVY) offers a simple way to take advantage of that dividend benefit. Chart 1 shows... READ MORE
Trend following and mean reversion are two types of trading strategies. Trend followers wait for a reversal and confirmation with a support break or resistance breakout. Mean reversion traders look for overbought or oversold conditions to pick tops or bottoms. The two styles are diametrically opposed, but both systems have... READ MORE
SEMICONDUCTORS HOLDRS TESTS RANGE SUPPORT... Link for todays video. The Semiconductors HOLDRS (SMH) defines the current state of unusual uncertainty in the stock market. Chart 1 shows SMH locked in a volatile trading range since early May. From low to high or high to low, the ETF has moved 10%... READ MORE
Outside of gold, August has been a tough month for commodities. The PerfChart below shows performance for six commodity related ETFs. Only one is up. Metals, Oil and Natural Gas are down rather sharply. Gold, in contrast is up over 2%. In an interesting twist, notice that gold is up... READ MORE
Selling pressure was intense enough to produce a short-term breadth breakdown. The charts below show the 10-day SMA for Net Advancing Volume for the Nasdaq and NYSE. Net Advancing Volume is simply the volume of advancing stocks less the volume of declining stocks. A move above +100 shows a significant... READ MORE
The "Hindenburg Omen" has been getting lots of press this week so I thought I'd put up a chart that people can use to track this elusive prophet of doom. All the different factors that go into the Omen's signal can be found in... READ MORE
GOLD AND EURO RESUME NEGATIVE CORRELATION... Link for todays video. For the most part, Gold and the Euro have been negatively correlated throughout 2010. Negative correlation means one rises when the other one falls and visa versa. Positive correlation means both rise or fall together. Chart 1 shows the Gold... READ MORE
Bonds have been on a tear since April with the 10-Year US Treasury Note ($UST) advancing some 8% in three months. The DJ Corporate Bond Index ($DJCBP) is not far behind with a 4.4% gain since early June. The advances over the last two months are exceptional sharp and... READ MORE
Even though the indicator summary flipped to positive last week, I noted that a sharp decline from current levels could easily flip a few indicators back to the bears. That is indeed what happened. With sharp declines this week, SPY, IWM and QQQQ failed at important resistance zones. The discrepancy... READ MORE
The S&P 500 ETF (SPY) gapped down again on the open, but managed to bounce and close well above its open to form a hollow candlestick. Even so, the ETF closed below its prior close to color the candlestick red. Nevertheless, SPY remains below its support break at... READ MORE
STOCK DIVIDENDS ARE MORE ATTRACTIVE WHEN RATES TUMBLE ... I've read a lot of articles recently about which asset classes (or stock groups) do best in a deflationary environment. In past market messages (which warned of the deflationary threat), I've explained that two asset classes that usually... READ MORE
Stocks were down sharply with a broad based decline on Wednesday, but there were a few stocks swimming against the tide. The S&P Sector Market Carpet provides an easy means to visual scan for green stocks in a sea of red. Carefusion (CFN), Macy's (M), Western... READ MORE
With a gap up, tight consolidation and gap down, the S&P 500 ETF (SPY) formed an island reversal over the last two weeks. It all started with the gap and close above 112 on August 2nd. The ETF traded between 111 and 113 the next six days and... READ MORE
With a gap up eight days ago and a gap down on Wednesday, the Industrials SPDR (XLI) formed an island reversal. Notice how the ETF gapped above 30.5 and largely held above this level for seven days. That ended with a large gap down that signals a reversal. MACD... READ MORE
STOCKS RETHINK FED POLICY STATEMENT... Link for todays video. After bouncing yesterday afternoon, stocks opened sharply lower on Wednesday morning in what looks like a rethink of the Fed policy statement. The prospects of further quantitative easing and even lower interest rates may seem promising on the surface, but one... READ MORE
Even though stocks bounced after the Fed announcement, S&P futures are down sharply in pre-market trading today. European and Asian stocks are also lower this morning. The Euro is getting slammed (130.5) and this may signal a return to the risk-off trade. Earning season is passing, the... READ MORE
FED TO REINVEST MORTGAGE PROCEEDS IN LONG TERM TREASURIES... Although bond yields have been falling (and bond prices rising) for more than four months, bond traders still liked today's Fed announcement that it planned to reinvest mortgage proceeds into long-term Treasuries to increase the money supply and give... READ MORE
Apple (AAPL) continues to consolidation within a relatively narrow range. The stock has traded between 266 and 254.90 for the last 13 days. Falling volatility is confirmed with the Bollinger BandWidth indicator, which shows the bands at their tightest in over five months. The direction of the consolidation break... READ MORE
Don't fight the Fed. This Wall Street motto is as old as the Fed. Even if you doubt the Fed's ability to influence the long-term outcome, the Fed can still affect the short-term expectations. Quantitative easing (QE) is back on the table and this may keep... READ MORE