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FED LEAVES RATES ALONE AS EXPECTED -- RECENT COMMODITY DROP SHOULD ALLEVIATE INFLATION CONCERNS -- FIRM DOLLAR HURTS GOLD -- FINANCIALS, RETAILERS, AND AIRLINES LEAD MARKET BOUNCE -- DESPITE SHORT-TERM IMPROVEMENT, NO CONVINCING SIGNS OF A BOTTOM YET

by John Murphy,

Chief Technical Analyst, StockCharts.com

COMMODITY DROP SHOULD EASE INFLATION ... The Fed left the short-term rate unchanged at 2% today as expected. It did, however, cite growing inflation concerns along with a weakening economy. That's a bad combination. Most of the inflation increases, however, have come from rising commodities. With commodity markets...   READ MORE 

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COMMODITIES AND THEIR RELATED STOCKS CONTINUE TO DROP -- GOLD AND OIL SERVICE INDEXES BREAK SUPPORT -- COPPER DROP HURTS FCX -- JOHNSON & JOHNSON HITS NEW RECORD AND LEADS DRUGS

by John Murphy,

Chief Technical Analyst, StockCharts.com

ALL COMMODITIES ARE IN THE RED ... The CRB Index is trading 12 points lower today with all seventeen commodities in the red. Chart 1 shows the DB Commodities ETF (DBC) falling to a three-month low. The other charts show losses in energy (Chart 2), precious metals (Chart 3), agriculture...   READ MORE 

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EARLY BULLISH SIGNS EMERGING?

by Chip Anderson,

Spotting tops and bottoms is perhaps the best reason for utilizing technical and sentiment indicators in your investing and trading arsenal. The first signs of a bottom forming can be subtle and I'm beginning to see a few. Consumer discretionary stocks, which have been relative laggards during the...   READ MORE 

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IWM AND QQQQ HIT RESISTANCE

by Chip Anderson,

The Russell 2000 ETF (IWM) and Nasdaq 100 ETF (QQQQ) were stifled at resistance this week and the bulls are getting a test. After surging above 69, IWM met resistance at broken support and the 62% retracement mark. QQQQ met resistance at 46 in early July and this level held...   READ MORE 

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RALLY LACKS CONVICTION

by Chip Anderson,

The rally that began nearly three weeks ago, out of the jaws of a potential crash, has become rather unimpressive in the last two weeks. As I said in my last article, the rally seemed to be contrived from the beginning, and support for the rally has faded rather than...   READ MORE 

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QUESTIONS FOR THE FUTURE

by Chip Anderson,

This past July-2008 was a very important month for the capital markets; crude oil peaked and traded lower by -11%. This is rather substantial to be sure, and one would be reasonable to believe that the demand/supply equation coupled with a daily technical oversold condition would push crude...   READ MORE 

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ECONOMISTS ARE LATE AS USUAL

by Chip Anderson,

In a recent Market Message, I discussed how the stock market is a leading indicator of the economy and why it isn't a good idea to use economic forecasting to trade the stock market. Historically, the market turns down at least six months before the economy. Chart 1...   READ MORE 

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USING KELTNER CHANNELS

by Chip Anderson,

Hello Fellow ChartWatchers! Let's start the month of August off right with a good, old-fashioned education article about the modern version of a good, old-fashioned chart overlay, Keltner Channels! Here we go... Keltner Channels are a set of three lines that are overlaid on top of...   READ MORE 

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BAD ECONOMIC NEWS IS LATE AS USUAL -- LOW PUT-CALL RATIO IS BEARISH WARNING -- SENTIMENT INDICATOR SHOWS IMPROVEMENT BUT NO UPTREND -- WHY I PREFER ETFS TO INDIVIDUAL STOCKS -- RAILS AND TRUCKERS WEIGH ON TRANSPORTS

by John Murphy,

Chief Technical Analyst, StockCharts.com

ECONOMISTS ARE LATE AS USUAL... In a recent Market Message, I discussed how the stock market is a leading indicator of the economy and why it isn't a good idea to use economic forecasting to trade the stock market. Historically, the market turns down at least six months...   READ MORE 

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QQQQ AND TECHNOLOGY ARE LAGGING -- QQQQ REMAINS BELOW RESISTANCE -- SURGING OIL LIFTS OVERSOLD ENERGY ETFS -- LONG-TERM TRENDS FOR ENERGY ETFS REMAIN UP

by John Murphy,

Chief Technical Analyst, StockCharts.com

QQQQ SHOWS RELATIVE WEAKNESS ... Today's Market Message was written by Arthur Hill. John Murphy will return tomorrow. - Editor The stock market bottomed on 15 July and surged over the last 11 trading days. Despite this big surge, performance has been unequal among the major index ETFs. Chart 1...   READ MORE 

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FALLING OIL BOOSTS AIRLINES -- SOUTHWEST REMAINS AIRLINE LEADER -- BIOTECHS HAVE BEEN JULY'S STRONGEST GROUP -- AMGEN HAS BEEN A BIOTECH LEADER FOR NEARLY A MONTH -- A STRONGER DOLLAR IS HURTING COMMODITIES AND HELPING STOCKS

by John Murphy,

Chief Technical Analyst, StockCharts.com

OIL RESUMES DOWNTREND... A bounce in the dollar today is causing more selling in commodities. Gold, grains, and oil are all falling as a result. A $3 drop in the price of crude has pushed the United States Oil ETF (Chart 1) below its early June low near 100 and...   READ MORE 

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A LOOK AT FOREIGN STOCK ETFS -- EMERGING MARKET ETF IS HOLDING ABOVE ITS MARCH LOW -- FALLING OIL PRICES ARE HURTING BRAZIL AND RUSSIA BUT HELPING TO STABILIZE CHINA AND INDIA -- MEDCO HEALTH SOLUTIONS TURNS UP

by John Murphy,

Chief Technical Analyst, StockCharts.com

A LOOK AT FOREIGN ETFS... One of our readers asked me to take a look at foreign ETFs. So here they are. Chart 1 shows the EAFE iShares (EFA) having lost 23% from their November peak. That puts them in bear market territory. The EFA chart doesn't look...   READ MORE 

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HEALTHCARE CONTINUES TO ATTRACT NEW MONEY -- BIOGEN IDEC AND JOHNSON & JOHNSON ARE LEADERS -- THREE NEW ONES ARE ABC, BCR, AND VAR -- HOUSING AND FINANCIAL GROUPS LEAD MARKET LOWER -- DOW BACKS OFF FROM INITIAL RESISTANCE BARRIERS

by John Murphy,

Chief Technical Analyst, StockCharts.com

HEALTHCARE SPDR SHOWS RELATIVE STRENGTH ... Healthcare remains the only defensive group showing relative strength. Chart 1 shows the Health Care SPDR (XLV) moving up to challenge its spring highs. Its relative strength line (below chart) is much more impressive. The RS turned up during May (when the last market rally...   READ MORE 

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RUSSELL 2000 REACHES 200-DAY -- A LONG-TERM HEAD-AND-SHOULDERS FOR THE DOW UTILITIES -- MATERIALS SECTOR SHOWS RELATIVE WEAKNESS -- STEEL ETF BREAKS 200-DAY -- LOOKING AT RETRACEMENTS IN THE LAST BEAR MARKET

by John Murphy,

Chief Technical Analyst, StockCharts.com

RUSSELL 2000 SURGES TO 200-DAY ... Today's Market Message was written by Arthur Hill. John Murphy will return tomorrow. - Editor The Russell 2000 surged to its 200-day moving average with an extremely sharp move over the last seven days. This small-cap index showed less weakness by...   READ MORE 

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AIRLINES AND FINANCIALS LEAD MARKET HIGHER -- AMR, CAL, AND LUV BOUNCE OFF LONG-TERM SUPPORT LINES -- SOUTHWEST IS UPSIDE LEADER --AIRLINE RALLY MAY BE ANOTHER SIGN THAT OIL HAS PEAKED

by John Murphy,

Chief Technical Analyst, StockCharts.com

AIRLINE INDEX CLEARS 50-DAY LINE ... Another possible sign that oil prices have peaked was today's spectular rally in airline shares. Chart 1 shows the AMEX Airline Index (XAL) jumping 22% today to make it day's strongest group by far. In addition, the XAL clearled its...   READ MORE 

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MOST COMMODITIES ARE IN CORRECTIONS -- GOLD MAY ALSO BE VULNERABLE AS DOLLAR ETF BOUNCES OFF MARCH LOW -- A POTENTIAL BOTTOM IN US BOND YIELDS MAY HELP STABILIZE THE DOLLAR -- THAT COULD PUT THE COMMODITY UPTREND IN JEOPARDY

by John Murphy,

Chief Technical Analyst, StockCharts.com

ENERGY IS THE LAST COMMODITY GROUP TO ROLL OVER ... I've gotten a lot of questions regarding my article last week about commodities having entered into a downside correction. One reader asked if there were any commodity ETFs in existence. There are several of them. Chart 1 shows the...   READ MORE 

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POOR SENTIMENT, MAX PAIN AND THE BOWLEY TREND

by Chip Anderson,

Tuesday afternoon marked a short-term bottom. In my opinion, we're going to print AT LEAST one more low in time; however, the sentiment had deteriorated on Tuesday to a point where we normally we see a rebound. In addition, there was TONS of net put premium (in-...   READ MORE 

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BAD NEWS FOR BONDS

by Chip Anderson,

After the Producer Price Index (PPI) surged on Tuesday, it was little surprise to see big gains in the Consumer Price Index (CPI) on Wednesday. Bernanke warned of inflation in his congressional testimony last week and the PPI-CPI figures confirm. The CPI surged 5% year-on-year and 1....   READ MORE 

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DISASTER AVERTED, SO FAR

by Chip Anderson,

In my July 3 article I warned that the market was oversold, dangerous, and vulnerable to a crash. On Tuesday of this week, the S&P 500 opened down, breaking significant support, and kept moving lower. I thought to myself, "This is it. Crash in progress." Then...   READ MORE 

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RALLY FORTHCOMING IN HOUSING MARKET?

by Chip Anderson,

Last week may very well have been an important turning point in the US stock market, with the Dow Industrials and the Russell 2000 Small Caps as forming bullish "key reversal" patterns to the upside. This would suggest an increased probability of further strength on the order of...   READ MORE 

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SHORT-TERM SELL SIGNALS GIVEN

by Chip Anderson,

This week's downturn in crude oil prices has had a depressing effect on the entire commodity group. Chart 1 shows the CRB Index (plotted through Thursday) breaking a three-month up trendline (and its 50-day moving average). The 12-day Rate of Change (ROC) line (top of...   READ MORE 

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PINNING DOWN YOUR ANNOTATIONS

by Chip Anderson,

Hello Fellow ChartWatchers! This week I wanted to tell you about a new feature we've just rolled out in our ChartNotes chart annotation tool. It is called "pinning" and it allows you to prevent any of your saved annotations from scrolling to the left over time....   READ MORE 

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COMMODITIES MAY HAVE PEAKED FOR NOW -- WEEKLY AND MONTHY CHARTS SHOW OVERBOUGHT COMMODITIES IN NEED OF A CORRECTION -- COMMODITIES ARE TOO HIGH RELATIVE TO STOCKS

by John Murphy,

Chief Technical Analyst, StockCharts.com

SHORT-TERM SELL SIGNALS GIVEN ... This week's downturn in crude oil prices has had a depressing effect on the entire commodity group. Chart 1 shows the CRB Index (plotted through Thursday) breaking a three-month up trendline (and its 50-day moving average). The 12-day Rate of...   READ MORE 

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ANOTHER OIL DROP BOOSTS MARKET -- ENERGY SPDR BREAKS 200-DAY LINE -- FINANCIALS AND CONSUMER DISCRETIONARY STOCKS LEAD REBOUND -- NASDAQ AND RUSSELL 2000 BOUNCE OFF MARCH LOWS -- MOVING AVERAGE TREND IS STILL DOWN BUT IMPROVING

by John Murphy,

Chief Technical Analyst, StockCharts.com

CRUDE OIL BREAKS SUPPORT... On Tuesday I suggested that the downside correction in energy shares warned of possible weakening in the price of crude. The drop in energy shares became more serious today. So did the drop in crude. Crude oil fell another $4.91 (-3.6%) today. Chart 1...   READ MORE 

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RUSSELL 2000 AND NASDAQ LEAD REBOUND -- FINANCIAL AND CONSUMER DISCRETIONARY SECTORS GET BIG OVERSOLD BOUNCES -- SURGING CPI WEIGHS ON BONDS -- DOW THEORY REMAINS ON SELL SIGNAL

by John Murphy,

Chief Technical Analyst, StockCharts.com

SMALL-CAPS AND TECHS SHOW RELATIVE STRENGTH ... Today's Market Message was written by Arthur Hill. John Murphy will return tomorrow. - Editor It has been a tale of two markets over the last few months. On one side, the Dow Industrials and S&P 500 were weighed down...   READ MORE 

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ENERGY STOCKS CORRECT FURTHER -- THAT MAY HINT AT OIL WEAKNESS -- DEFENSIVE LEADERSHIP STILL FAVORS STAPLES, HEALTHCARE, AND UTILITIES -- NO SIGN OF A BOTTOM YET IN FINANCIALS

by John Murphy,

Chief Technical Analyst, StockCharts.com

ENERGY STOCKS CONTINUE DOWNSIDE CORRECTION ... A big drop in energy prices made energy the day's weakest sector. Actually, energy stocks have been correcting for the past two weeks. Chart 1 shows that the Energy SPDR (XLE) broke its 50-day average a couple of weeks back on heavy...   READ MORE 

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MARKET OFF TO ANOTHER BAD START -- FOREIGN CURRENCIES SURGE AGAINST DOLLAR -- BIOTECHS AND DRUGS CONTINUE TO ATTACT DEFENSIVE MONEY -- DNA BOOSTS BIOTECH HOLDERS -- ABT AND JNJ ARE BIG PHARMA LEADERS

by John Murphy,

Chief Technical Analyst, StockCharts.com

FOREIGN CURRENCIES JUMP ... The U.S. Dollar is coming under a lot of pressure. The most significant drop is against the Euro which touched a new record today (Chart 1). In fact, all major currencies are rallying against the dollar. Charts 2 through 4 show upturns in the British Pound,...   READ MORE 

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FINANCIALS LEAD MARKET LOWER AGAIN -- S&P 500 EMA TREND IS STILL DOWN -- GOLD STOCK ETF BREAKS OUT -- CELGENE AND GENZYME ARE BIOTECH LEADERS -- VIX STILL NOT HIGH ENOUGH TO SIGNAL A BOTTOM

by John Murphy,

Chief Technical Analyst, StockCharts.com

REGIONAL BANKS TUMBLE ... The rout in financial shares continues. Chart 1 shows Bank Regional Holders tumbling to the lowest level in six years. That contributed to more big losses in the entire financial sector. Chart 2 shows the RHK bearing down on its 2002 lows. As has been suggested herein...   READ MORE 

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THE LONG-TERM PICTURE FOR DIA, SPY AND QQQQ -- BREADTH REMAINS WEAK AND WITHOUT A DIVERGENCE -- XLF APPROACHES ITS 2002-2003 LOWS -- ITB STILL UNDERPERFORMING -- BIOTECHS SHOW RELATIVE STRENGTH

by John Murphy,

Chief Technical Analyst, StockCharts.com

TAKING A BIG STEP BACK... Today's Market Message was written by Arthur Hill. John Murphy will return next week. - Editor The stock market is oversold, but just getting even more oversold. Chart 1 shows the Dow Industrials ETF (DIA) moving to a new low for 2008. The Commodity...   READ MORE 

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QQQQ AND IWM MANAGE TO FIRM -- CONSUMER DISCRETIONARY SPDR AND RETAIL SPDR RECORD NEW LOWS -- GOLD SURGES AS DOLLAR SAGS - SECTOR PERFORMANCE SINCE THE OCTOBER AND MAY HIGHS

by John Murphy,

Chief Technical Analyst, StockCharts.com

TO BOUNCE OR NOT TO BOUNCE... Today's Market Message was written by Arthur Hill. John Murphy will return next week. - Editor The major indices surged on Tuesday, pulled back sharply on Wednesday and then firmed on Thursday. Needless to say, there is a serious tug-o-war underway...   READ MORE 

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STOCKS GET COLD FEET -- FINANCIALS ABOUT FACE AND LEAD THE WAY LOWER - HEALTHCARE SHOWS RELATIVE STRENGTH -- USING STOCHASTICS WITH THE SECTOR CARPET

by John Murphy,

Chief Technical Analyst, StockCharts.com

EASY COME EASY GO ... Today's Market Message was written by Arthur Hill. John Murphy will return next week. - Editor After a big rebound in the financial sector on Tuesday, stocks got cold feet on Wednesday and retreated. The major indices closed sharply lower with small-caps and techs...   READ MORE 

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MAJOR INDEX ETFS REBOUND -- IWM AND QQQQ LEAD -- GENTLE BEN FIRES UP FINANCIALS -- U.S. DOLLAR INDEX GETS A BOUNCE -- OIL FALLS FOR SECOND DAY

by John Murphy,

Chief Technical Analyst, StockCharts.com

TECHS AND SMALL-CAPS LEAD MARKET REBOUND ... Today's Market Message was written by Arthur Hill. John Murphy will return next week. - Editor The stock market rebounded on Tuesday with the Russell 2000 ETF (IWM) and the Nasdaq 100 ETF (QQQQ) leading the charge. IWM surged over 3%, while...   READ MORE 

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PANIC AND FEAR? NO SIGNS JUST YET

by Chip Anderson,

I'm the conservative type. I'm also nervous. I never like to see the market fall precipitously while market participants yawn. In a nutshell, that's what we've been seeing. Yes, the talking heads will say the sky is falling, but unfortunately for bulls,...   READ MORE 

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BEAR MARKET EXPANDS!

by Chip Anderson,

Sector performance in May and June shows the bear extending its grip into other key sectors. The Financials SPDR (XLF) and the Consumer Discretionary SPDR (XLY) woke up the bear with dismal performances in May. The first PerfChart shows sector performance from 1-May until 2-June, which is basically...   READ MORE 

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VERY DANGEROUS MARKET

by Chip Anderson,

A bullish take on the stock market would be that (1) market indicators are very oversold, (2) there is a triple bottom setup on the S&P 100 Index, and (3) sentiment polls show a lot of bearishness. I agree that those conditions exist, but we are in a...   READ MORE 

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SITE NEWS: "UNIVERSAL LOGIN" NOW WORKING

by Chip Anderson,

"UNIVERSAL LOGIN" NOW WORKING - We've finally, finally, finally fixed something that has been bugging lots of people for a long time. In the past, we had two very different ways to log into our website. People who subscribed to our Extra or Basic charting service logged...   READ MORE 

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SECTOR ROTATION SAYS BEARISH

by Chip Anderson,

SECTOR ROTATION MODEL... One of our readers asked where we are in the Sector Rotation Model. That model shows the normal sector rotation that takes place at various stages in the business cycle. The chart shows that basic materials and energy are market leaders at a market peak. As the...   READ MORE 

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UNAVOIDABLE BAD NEWS (AND HOW TO AVOID IT)

by Chip Anderson,

Hello Fellow ChartWatchers! This week's edition of ChartWatchers is full of important information including a lively debate about the health of the market - Tom Bowley is actually optimistic (well... somewhat), Arthur Hill not so much. But first, I have several items that are super important for our members:...   READ MORE 

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DEFENSIVE LEADERS ARE KROGER, AMGEN, AND EXELON -- SECTOR ROTATION MODEL FAVORS STAPLES, HEALTHCARE, AND UTILITIES -- WITH MATERIALS PEAKING, ENERGY STOCKS MAY BE VULNERABLE -- WEAK ECONOMIC NEWS IS CONFIRMING WHAT THE MARKET TOLD US SIX MONTHS AGO

by John Murphy,

Chief Technical Analyst, StockCharts.com

DEFENSIVE STOCK LEADERS ... Arthur Hill pointed out again yesterday that defensive groups like consumer staples, healthchare, and utilities have been attracting new money over the past month. By using our Sector Market Carpet, I've isolated a leading stock in each of those three groups. They should offer some...   READ MORE 

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RUSSELL 2000 AND SMALL-CAPS LEAD BROAD DECLINE -- MATERIALS SECTOR BREAKS DOWN -- STEEL STOCKS FEEL THE HEAT -- RAILROADS LEAD THE DOW TRANSPORTS SHARPLY LOWER -- DEFENSIVE SECTORS SHOW RELATIVE STRENGTH

by John Murphy,

Chief Technical Analyst, StockCharts.com

SMALL-CAPS LEAD THE MARKET LOWER ... Today's Market Message was written by Arthur Hill. John Murphy will return tomorrow. - Editor The Russell 2000 led the market lower on Wednesday as selling intensified in small-caps. Chart 1 shows the Russell 2000 relative to the S&P 100,...   READ MORE