MORE DRUG LEADERS ... In my earlier market message, I showed today's explosive upmove in the pharmaceutical group -- spearheaded by Johnson & Johnson. I mentioned, however, these next two stocks who also qualify as drug leaders. The weekly bars in Chart 1 show Abbott Labs trading over 45 for... READ MORE
HEALTHCARE IS TOP SECTOR... I've been writing recently about the revival in the Healthcare sector. Today it looks like the healthiest part of the market. On Tuesday I showed the Health Care Select Sector SPDR (XLV) closing over its 200-day average for the first time since June,... READ MORE
FOREIGN PURCHASES OF US ASSETS ARE SLOWING... The recent bounce in the dollar -- and the pullback in foreign currencies -- didn't last long. The dollar is falling sharply again today and foreign currencies are jumping. Chart 1 shows the Euro having bounced off initial support at its (dashed) 20-... READ MORE
ENERGY AND THEN STAPLES... Market sectors have a tendency to show market leadership in a certain order. They don't always follow the order exactly, but there is a strong tendency not to get too far out of line. Chart 1 shows the "ideal" order during an... READ MORE
CRUDE OIL TESTING $40 SUPPORT... Last week's price drop has pushed crude oil within a dollar of potential long-term support around $40. I've written a few times about my belief that $40 would be the new floor under the oil market. That belief is being... READ MORE
CAMPBELL SOUP IS HEATING UP ... I wrote yesterday about new buying in the consumer staple group and showed a handful of recent stock leaders. With all the recent attention being given to basic material, gold, oil, and technology stocks, it's possible that a lot of investors may be... READ MORE
WHAT ABOUT THE 50-DAY AVERAGE?... I received several questions about my piece on the short-term breakdown in the Semiconductor (SOX) Index yesterday. One asked if it wasn't too soon to abandon semiconductors since the SOX was still over its 50-day average. I totally agree. And... READ MORE
NEW SIGNS OF STRENGTH ... Yesterday I wrote about how the healthcare sector was starting to move up in the relative strength rankings. I mentioned that over the previous week, HC had moved into third place behind technology and consumer staples. One of our readers asked if new buying in HC... READ MORE
ALTERA AND XILINX FALL HARD ... Both chip stocks cut earnings forecasts and are falling heavily today on rising volume. Charts 1 and 2 show the chart damage being done. Both stocks have gapped beneath moving average lines and previous breakout points along thier September/October highs. With the trading day... READ MORE
BIOTECHS ARE DAY'S STRONGEST GROUP ... Biotech stocks are not only helping the healthcare sector today; they're also the day's strongest industry group. And their charts are starting to look more promising. Chart 1 shows the Biotechnology Index in an apparent "ascending triangle"... READ MORE
FOREIGN CURRENCIES ARE FALLING ... A sharp rebound in an oversold dollar is causing heavy selling on foreign currencies. Chart 1 shows the Euro gapping down to 132 today and nearing a test of its 20-day moving average. The Japanese yen has already broken that initial support line and is... READ MORE
COMMODITY STOCKS ARE FALLING ... Almost anything related to commodities fell hard today. Gold stocks have been falling for a week. And so have oil stocks. Another big drop in crude today pushed the Energy Select Sector SPDR ( XLE) under its 50-day moving average for the first time in three... READ MORE
REVISITING NETWORKERS... Back in mid-November, I wrote about the Network iShares (IGN) breaking through their 200-day moving average (see red circle) and starting to move from technology laggards to leaders November 15, 2004. That leadership is continuing today. In fact, the IGN is the day's strongest... READ MORE
INTEL TRYING TO HOLD GAP AREA... I'm going to take a close look at Intel because of its importance in the Semiconductor (SOX) Index and the Nasdaq market (not to mention the Dow and the S&P 500). A bullish report last Thursday caused Intel to gap... READ MORE
While the Nasdaq trades near a 52-week high, the Semiconductor HOLDRS (SMH) remains well below its Jan-04 high and has shown relative weakness over the last few months. There is also a split within the group as Applied Materials challenges resistance and Micron Technology (MU) tests support. Until... READ MORE
When there is weak cash flow into Rydex Precious Metals Fund it is a fairly reliable warning to expect price weakness in the short-term, and sometimes the corrections can be quite severe. As a general rule we expect cash flow to more or less follow prices -- when prices are... READ MORE
Today we look at the high relative valuation of Consumer Discretionary vs. Staples stocks. Current levels have not been seen; at the 2000 high in which the bubble burst', the ratio stood near 1.40. We believe that this stretched valuation' argues for one to reassess their portfolios... READ MORE
The last paragraph in the September 23 report carried the headline: LONG TERM IMPLICATIONS FOR STOCKS AREN'T GOOD. To repeat what I wrote then, "An October pullback in oil would probably be helpful to the stock market during the fourth quarter. The ability of oil to stay... READ MORE
Happy Holidays! Welcome to this special holiday edition of ChartWatchers! This time around John explains why $40 is such an important number of Oil prices, Richard explains why he'd buy Coke but sell McDonalds, Carl has a chart that explains while Precious Metal prices are headed lower, and... READ MORE
P&F CHART OF NASDAQ 100 ... The main benefit of point & figure charts is that they give precise buy and sell signals. A buy signal occurs when a column of x's exceeds a previous x column. A sell doesn't occur until a column of... READ MORE
OCTOBER TOP IS NORMAL... Since the direction of crude oil is so important to the stock market, and because I've received so many questions on the energy sector this week, I'd like to spend more time on the subject. Before doing so, however, I'd... READ MORE
LONG-TERM CHART OF OIH ... Once again, I need to clarify the difference between short and long-term market action. A reader recently asked where the next upside target for the OIH was. I showed the following chart with an upside target near 98. That was a long-term projection.... READ MORE
ENERGY CONTINUES TO CORRECT ... With crude oil falling another dollar today, energy stocks remain on the defensive. The weakest part of the energy sector -- oil service -- is falling the hardest. Chart 1 shows the Oil Service Holders (OIH) breaking their 50-day average. A further drop to the early November... READ MORE
CRUDE DROPS $3.64 ON THE DAY ... Crude oil plunged over $3 today (-7.4%) and is on the verge of undercutting its mid-November low. That took place after crude had recovered half of its recent price drop from $55 to $45, and suggests the likelihood that it will... READ MORE
DROP IN OIL HURTS OSX -- SOX IS RETESTING 200-DAY LINE ... The market is reacting very positively to today's big drop in the price of crude. As a result, Energy is one of the few sectors in the red today (along with Utilities. More on the utility selling... READ MORE
GATEWAY HITS 52-WEEK HIGH ... Even on a relatively flat market day, there's always something going up. Today it was Gateway. The stock was the biggest percentage gainer in the S&P 500. And its daily bars in Chart 1 pretty much speak for themselves. GTW broke... READ MORE
STOCK PLUNGES 3.4% ... Retailers are the day's weakest stock market group. The main reason is today's 3.4% plunge in the stock of Wal-Mart which is the world's largest retailer. In so doing, the stock is suffering some serious chart damage. Just... READ MORE
FEAR OF LESS FOREIGN BUYING ... Not too long ago I wrote that there were two main side-effects that would flow from a falling dollar. One was, of course, higher commodity prices. The other was the flow of funds into foreign markets. Money tends to flow from countries with falling... READ MORE
TURKEY BOUNCE STILL FAVORS VALUE... The market enjoyed its traditional pre-Thanksgiving bounce. All the major averages ended the day in plus territory with the the S&P 500 closing up nearly 5 points. The hourly bars in Chart 1 show, however, that the S&P 500 is... READ MORE
BE CAREFUL WITH THE DOLLAR... If you've been reading my commentary for any length of time, you'll know that I've been bearish on the dollar for more than two years. My book on Intermarket Analysis, which was written last year, devoted a lot of... READ MORE
SMALL CAPS STILL LEAD LARGE CAPS ... Small caps have been the best performers by size this year. The Russell 2000 Small Cap Index has gained 11% this year versus 6% for the large cap Russell 1000 Index and the S&P 500 Large Cap Index. Midcaps came in second... READ MORE
TIPS ARE INFLATION PROTECTED BONDS... With all the talk about protecting oneself against rising inflation pressures resulting from higher commodities and a falling dollar, it's worth considering Inflation Protected Securities (or TIPS). These are Treasury bonds that are indexed to the rate of inflation as measured by the... READ MORE
ANOTHER LOOK AT THE CRB/SPX RATIO ... One of our newer readers expressed puzzlement at the ratio of the CRB/S&P 500 chart that I showed on Friday. The chart is a ratio of the CRB Index (representing commodities). The point of the chart was simply to show... READ MORE
A CORRECTION ... In my Friday evening message, I mentioned that the 1140 level for the S&P 500 was important because it represented a couple of percentage retracement levels. One of our readers pointed out, however, that one of the numbers was incorrect. Here are the right numbers. Chart... READ MORE
For an idea of how a FUTURE trend reversal might look, traders may wish to focus on the August low and think inverted. The July-August downtrend was defined by a falling price channel and a Stochastic Oscillator below 20. Notice that the Stochastic Oscillator moved above 20 for a... READ MORE
The market has finally broken out of the 2004 trading range, but many people are worried that the move could be a bull trap. One way to judge the authenticity of a move is to see how many stocks and/or sectors are participating in it. To do this we... READ MORE
The recent rally to new highs in the S&P 500 large cap, S&P 400 mid-cap and S&P 600 small -cap is suspect. While higher prices may be offing in the near-term, we believe this rally could be terminal in nature given several... READ MORE
The daily chart for the S&P 500 for the last year pretty much tells the tale. The trend is still up. But its 14-day RSI line is in overbought territory for the first time since last January. Its daily MACD lines are also up against their early... READ MORE
Law #11: KEEP LEARNING Law #11: Technical analysis is a skill that improves with experience and study. Always be a student and keep learning. - John Murphy This may be THE most important law of all. The instant you think you've learned everything there is to know about Technical... READ MORE
ANOTHER LOOK AT RSI AND ADX ... It looks like I got a little too cute with my short-term reading of the RSI and ADX lines. Since I've gotten several questions on them, and given today's stock selling, I need to do some more explaining (and... READ MORE