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ALTHOUGH THE DOW IS TESTING ITS 2000 PEAK, SOME MARKET INDEXES HAVE ALREADY REACHED NEW RECORDS AND SOME AREN'T EVEN CLOSE -- THE DOW FELL THE LEAST AFTER 2000 AND HAS RISEN THE LEAST SINCE 2003

by John Murphy,

Chief Technical Analyst, StockCharts.com

THE TWO OTHER DOW AVERAGES HAVE EXCEEDED THAT HIGH ... Everyone's attention is fixed on the Dow Jones Industrials' challenge of the all-time high reached in January 2000. Which begs the question as to how significant that previous peak has been for the entire market. For a lot...   READ MORE 

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A LOOK AT DOW LEADERS AS IT TESTS ALL-TIME HIGH -- MOST DOW STOCKS AREN'T EVEN CLOSE TO NEW RECORDS -- GE TRIES TO PLAY CATCH-UP

by John Murphy,

Chief Technical Analyst, StockCharts.com

DOW IS TESTING ITS ALL-TIME HIGH ... If you read newspapers or listen to radio or TV, you're no doubt aware that the Dow Industrials are within a hair of their January 2000 intra-day record at 11750. Chart 1 shows the Dow approaching that very important test. I thought...   READ MORE 

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GOLD AND ENERGY STOCKS ARE BOUNCING OFF CHART SUPPORT AS DOW TESTS MAY HIGH

by John Murphy,

Chief Technical Analyst, StockCharts.com

ENERGY STOCKS BOUNCE OFF 2006 LOWS... Over the last couple of months, energy stocks have gone from one of the market's strongest groups to one of the weakest. At the same time, energy prices have fallen sharply. Charts 1 and 2 show, however, that both markets are attempting...   READ MORE 

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A BULLISH AND BEARISH CASE FOR THE DOLLAR -- THE YIELD CURVE IS POTENTIALLY BEARISH -- GLOBAL MONEY FLOWS, HOWEVER, COULD SUPPORT THE DOLLAR -- WATCHING THE LOONIE

by John Murphy,

Chief Technical Analyst, StockCharts.com

INVERTED YIELD CURVE IS POTENTIALLY DOLLAR BEARISH ... Last Thursday I showed a potential "head and shoulders" bottom forming in the U.S. Dollar. I received a number of e-mails questioning a bullish case for the dollar. The main bearish argument for the dollar has to do with a...   READ MORE 

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RELATIVE WEAKNESS IN EMERGING MARKTS AND SMALL CAPS SHOWS MORE RISK AVERSION -- SO DOES THE BUYING OF BONDS AND DIVIDEND-PAYING STOCKS -- DOW'S LEADERSHIP COMING FROM DRUGS AND TELECOM

by John Murphy,

Chief Technical Analyst, StockCharts.com

EMERGING MARKETS ARE UNDERPERFORMING ... Yesterday I wrote about how foreign markets had been underperforming the U.S. market since May. I also recently wrote that the peak in commodity markets could start to have a negative impact on countries tied to commodity markets like Canada as well as emerging markets....   READ MORE 

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FIRMING DOLLAR PULLS COMMODITIES LOWER -- GOLD / DOLLAR LINK REMAINS STRONG -- HEAD AND SHOULDERS DOLLAR BOTTOM?

by John Murphy,

Chief Technical Analyst, StockCharts.com

STRONGER DOLLAR HURTS COMMODITIES... One of the constant intermarkets principles is that the U.S. Dollar trends in the opposite direction of commodity prices. Chart 1 shows how well that inverse relationship has worked over the last sixteen years. Notice in particular that the major peak in the Dollar Index...   READ MORE 

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FIRMING DOLLAR IS CAUSING WORLD MARKETS TO LAG BEHIND THE U.S. -- WORLD INDEX HAS ALREADY REACHED MAJOR RESISTANCE BARRIER

by John Murphy,

Chief Technical Analyst, StockCharts.com

WORLD INDEX IS LAGGING BEHIND THE US ... I ended last night's message with the following chart to show that foreign stocks have been lagging behind the U.S. during the recent rally. The black bars in Chart 1 show the S&P 500 challenging its May peak....   READ MORE 

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MARKET RALLIES ON FED INACTION -- NASDAQ REGAINS ITS 200-DAY LINE -- ORACLE BOOSTS SOFTWARE HOLDERS

by John Murphy,

Chief Technical Analyst, StockCharts.com

FED HOLDS RATES STEADY... To no one's surpise, the Fed left short-term rates unchanged today. The combination of falling commodity prices, lower inflation numbers, and the threat from a weak housing sector made another rate hike highly unlikely. The market was rallying into the news and stayed firm...   READ MORE 

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WEAK HOUSING AND NEGATIVE PPI BOOST BONDS -- YAHOO PULLS NASDAQ BELOW 200-DAY AVERAGE -- S&P 500 STRUGGLES NEAR MAY PEAK

by John Murphy,

Chief Technical Analyst, StockCharts.com

BOND ETF HITS NEW HIGH ... Chart 1 shows the 7-10 Year Treasury Bond ETF (IEF) over the last eighteen months. I showed a similar chart last Friday to demonstrate how lower inflation pressures (signalled by falling commodity prices) were giving a boost to bond prices. We're seeing more...   READ MORE 

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FALLING CRB BOOSTS BONDS -- ROTATION OUT OF ENERGY INTO CONSUMER DISCRETIONARY STOCKS -- BULLISH PERCENT INDEX TURNS UP -- FOUR-CYCLE LOW IS DUE THIS YEAR -- FALLING COMMODITIES ARE HURTING CANADA

by John Murphy,

Chief Technical Analyst, StockCharts.com

FALLING COMMODITIES BOOST BOND PRICES... The biggest story in the financial markets has been the breakdown in commodity prices and energy in particular. One of the immediate beneficiaries of falling commodities is usually the bond market. That's because bond prices are very sensitive to inflation trends. Historically, bond...   READ MORE 

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BROKERS BREAKOUT TO THE UPSIDE -- THAT'S GOOD NEWS FOR THE MARKET -- RECENT ROTATIONS SHOW MORE OPTIMISTIC MOOD

by John Murphy,

Chief Technical Analyst, StockCharts.com

BROKERS PLAY CATCH-UP TO FINANCIALS ... The financial sector has been one of the market's strongest groups all year. That can be seen by the rising relative strength ratio of the Financials Sector SPDR (XLF) in Chart 1. Chart 1 also shows the XLF trading above its May peak...   READ MORE 

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FALLING ENERGY PRICES BOOST RETAILERS WHICH SHOW NEW LEADERSHIP -- FALLING BOND YIELDS BOOST OVERSOLD HOMEBUILDERS -- DOW HITS NEW FOUR-MONTH HIGH

by John Murphy,

Chief Technical Analyst, StockCharts.com

FALLING OIL BOOSTS RETAILERS ... Over the last year, one of the market sectors most hurt by rising energy prices has been retailers. With oil prices falling to a five-month low, however, retailers have become one of the market's strongest groups. To show how closely the two markets are...   READ MORE 

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GOLD BREAKS ITS SUMMER LOWS AS COMMODITY PRICES CONTINUE TO FALL -- CRB INDEX HITS NEW 2006 LOW -- THAT MAY BE GOOD NEWS ON INFLATION BUT HINTS AT ECONOMIC SLOWING

by John Murphy,

Chief Technical Analyst, StockCharts.com

GOLD TUMBLES BELOW SUMMER LOW... Gold and silver have succumbed to selling pressure that has weighed on most commodity markets over the last month. With energy prices falling, and the CRB Index having broken its summer low, the entire commmodity price structure is crumbling. I thought that a weaker dollar...   READ MORE 

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SEPTEMBER SELLING CONTINUES -- MACD LINES TURN NEGATIVE -- MACD HISTOGRAM GAVE EARLIER SIGNAL OF A WEAK RALLY

by John Murphy,

Chief Technical Analyst, StockCharts.com

S&P GIVES SHORT-TERM SELL SIGNAL ... The market continued its early September slide today. Several of our short-term technical indicators have turned negative. One of them them is the daily MACD (which happens to be one of my favorite indicators). Chart 1 shows the S&P 500 sliding...   READ MORE 

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GOLD FALLS ON FIRMER DOLLAR -- FALLING ENERGY PRICES PULL CRB EVEN LOWER -- COMMODITY ETF IS ALSO ON THE DEFENSIVE

by John Murphy,

Chief Technical Analyst, StockCharts.com

GOLD ETF GAPS DOWN ... The price of gold is falling pretty hard today. By early afternoon, the Gold ETF (GLD) is down the equivalent of $16. Silver is falling as well along with most other commodities. Chart 1 puts today's gold selling into the context of its two-month...   READ MORE 

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MARKET PULLS BACK FROM OVERBOUGHT CONDITION -- SMALL CAPS AND NASDAQ ARE STILL BELOW 200-DAY LINE -- DOW TRANSPORTS REMAIN WEAK -- WATCH OUT FOR HEAVIER DOWNSIDE VOLUME IN SEPTEMBER

by John Murphy,

Chief Technical Analyst, StockCharts.com

SMALL CAPS CONTINUE TO LAG ... Last Friday I showed the Nasdaq Composite entering a resistance zone marked by its early July peak at 2190 and its 200-day moving average. I wrote that what the Nasdaq did in that zone would tell us a lot about its real strength and that...   READ MORE 

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GOLD INDEXES BREAKOUT TO THE UPSIDE AS GOLD JUMPS $13 -- FREEPORT MCMORAN COPPER AND GOLD BREAKS OUT ON METAL GAINS

by John Murphy,

Chief Technical Analyst, StockCharts.com

GOLD INDEXES BREAK OUT... Both of the precious metal stock indexes that I follow are breaking out to the upside today. Charts 1 shows the AMEX Gold Bugs Index (HUI) breaking through its summer highs to the highest level since mid-May. Chart 2 shows the PHLX Gold & Silver Index...   READ MORE 

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GOLD LOOKS UNDERVALUED RELATIVE TO OIL -- DOW COMPOSITE INDEX STILL IN TRADING RANGE -- NASDAQ NEARS MOMENT OF TRUTH

by John Murphy,

Chief Technical Analyst, StockCharts.com

GOLD IS DOING BETTER THAN OIL ... I've recently turned more cautious on the oil sector while turning more optimistic on precious metals. That may seem like a contradiction since both are commodity markets and do have some historical correlation. Part of my reasoning is based on fundamental considerations....   READ MORE 

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SILVER REACHES NEW RECOVERY HIGH -- ANOTHER LOOK AT PRECIOUS METAL LEADERS -- GOLDCORP BUYS GLAMIS

by John Murphy,

Chief Technical Analyst, StockCharts.com

GLAMIS JUMPS 20% ... The announcement that Goldcorp (GG) is buying Glamis Gold (GLG) is causing dramatic swings in both gold stocks. Chart 1 shows Glamis Gold surging nearly 20% (on massive volume) to a new 52-week high. At the same time, Goldcorp is falling 8.5% on heavy volume. It&...   READ MORE 

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ENERGY STOCKS BREAK 50-DAY AVERAGE -- CRB INDEX VIOLATES JUNE LOW -- ECONOMIC SLOWING FAVORS BONDS OVER STOCKS

by John Murphy,

Chief Technical Analyst, StockCharts.com

SHORT-TERM ENERGY TREND TURNS DOWN... With energy prices continuing to drop, selling pressure has intensified in energy stocks. On Monday, I warned that the Energy Sector SPDR (XLE) was headed for a test of its 50-day moving average. Chart 1 shows the XLE breaking that support line today. That'...   READ MORE 

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BIG DROP IN OIL HELPS MARKET RALLY -- COMMODITIES CONTINUE TO SOFTEN -- HEALTHCARE ETF NEARS RECORD HIGH

by John Murphy,

Chief Technical Analyst, StockCharts.com

HURRICANE MISSES GULF COAST... News that a hurricane threat to oil refineries in the Gulf of Mexico had passed caused heavy selling in the energy pits today and took most other commodity markets lower as well. Crude oil prices fell more than $2.00. Chart 1 shows the nearby futures...   READ MORE 

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DEFENSIVE STOCKS ARE 2006 LEADERS WHILE HOUSING IS YEAR'S WEAKEST GROUP -- PHARMACEUTICALS GET STRONGER WHILE TRANSPORTS SINK

by John Murphy,

Chief Technical Analyst, StockCharts.com

2006 LEADERS... If you glance at "John's Latest Performance Chart" you'll see the best and worst group performances for the first eight months of 2006. It shows the six top performers for the year compared to the four worst. The six winners have something...   READ MORE 

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CRB INDEX STILL TESTING JUNE LOW -- A REVIEW OF SOME COMMODITY INVESTMENTS

by John Murphy,

Chief Technical Analyst, StockCharts.com

CRB INDEX TESTING JUNE LOW ... Last week I showed the Reuters/Jefferies CRB Index slipping beneath its 200-day moving average and warned that it was starting to look toppy. The real key to the chart, however, is the ability of CRB Index to stay above its June low at 329....   READ MORE 

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CRB INDEX BREAKS 200-DAY AVERAGE AS CRUDE OIL FALLS TO TWO-MONTH LOWS -- FALLING COMMODITIES CARRY MESSAGE OF LOWER INFLATION AND A WEAKER ECONOMY

by John Murphy,

Chief Technical Analyst, StockCharts.com

CRB BREAKS 200-DAY AVERAGE ... I wrote yesterday about recent selling in commmodity pits pushing the Reuters/Jefferies CRB Index into a test of its 200-day average. Today's five point drop has pushed it below that long-term support line in pretty decisive fashion (see red arrow). Chart 1 shows...   READ MORE 

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WEAK CPI REPORT BOOSTS BONDS AND STOCKS -- FALLING DOLLAR BOOSTS GOLD -- S&P 500 REACHES NEW THREE-MONTH HIGH

by John Murphy,

Chief Technical Analyst, StockCharts.com

JULY CPI HAS SLOWEST GAIN IN FIVE MONTHS ... The market got a second dose of good news on inflation in two days. On the heels of yesterday's weak PPI number, today's report showed a gain of only 0.2% in the July core CPI number which...   READ MORE 

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JULY DROP IN CORE PPI STRENGTHENS BONDS AND STOCKS -- SOFTWARE AND CHIPS HELP PULL NASDAQ OVER 50-DAY AVERAGE

by John Murphy,

Chief Technical Analyst, StockCharts.com

WEAK PPI BOOSTS BONDS AND STOCKS... Core inflation at the producer level fell unexpectedly during July. Since inflation is the most closely watched figure these days (because of its impact on Fed decision-making), bonds and stocks rallied on the news. The dollar dropped. For the first time in awhile, today&...   READ MORE 

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MARKET HAS SECOND THOUGHTS ABOUT FED BEING DONE -- THAT'S BOOSTING THE DOLLAR AND CAUSING PROFIT-TAKING IN GOLD -- SMALL CAP GROWTH IS STILL THE WEAKEST GROUP

by John Murphy,

Chief Technical Analyst, StockCharts.com

STRONG RETAIL NUMBERS AND IMPORT PRICES ... The market is having second thoughts about the Fed being done with its rate hiking. A strong retail report today and a big jump in import prices suggest that the economy and inflation may be a little stronger than expected. I agree with the...   READ MORE 

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SILVER CONTINUES TO LEAD GOLD HIGHER -- A LOOK AT GOLD AND SILVER LEADERS

by John Murphy,

Chief Technical Analyst, StockCharts.com

GOLD ETF NEARS WEEKLY BUY SIGNAL ... I suggested yesterday that gold could be one of the biggest beneficiaries of Fed inaction on rates. That was predicated on my view that the dollar would weaken. In today's trading, the dollar is indeed dropping and gold prices are rising. This...   READ MORE 

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MARKET SELLS OFF ON FED PAUSE -- UTILITIES GAIN WHILE TRANSPORTS FALL -- CONSUMER STAPLES REMAIN MARKET LEADERS -- RETAILERS AND HOMEBULDERS LEAD DAY'S DECLINE

by John Murphy,

Chief Technical Analyst, StockCharts.com

RETAILERS AND HOMEBUILDERS FALL... The Fed paused today as pretty much everyone expected. Unfortunately, the stock market fell on the news. Part of the reason may have had to do with the wording of the accompanying statement. The Fed acknowledged economic slowing, especially in the housing sector. Its claim (or...   READ MORE 

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WEAK JOBS REPORT HELPS BONDS BUT HURTS DOLLAR -- THAT SHOULD HELP GOLD -- DEFENSIVE INVESTORS SHIFT TO LARGE CAP VALUE STOCKS -- A MIXED MESSAGE FOR STOCKS

by John Murphy,

Chief Technical Analyst, StockCharts.com

BOND YIELDS HIT FOUR-MONTH LOW... The U.S. economy added fewer jobs than expected during July and the unemployment report rose for the first time in five months to 4.8% from 4.6%. The weak job report is the latest in a string of signs that the economy is...   READ MORE 

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COMMODITIES TURN UP AS DOLLAR WEAKENS -- REVIEW OF LONG-TERM INDICATORS -- AUGUST ISN'T USUALLY A GOOD MONTH

by John Murphy,

Chief Technical Analyst, StockCharts.com

US DOLLAR IS ROLLING OVER ... Recent reports of economic weakening, combined with diminished expectations for additional rate hikes by the Fed, are causing selling in the dollar. Chart 1 (plotted through Tuesday) shows the U.S. Dollar Index starting to roll over to the downside over the last week. The...   READ MORE 

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NATURAL GAS PACES STRONG ENERGY SECTOR

by John Murphy,

Chief Technical Analyst, StockCharts.com

NATURAL GAS SPIKES ON HOT WEATHER... While everyone has been looking at the rising price of crude oil and gasoline, natural gas prices have declined for most of the year -- until the last week. Unusually hot weather conditions have produced an impressive spike in natural gas prices which climbed...   READ MORE 

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DROP IN SECOND QUARTER GDP BOOSTS FINANCIALS -- BOND YIELDS AND DOLLAR DROP-- SOX LEADS TECHNOLOGY BOUNCE

by John Murphy,

Chief Technical Analyst, StockCharts.com

SECOND QUARTER GDP DROPS SHARPLY... Today's report that U.S. second quarter growth fell to 2.5%, which is less than half of the first quarter's +5.6%, carries both good and bad news. The bad news is that the economy is slowing. The good news...   READ MORE 

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DOW CHEMICAL HURTS CHEMICALS AND MATERIALS SPDR -- FEDEX AND DOW TRANPORTS FALL BELOW 200-DAY LINE -- DOW COMPOSITE INDEX MAY OFFER CLUES TO MARKET DIRECTION

by John Murphy,

Chief Technical Analyst, StockCharts.com

FEDEX LEADS TRANSPORTS LOWER ... The transportation sector continues to get battered. Yesterday we showed UPS and a couple of rail stocks falling below their 200-day lines. Today's most notable casualty is FedEx. Chart 1 shows that stock breaking both its 200-day line and its June low. Even an...   READ MORE 

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RAILS AND OTHER TRANSPORTATION LOSERS WEIGH ON INDUSTRIAL SPDR -- ENERGY SPDR FAR OUTPACES OIL SERVICE HOLDERS

by John Murphy,

Chief Technical Analyst, StockCharts.com

DOW INDUSTRIALS VS. INDUSTRIALS SPDR ... I've written several times over the past few months that the Dow Industrials were holding up a little better than the rest of the market, and interpreted that to mean that investors were switching from riskier small cap stocks into more stable industrials....   READ MORE 

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AT&T LEADS STRONG TELECOM GROUP HIGHER -- UPS WEIGHS DOWN TRANSPORTS -- CONSUMER INDEX HITS RECORD HIGH AS INVESTORS CONTINUE TO FAVOR DEFENSIVE STOCKS

by John Murphy,

Chief Technical Analyst, StockCharts.com

AT&T HITS NEW FOUR-YEAR HIGH ... Although the market remains in a short-term rally mode, upside leadership keeps coming from traditionally defensive groups. Today's standout Dow performer was AT&T which surged to the highest level in four years. The daily bars in Chart 1 show...   READ MORE 

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ABSENCE OF VOLUME DETRACTS FROM MARKET GAINS -- THE RALLY IN BIG PHARMAS, HOWEVER, LOOKS LIKE THE REAL THING

by John Murphy,

Chief Technical Analyst, StockCharts.com

HEALTHCARE IS GETTING BETTER... On Friday I wrote about how the big pharmas were attracting some serious money and were starting to pull the entire healthcare sector higher. I showed the daily chart of the Health Care Sector SPDR (XLV) and suggested that it needed a close over its 200-day...   READ MORE 

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MARKET TESTING MAJOR SUPPORT LEVELS AGAIN -- DRUGS HAVE A STRONG WEEK -- TRANSPORTS PLUNGE AS UTILITIES SURGE -- SMALL CAPS GIVE MAJOR SELL SIGNAL -- STAY DEFENSIVE

by John Murphy,

Chief Technical Analyst, StockCharts.com

DRUGS LEAD HEALTHCARE HIGHER... Whenever we list defensive groups that usually do better when the market gets into trouble, the usual candidates are consumer staples, utilities, and healthcare. Consumer staples and utilities have continued to be the market's top performers over the last couple of months. It looks...   READ MORE 

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BERNANKE COMMENTS BOOST BONDS AND STOCKS -- BANKS LEAD DAY'S RALLY

by John Murphy,

Chief Technical Analyst, StockCharts.com

MARKET LIKES FED COMMENTS ... The bond and stock markets liked what Mr. Bernanke had to say today before Congress. He indicated that economic growth and inflation were moderating which was taken to mean that the Fed might be nearing the end of its rate hikes. Bond prices rose and yields...   READ MORE 

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RISE IN DOLLAR CAUSES PROFIT-TAKING IN PRECIOUS METALS -- GOLD AND SILVER ETFS GIVE SHORT-TERM SAR SELL SIGNALS

by John Murphy,

Chief Technical Analyst, StockCharts.com

DOLLAR BUYING PUSHES GOLD LOWER ... Yesterday saw the first serious selling of gold and silver in more than a month. Part of that selling is due to technical factors. Part of it is also due to a rising dollar. While geopolitical concerns have helped boost gold and oil prices recently,...   READ MORE