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DOW DOWNTREND IS CLEAR WITH SHORT EMA -- DOW THEORY MOVES INTO BEAR MODE -- KEY SECTORS REMAIN IN DOWNTRENDS -- BREADTH INDICATORS HAVE YET TO REVERSE COURSE -- DOLLAR FINDS SUPPORT NEAR RETRACEMENTS -- GOLD AND SILVER TEST IMPORTANT SUPPORT ZONES

by John Murphy,

Chief Technical Analyst, StockCharts.com

DOW DOWNTREND IS CLEAR WITH SHORT EMA... A short exponential moving average offers the best of both worlds: price smoothing and sensitivity. May and June were volatile months for the stock market. The Dow moved within a 1400 point range in May and an 800 point range in June. Over...   READ MORE 

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Fidelity Funds carpet view

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

Even if you do not invest in Fidelity Funds, the Fidelity Funds Carpet can be used to find outperforming and underperforming groups. Over the last 6 days, bond funds have been lagging and international funds have been leading. Within the US, Energy Services are leading and Gold is lagging. Click...   READ MORE 

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Indicator Summary remains decidedly negative

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

Even with this week's bounce, the indicator summary remains decidedly negative. The AD Lines and AD Volume Lines remain in clear downtrends and bullish divergences have yet to appear. NYSE Net New Highs have yet to break down, but have yet to surge higher. The S&P...   READ MORE 

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SPY hits the 50% retracement

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

On the daily chart, SPY remains in a downtrend overall and is currently trading in the middle of its seven week range. This range includes the mid June high around 113 and the early July low around 101. A falling wedge defines the overall downtrend with a resistance zone around...   READ MORE 

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MORE HISTORY ON MOVING AVERAGE CROSSOVERS -- WHY EMA LINES ARE MORE RELIABLE -- THE DIRECTION OF THE 200-DAY MA IS ALSO IMPORTANT -- WEEKLY 13-34 EMA COMBO IS ALSO AT CRITICAL POINT -- PREDEFINED STOCK SCANS REFLECT NEGATIVE TREND

by John Murphy,

Chief Technical Analyst, StockCharts.com

THE 50-200 EMA COMBINATION WORKS BETTER... My Tuesday article on the significance of the "death cross" for the S&P 500 (when the 50-day average crosses below the 200-day) evoked a lot of messages and questions about the reliability of its signals. A number of readers correctly...   READ MORE 

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Relative strength in XLU

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

Over the last 10 trading days, the Utilities SPDR (XLU) is the only sector sporting a gain. Utilities show both absolute and relative strength. Click this image for details...   READ MORE 

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Oversold bounce within a bigger downtrend

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

Stocks surged yesterday with a pretty strong advance. Advances swamped declines and advancing volume far exceeded declining volume - on both the NYSE and the Nasdaq. Volume was light, but volume should be light during the summer so I am not concerned with volume at this point. All sectors were...   READ MORE 

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FINANCE SECTOR LEADS MARKET REBOUND -- AXP, FITB AND PNC LEAD BANKS -- SEMICONDUCTOR HOLDRS BOUNCES OFF RANGE SUPPORT -- ALTR, BRCM AND XLNX LEAD SEMIS -- XLU CONTINUES TO SHOW RELATIVE STRENGTH -- AEP, CMS AND DUK LEAD UTILITIES

by John Murphy,

Chief Technical Analyst, StockCharts.com

FINANCE SECTOR LEADS MARKET REBOUND... Link for todays video. Stocks rebounded with a broad advance that lifted most boats. Advances led declines 6 to 1 on the NYSE and 3.5 to 1 on the Nasdaq. All major indices were up sharply. All sectors were higher with finance leading the...   READ MORE 

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IWM closes weak and leads lower

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

The Russell 2000 ETF (IWM) surged above 61 intraday, but gave up sizable gains and closed near 59. The ETF even closed below last week's low. The indicator window shows the IWM:SPY ratio, which compares small-caps to large-caps. This ratio is moving lower as small-caps lead lower....   READ MORE 

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Stocks fail to hold gains and close weak

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

Stocks were strangely mixed on Tuesday with the large-cap indices edging higher and the small-cap indices falling rather sharply. The S&P 500 and Dow gained around .50%, but the Russell 2000 and S&P 600 SmallCap Index lost around 1.50%. The Russell 2000 was up over...   READ MORE 

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STOCKS BOUNCE WHILE GOLD AND THE DOLLAR SELLOFF -- DOLLAR SELLING BOOSTS FOREIGN ETFS -- AN IMPORTANT MOVING AVERAGE TEST IS TAKING PLACE

by John Murphy,

Chief Technical Analyst, StockCharts.com

GOLD AND DOLLAR DROP TOGETHER... I pointed out last Thursday the simultaneous drop in gold and the dollar, and the fact that both markets had fallen below their 50-day moving averages. I suggested that since both had risen together, it made sense that they should correct together. And they continue...   READ MORE 

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SPX declines 9 out of 10 days

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

The S&P 500 is now down nine of the last 10 days. Notice the nine red candlesticks and the lone black candlestick. In addition, the Commodity Channel Index (CCI) has been oversold since the decline below 1040. Click this image for details...   READ MORE 

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Stocks remain oversold after steep decline

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

After a steep decline the last two weeks, stocks are deeply oversold and pessimism is running rampant. A story on Bob Prechter's "take cover" forecast is the "most emailed" article in the New York Times. The 50-day SMA closed below the 200-day SMA in...   READ MORE 

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VOLATILITY INDICES HOLD THEIR BREAKOUTS -- MATERIAL SPDRS AND BASE METALS ETF CONFIRM DOUBLE TOPS -- HOMEBUILDER ETFS TEST NOVEMBER LOWS -- XLK BREAKS NECKLINE SUPPORT -- SEMICONDUCTOR HOLDRS SHOWS RELATIVE STRENGTH

by John Murphy,

Chief Technical Analyst, StockCharts.com

VOLATILITY INDICES FORM HIGHER LOWS AFTER BREAKOUTS... Link for todays video. The volatility indices held their breakouts and resumed their uptrends with the stock market slide over the last two weeks. Because the S&P 500 Volatility Index ($VIX) and Nasdaq 100 Volatility Index ($VXN) can be rather, well,...   READ MORE 

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China leads lower in 2010

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

Of the six equity indices shown below, the Shanghai Composite ($SSEC) is the weakest in 2010 with a 27.56% loss (year-to-date). The Nikkei 225 ($NIKK), French CAC 40 ($CAC) and London FTSE ($FTSE) are all down double digits. The S&P 500 is holding up relatively well with...   READ MORE 

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Indicator Summary goes more negative

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

With a sharp decline the last two weeks, all indicators are in bear mode. The indicator summary turned negative last Friday (-4) and moved to -10 this week. Oversold conditions and excessive bearish sentiment are the only positives in the stock market right now. This may produce an oversold bounce,...   READ MORE 

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SPY forms hammer after steep decline

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

After a 9 day 9.7% decline from high to low, the S&P 500 ETF (SPY) formed a hammer by closing well above its intraday low. I do not think this was the big selling climax, but it does mark an intraday reversal that could put in a...   READ MORE 

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GOLD TAKES A HIT AS DOLLAR DROPS -- GOLD STOCKS BACK OFF FROM OLD HIGHS -- SHORT-TERM TREND HAS WEAKENED FOR PRECIOUS METAL ASSETS

by John Murphy,

Chief Technical Analyst, StockCharts.com

GOLD AND SILVER BREAK 50-DAY LINES... Gold and silver prices took a hit today for the first time in awhile. So did precious metal stocks. Chart 1 and 2 show the Gold ETF (GLD) and Silver (SLV) falling an average of 4% today on very heavy volume. Both commodity ETFs...   READ MORE 

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I'VE BEEN USING THE 1930S AS MY DEFLATION MODEL FOR THE LAST DECADE -- KONDRATIEFF WINTER HAS BEEN ON TARGET -- GOLD STOCKS AND DEFLATION

by John Murphy,

Chief Technical Analyst, StockCharts.com

GOLD AND DEFLATION... I'm going to be writing about deflation in this message, since that's the only model that seems to have worked over the last decade. But first, I'd like to respond to one of our reader's question about the performance...   READ MORE 

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Nasdaq new 52-week lows expanding

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

New 52-week lows are expanding on the Nasdaq and new 52-week highs are drying up. Net New Highs (new 52-week highs less new 52-week lows) is an easy way to assess the battle for new 52-week extremes. Net New Highs first dipped below -100 in early May and has dipped...   READ MORE 

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The knife continues to fall for SPY

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

Stocks attempted to hold their ground on Wednesday, but afternoon selling pressure drove the major index ETFs below Tuesday's lows. The major index ETFs were down around 1%. All sectors were lower with technology, consumer discretionary and finance leading the way down. Relative weakness in these three reinforces...   READ MORE 

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StochRSI turns oversold for SMH

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

Also known as RSI on steroids, StochRSI is the Stochastic Oscillator applied to RSI values. It becomes overbought and oversold a lot more than both indicators. SMH declined to support in the 25.5-26 area as StochRSI moved below .20 to become oversold. The cup is half full for StochRSI...   READ MORE 

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S&P 500 DECLINES FURTHER WITH A DANGEROUS DIVERGENCE -- BREAKING DOWN THE HEAD-AND-SHOULDERS IN THE S&P 500 -- AN ALTERNATIVE FALLING WEDGE FOR THE S&P 500 -- YEN AND SWISSY RISE IN THE FACE OF UNCERTAINTY

by John Murphy,

Chief Technical Analyst, StockCharts.com

S&P 500 DECLINES FURTHER WITH A DANGEROUS DIVERGENCE ... Link for todays video. After a hair-raising decline on Tuesday, the S&P 500 continued lower on Wednesday. Buyers are simply nowhere to be found ahead of Fridays employment report and the three day weekend. Chart 1 shows the...   READ MORE 

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SPY becomes oversold near May lows

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

At this point the medium-term trends (daily charts) are clearly in bear mode (downtrends). However, the major index ETFs are short-term oversold after sharp declines. In addition, many are trading near potential support from their May lows. "Potential" is the key word here. Support levels are potential in...   READ MORE 

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S&P 500 tests May lows

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

With a sharp decline early Tuesday, the S&P 500 is once again testing the May-June lows. In fact, this test also involves the February low. The 1040 level held in February, late May and early June. Can it handle another assault? Click this image for a live chart....   READ MORE 

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STOCKS AND COMMODITIES CONTINUE TO FALL AS BONDS RALLY -- ONCE AGAIN, FOREIGN STOCKS LEAD GLOBAL DECLINE -- MORE 200-DAY AVERAGES ARE BEING BROKEN -- REVIEW OF POTENTIAL DOWNSIDE TARGETS

by John Murphy,

Chief Technical Analyst, StockCharts.com

DOWNGRADE OF CHINA GROWTH CONTRIBUTES TO SELLING ... As has been the case since the market top in May, foreign stocks are leading the global retreat in stocks. Today's main headline was a downgrade in Chinese economic growth. That's not too much of a surprise to those...   READ MORE 

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SPY forms triangle within downtrend

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

The demise of the consumer discretionary remains the most important event of the last few weeks. The Consumer Discretionary SPDR (XLY) was holding up fine in May, but came down hard in June and is the weakest of the eight sectors this month. Consumer discretionary is no ordinary sector. It...   READ MORE 

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Gold ETF battles resistance

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

For the second time in two weeks, the Gold ETF (GLD) surged above resistance at 122 and then moved back below with a long red candlestick. The overall uptrend in GLD remains in place, but there is considerable resistance in this area. First support is set at last week'...   READ MORE 

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MOMENTUM TURNS BEARISH FOR MATERIALS SPDR -- A KEY TEST FOR THE STEEL ETF -- CONSUMER STAPLES LEAD MIXED MARKET -- TOBACCO STOCKS LEAD CONSUMER STAPLES HIGHER -- EURO ETF CONSOLIDATES AT RESISTANCE -- INTEREST RATES CONTINUE TO FALL

by John Murphy,

Chief Technical Analyst, StockCharts.com

MOMENTUM TURNS BEARISH FOR THE MATERIALS SECTOR... Link for todays video. The Materials SPDR (XLB) showed some relative weakness on Monday as the sector with the second largest loss (behind energy). Chart 1 shows XLB with a rather volatile range since late May. XLB tested the February low with two...   READ MORE 

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SPY forms spinning top near key retracement

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

After a four day decline, SPY formed a big spinning top to establish a potential support zone around 107-108. These candlesticks have small bodies and long upper/lower shadows. The small bodies reflect little change from open to close. The upper and lower shadows indicate movement during the day that...   READ MORE 

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SPY FORMS LOWER HIGH WITH WEEKLY REVERSAL -- NASDAQ AD VOLUME LINE FAILS TO BREAK RESISTANCE -- NYSE AD LINE FORMS LOWER HIGH AS SMALL-CAPS WEAKEN -- NET NEW HIGHS TURN NEGATIVE -- CONSUMER DISCRETIONARY AND FINANCE WEIGH ON MARKET

by John Murphy,

Chief Technical Analyst, StockCharts.com

SPY FORMS LOWER HIGH WITH WEEKLY OUTSIDE REVERSAL... Link for todays video. The long-term uptrend is in jeopardy after the major index ETFs reversed near key retracements and formed lower highs. Stocks peaked in April with the major index ETFs declining sharply in April-May. After battling support from the February...   READ MORE 

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Negative MACD for Euro Top 100 Index

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

The Euro Top-100 Index ($EUR) is forming a potentially lower high with bearish momentum. After a bounce in June, the index reversed course this week with an outside reversal well below the April high. MACD moved into negative territory in late May and remains in negative territory. Click this image...   READ MORE 

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Indicator Summary flips back to negative

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

There have been three changes in the last three weeks. The summary turned negative on 11-June, positive on 18-June and negative again on 24-June. Interpretation of these indicators is somewhat subjective. For instance, the NYSE AD Line appears to be forming a lower high with this week's sharp...   READ MORE 

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SPY extends short-term downtrend

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

The daily chart is looking rather ugly. It all started with Monday's reversal day near the 50% retracement. Selling pressure continued on Tuesday with a move below the resistance breakout. A little uncertainty surrounding the Fed announcement made for indecisive trading on Wednesday, but no gains were to...   READ MORE 

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A weekly outside reversal working for $DIA

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

As of late Thursday afternoon, the Dow SPDR (DIA) was forming a weekly outside reversal. Notice how Monday's trading started above last week's close and is now below last week's open. This week's reversal has completely engulfed the prior white candlestick. Click...   READ MORE 

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LINK BETWEEN BONDS AND STOCKS CHANGED IN 1998 -- FALLING BOND YIELDS ARE NOW BAD FOR STOCKS -- FALLING RETAIL STOCKS ARE ANOTHER SIGN OF WEAKNESS -- SO ARE DROPS IN HOME DEPOT AND LOWES -- 13 AND 34 DAY EMA LINES ARE STILL NEGATIVE

by John Murphy,

Chief Technical Analyst, StockCharts.com

WHY I WROTE SECOND INTERMARKET BOOK ... In my 1991 intermarket book, I wrote that bond and stock prices generally trended in the same direction. That meant that bond yields and stocks trended in opposite directions. In the three decades between the 1970s and 1990s, falling bond yields were good for...   READ MORE 

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SPY consolidates below support break

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

On the daily chart, SPY failed to hold the breakout at 110.5 and remains below support from broken resistance. Is this just a pullback or the start of a bigger decline? Ideally, a pullback should be a little tamer. The sharp Monday-Tuesday reversal day is dominating the picture here....   READ MORE 

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DIA TESTS BROKEN RESISTANCE -- SPY FAILS TO HOLD BREAKOUT -- BOND ETF BREAKS RESISTANCE -- DOLLAR DIPS AS EURO BOUNCES -- GERMANY AND THE NETHERLANDS LEAD EUROPEAN STOCKS -- FRANCE HITS RESISTANCE AS ENGLAND LAGS

by John Murphy,

Chief Technical Analyst, StockCharts.com

DIA TESTS BROKEN RESISTANCE... Link for todays video. The Fed left rates unchanged and indicated that it would continue to do so for an extended period of time. Nothing new here. The Fed also noted that the European debt crisis could have an adverse affect on US growth. Stocks finished...   READ MORE 

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Markets turn defensive ahead of Fed

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

The PerfChart below shows the performance for five intermarket related ETFs over the last two days. Stocks and the oil are down as money moved out of risk ahead of Wednesday's FOMC policy statement. Conversely, bonds, gold and the Dollar are up as money moved into relative safety....   READ MORE 

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SPY breaks support ahead of FOMC

by Arthur Hill,

Chief Technical Strategist, TrendInvestorPro.com

Stocks took it on the chin Tuesday with big losses in the major index ETFs. The Russell 2000 ETF (IWM) and S&P 400 MidCap ETF (MDY) led the way lower with losses greater than 2%. All sectors were down with energy, materials, utilities, industrials and consumer discretionary losing...   READ MORE