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NYSE ADVANCE-DECLINE LINE SHOWS FIRST NEGATIVE DIVERGENCE IN THREE YEARS -- NEW HIGH-NEW LOW LINE IS ALSO DROPPING -- WHY CHRISTMAS MAY BE A GOOD TIME TO DO SOME STOCK TRIMMING

by John Murphy,

Chief Technical Analyst, StockCharts.com

NYSE ADVANCE DECLINE HASN'T HIT A NEW HIGH ... Like most other market analysts, I've been expecting the traditional fourth quarter market rally. On Tuesday, after the Fed hinted that it might be nearing the end of its rate-hiking, I wrote that the two-week correction/consolidation appeared...   READ MORE 

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RECORD TRADE DEFICIT WEAKENS DOLLAR AT MAJOR RESISTANCE BARRIER -- GOLD WEAKENS WHILE JAPANESE YEN IS JUMPING

by John Murphy,

Chief Technical Analyst, StockCharts.com

GOLD PULLS BACK WHILE YEN JUMPS ... On Monday I revisited the positive relationship between gold and the Japanese market. I suggested that both still looked overbought to me, but would probably need to correct together. Gold started its downturn yesterday which has continued today. Chart 1 shows the Gold Trust...   READ MORE 

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MARKET LIKES CHANGE IN FED WORDING AND APPEARS READY TO RESUME DECEMBER RALLY

by John Murphy,

Chief Technical Analyst, StockCharts.com

FED DROPS REFERENCE TO ACCOMODATION ... The Fed raised short-term rates another quarter point today to 4.25% as expected. However, it dropped its reference to "policy accommodation". The market took that to mean that the Fed may be nearing the end of its tightening cycle. Whether that'...   READ MORE 

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GOLD AND JAPAN HIT NEW HIGHS -- THEY'RE STILL CLOSELY CORRELATED

by John Murphy,

Chief Technical Analyst, StockCharts.com

NEITHER ONE HAS CORRECTED ... A couple of weeks ago I expressed some concern that gold prices might stall or pullback temporarily from long-term supply around $500. Obviously, that didn't happen. Gold has since jumped another $40 to a new 24-year high. It was up over $10 earlier today....   READ MORE 

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MARKET PULLBACK CONTINUES -- ENERGY PRICES JUMP WHILE THE CHIPS FALL -- GOLD STOCKS BREAKOUT -- JAPAN MAY HAVE BEGUN OVERBOUGHT CORRECTION

by John Murphy,

Chief Technical Analyst, StockCharts.com

DOW LOSES MORE GROUND ... The market lost more ground today. The Dow Industrials fell 55 points to close at 10755. That puts it within 55 points of its summer highs near 10700. The market got hit with two negatives today. One was a sizeable pullback in semiconductors which had recently...   READ MORE 

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OVERBOUGHT CONDITION WEIGHS ON MARKET -- ADX LINES TURN DOWN -- USING BOLLINGER BANDS TO FIND CHART SUPPORT

by John Murphy,

Chief Technical Analyst, StockCharts.com

DOW BACKS OFF FROM 11000 ... Chart 1 shows some chart reasons why the Dow Industrials are pulling back. First of all, the Dow reached its spring high (10984) in an overbought condition. That's seen in the 9-day RSI line (top of chart) which moved into overbought territory over...   READ MORE 

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SEMICONDUCTORS RESUME UPTREND -- APPLIED MATERIALS BREAKS OUT -- ASIAN ETFS BENEFIT FROM CHIP GAINS -- TAIWAN SEMICONDUCTOR NEARS BULLISH BREAKOUT

by John Murphy,

Chief Technical Analyst, StockCharts.com

SEMIS CONTINUE TO CLIMB ... The Semiconductor (SOX) Index is gaining more than 2% today to continue its uptrend and its recent market leadership. Chart 1 shows the SOX reaching a new 52-week high today. Just last week it broke through its summer high to achieve a bullish breakout. It'...   READ MORE 

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BOND YIELDS ARE CLIMBING AGAIN -- BASIC MATERIALS ARE STARTING TO OUTPERFORM FINANCIALS -- RISING INFLATION AND RISING RATES COULD CAUSE 2006 PROBLEMS

by John Murphy,

Chief Technical Analyst, StockCharts.com

YIELDS ARE BOUNCING OFF SUMMER HIGHS... After pulling back during the month of November, bond yields are starting to climb again. More importantly, they're bouncing off the previous peaks hit during August. That's important in chart work because short-term pullbacks shouldn't fall below previous...   READ MORE 

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DOW THEORY UPTREND STILL IN QUESTION -- NEW CHIP LEADERSHIP -- ENERGY PRICES MAY HAVE BOTTOMED -- JAPAN LOOKS OVERBOUGHT

by John Murphy,

Chief Technical Analyst, StockCharts.com

INDUSTRIALS STILL BELOW 2005 HIGH ... One of the oldest technical approaches is the Dow Theory. It simply holds that upside breakouts in either the Dow Industrials or the Dow Transports must be confirmed by the other to signal the start or the resumption of the major bull trend. In this...   READ MORE 

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ECONOMIC OPTIMISM BOOSTS CYCLICALS -- STOCKS ARE RALLYING AT BONDS' EXPENSE -- CRB INDEX BOUNCES OFF 200-DAY LINE

by John Murphy,

Chief Technical Analyst, StockCharts.com

BUYING CYCLICALS ... On Tuesday I showed the Materials Select SPDR (XLB) breaking through its summer high to achieve a bullish breakout. Materials were today's second strongest group just behind energy. Although there may be some inflationary meaning behind the new buying in these stocks, there's a...   READ MORE 

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SEMIS AND SMALL CAP BREAKOUTS GIVE NEW LIFE TO MARKET -- NIKKEI CLEARS 15,000 -- YES, THE HUI IS THE UNHEDGED GOLD INDEX

by John Murphy,

Chief Technical Analyst, StockCharts.com

SMALL CAP BREAKOUT ... Earlier in the week I suggested that the fourth quarter market advance was being stalled partially by the inability of small cap stocks to break through their summer highs. That inability is being corrected today. Charts 1 and 2 show the S&P 600 Small Cap...   READ MORE 

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FOURTH QUARTER RALLY MAY BE READY FOR PAUSE AS MARKET LOOKS OVER-EXTENDED

by John Murphy,

Chief Technical Analyst, StockCharts.com

DOW IS OVER-EXTENDED ... Yesterday I wrote about the Dow Industrials running into some selling along its early 2005 peak just below 11,000. I also mentioned it being over-extended. That can be plainly see in the 9-day RSI line which is well into overbought territory over 70. That's...   READ MORE 

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STEEL LEADS STRONG MATERIAL SECTOR -- US STEEL NEARS BULLISH BREAKOUT -- NEWMONT MINING TESTS $48 AS GOLD TOUCHES $500

by John Murphy,

Chief Technical Analyst, StockCharts.com

MATERIALS SPDR TURNS UP ... Basic material stocks are the day's strongest sector. Chart 1 shows the XLB having already broken through its summer high to reach the highest level in seven months. The relative strength ratio, which peaked in March, has also bottomed. Most of today's...   READ MORE 

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RETAILERS AND SMALL CAPS PULL MARKET LOWER -- DOW BACKS OFF FROM 11K -- OIL STOCKS WEAKEN -- GOLD NEARS $500

by John Murphy,

Chief Technical Analyst, StockCharts.com

HEAVY RETAIL SELLING... With the holiday shopping season upon us, all eyes are focused on retailers. For today at least, investors weren't impressed with what they've seen so far. As a result, the Retail Holders were one of the day's biggest losers. To make...   READ MORE 

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DOLLAR IS UP AGAINST RESISTANCE AT SPRING 2004 HIGHS AND IS OVERBOUGHT -- INTEREST RATE DIFFERENTIALS MAY START SHIFTING AGAINST THE DOLLAR

by John Murphy,

Chief Technical Analyst, StockCharts.com

MONTHLY DOLLAR INDEX CHART ... To get a better idea of where the dollar stands in relation to its long-term trend, it's a good idea to start with the monthly chart. The monthly bars in Chart 1 show the Dollar Index peaking at the start of 2002 and falling...   READ MORE 

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SOX NEARS BULLISH BREAKOUT -- MARKET SHRUGS OFF OIL BOUNCE -- WHEN BEING OVERBOUGHT MAY NOT MEAN MUCH

by John Murphy,

Chief Technical Analyst, StockCharts.com

SEMICONDUCTOR INDEX TESTING 2005 HIGHS ... After some hesitation earlier this morning owing to a jump in energy prices, the market moved into new ground this afternoon to resume its uptrend. A lot of the credit for the afternoon strength comes from the semiconductor group which was second only to energy...   READ MORE 

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OIL IS BOUNCING OFF 200-DAY AVERAGE WHILE OIL STOCKS RALLY -- OIL SERVICE HOLDERS TEST RECENT HIGH -- CRB INDEX IS ALSO BOUNCING OFF ITS 200-DAY LINE

by John Murphy,

Chief Technical Analyst, StockCharts.com

CRUDE OIL BOUNCES OFF SUPPORT LINES... After losing more than 20% since the end of August, crude oil prices are starting to bounce off two lines of potential chart support. One is the horizontal line in Chart 1 which is drawn under the July lows. The other is the 200-day...   READ MORE 

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NASDAQ COMPOSITE: MAJOR BULLISH BREAKOUT OR RISING WEDGE?

by John Murphy,

Chief Technical Analyst, StockCharts.com

NASDAQ HITS FOUR-YEAR HIGH ... Chart 1 shows the Nasdaq Composite having hit a new four-year high this week. It's now trading at the highest level since the spring of 2001. There's another shelf of potential resistance to watch at 2328 (see circle), but the action has...   READ MORE 

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YAHOO BREAKS OUT AND THE NASDAQ ISN'T FAR BEHIND -- WHY GOLD AND THE NIKKEI ARE BREAKING OUT TOGETHER -- WHY PULLBACK IN BOND YIELDS IS BOOSTING GOLD

by John Murphy,

Chief Technical Analyst, StockCharts.com

SHIFT FROM DEFLATION TO INFLATION ... Gold and the Japanese market are breaking out to new highs together. I don't think that's a coincidence. Back on September 29 I wrote an article entitled "New Japanese Leadership May Be Signaling Shift To Global Inflation" (September 29,...   READ MORE 

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GOLD NEARS A NEW RECOVERY HIGH -- NEXT TARGET IS $500 -- GOLD STOCKS REASSERT MARKET LEADERSHIP

by John Murphy,

Chief Technical Analyst, StockCharts.com

GOLD SOARS $9.00... Gold prices have risen $9.00 today and are on the verge of a new multi-year high. That's putting a strong bid under gold stocks which are up 4% and the day's strongest stock group. Chart 1 shows the Gold ETF (GLD)...   READ MORE 

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FINANCIALS AND RETAILERS PULL OVERBOUGHT MARKET LOWER

by John Murphy,

Chief Technical Analyst, StockCharts.com

DOW AND S&P 500 PULL BACK FROM RESISTANCE ... Yesterday I wrote about some of the major market averages being up against chart resistance and in an overbought condition. That combination probably helped lead to today's profit-taking in the overall market. Chart 1 shows theDow Industrials backing...   READ MORE 

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MARKET AVERAGES NEAR RESISTANCE BARRIERS AND ARE LOOKING OVERBOUGHT

by John Murphy,

Chief Technical Analyst, StockCharts.com

DOW INDUSTRIALS REACH 10700 BARRIER ... Some of the major market averages have reached important resistance levels which represents a moment of truth for the market. The Dow is a good example. It's trading over 10,700 today which puts it right up against the highs formed from July...   READ MORE 

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WEAKNESS IN ENERGY CONTINUES ROTATION INTO AIRLINES, BANKS, AND RETAILERS -- FOURTH QUARTER RALLY CONTINUES -- WHERE WE ARE AFTER THAT

by John Murphy,

Chief Technical Analyst, StockCharts.com

ENERGY STOCKS SELLOFF ON WEAK OIL ... With crude oil falling to a three-month low, energy stocks are coming under heavy selling pressure. On Monday, I showed the Energy Sector SPDR (XLE) falling back below its 50-day moving average. It's fallen even further since then. Chart 1 shows the...   READ MORE 

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HOMEBUILDERS WEIGH ON MARKET -- HOUSING INDEX PEAKED IN JULY -- DOUBLE TOP IN BOND PRICES SIGNALS END OF FIVE-YEAR HOUSING BOOM

by John Murphy,

Chief Technical Analyst, StockCharts.com

HOMEBUILDERS PEAKED IN JULY ... A negative forecast from Toll Brothers that housing demand was weakening pushed that stock and other homebuilders sharply lower today. In turn, that caused some profit-taking in the broader market. The idea that the housing sector might be peaking isn't new. If you go...   READ MORE 

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ENERGY SELLING BOOSTS MARKET -- INTEL AND CITIGROUP LEAD DOW -- ETF LEADERS INCLUDE JAPAN, RETAILERS, AND REGIONAL BANKS

by John Murphy,

Chief Technical Analyst, StockCharts.com

OIL BACK BELOW $60 AS ENERGY STOCKS FALL ... The price of crude oil fell $1.11 today to close back below the $60 level. Chart 1 shows, however, that crude is nearing its 200-day moving average at 57.39. It remains to be seen if that long-term support line will...   READ MORE 

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DOLLAR BREAKOUT RESULTS FROM HIGHER INTEREST RATES, BUT PUTS DOWNSIDE PRESSURE ON COMMODITIES

by John Murphy,

Chief Technical Analyst, StockCharts.com

DOLLAR INDEX BREAKS SUMMER HIGH ... The U.S. Dollar broke through its summer high today and closed above 91 for the first time in eighteen months. The daily bars in Chart 1 show the short-term bullish breakout. The weekly bars in Chart 2 show that the USD is trading at...   READ MORE 

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TRANSPORTATION AVERAGE HITS ALL-TIME HIGH -- AIRLINES, BANKS, AND RETAILERS ARE TOP OCTOBER PERFORMERS -- NASDAQ ALSO SHOWS NEW LEADERSHIP

by John Murphy,

Chief Technical Analyst, StockCharts.com

TRANSPORTS HIT ALL-TIME HIGH ... I've written several times over the last few weeks about how the drop in energy prices during October was giving a big boost to the fuel-sensitive transportation stocks. With crude continuing to trade below $60, the Dow Transportation Average has broken through its spring...   READ MORE 

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GLOBAL MARKETS BOUNCE OFF 200-DAY LINES -- JAPANESE AND LATIN AMERICAN LEADERSHIP

by John Murphy,

Chief Technical Analyst, StockCharts.com

INTERNATIONAL STOCKS RISE... Following on the heels of Friday's strong stock market gains in the U.S., international stock markets opened the week on a powerful note. The major European stock markets gained about 2% while Japan did about the same. That got our market off to a...   READ MORE 

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S&P 500 TESTING TOP OF SHORT-TERM TRADING RANGE -- A MOVING AVERAGE CROSSOVER SYSTEM -- ENERGY AND UTILITY BUYING HELPS STABILIZE MARKET

by John Murphy,

Chief Technical Analyst, StockCharts.com

NO CHANGE IN SHORT-TERM TREND... Last Friday I showed the S&P 500 trading between support at its 400-day (80-week) moving average (blue line) and resistance at the red 200-day (40-week) line. I also suggested that the S&P needed a decisive close above 1200 to turn its...   READ MORE 

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BOND YIELD SURGE TO SIX-MONTH HIGHS UNDERMINES MARKET BOUNCE -- ENERGY PRICES SELLOFF ON INVENTORY DATA

by John Murphy,

Chief Technical Analyst, StockCharts.com

NEW SIX MONTH HIGHS ... Long-term interest rates surged today in the T-bond and T-note markets. Charts 1 and 2 show the 10-year T-note (TNX) and the 30-year T-bond yield (TYX) surging to the highest levels in more than six months. This upward trend continues breakouts that took place earlier in...   READ MORE 

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OIL SERVICE LEADS ENERGY REBOUND AS CRUDE OIL APPEARS TO HAVE BOTTOMED -- THAT MAY HELP YEAREND BOUNCE

by John Murphy,

Chief Technical Analyst, StockCharts.com

OIL MAY HAVE BOTTOMED ... It looks like the fourth quarter correction in crude has probably ended. After dipping briefly below $60, crude oil jumped more than $2 yesterday and looks to have bottomed. The Commodity Channel (CCI) Index (on top of the chart) is turning up from oversold condition after...   READ MORE 

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SHORT-TERM S&P INDICATORS IMPROVE -- TRANSPORTS SHOW LEADERSHIP -- ENERGY CORRECTION MAY BE NEARLY OVER

by John Murphy,

Chief Technical Analyst, StockCharts.com

TRANSPORTS HAVE ANOTHER STRONG DAY... On Friday I wrote that one of the places that any fourth quarter bounce would start would be the transports. That's because they're among the main beneficiaries of the recent slide in oil prices. [Earlier in the week I also listed...   READ MORE 

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WATCHING S&P MOVING AVERAGE LINES -- NEGATIVE WEEKLY INDICATORS

by John Murphy,

Chief Technical Analyst, StockCharts.com

CAUGHT BETWEEN TWO LINES ... There's good and bad news on the daily S&P 500 bar chart. The bad news has to do with the fact that the S&P is still trading below its red 200-day moving average line. Although not every break of the...   READ MORE 

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TRANSPORTS BENEFIT FROM OIL SLIDE -- LEADERS ARE CNF, EXPD, AND LUV

by John Murphy,

Chief Technical Analyst, StockCharts.com

TRANSPORTS ARE SHOWING RESILIENCY... Earlier in the week I wrote that falling energy prices should benefit certain market groups more than others. I also suggested that any fourth quarter rally would most likely be led by financials (mainly banks), retailers, technology, and transports. I've already shown some early...   READ MORE 

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JAPAN HOLDS UP THE BEST DURING OCTOBER ALTHOUGH YEN HAS BEEN FALLING -- JAPANESE MUTUAL FUND HOLDS UP OK

by John Murphy,

Chief Technical Analyst, StockCharts.com

JAPAN IS TOP OCTOBER MARKET ... A number of readers have asked for an update on the Japanese market. My October 11 message entitled "Why Japan is a Good Global Value" (October 11, 2005) showed the low correlation between Japan and the U.S. over the last fifteen years,...   READ MORE 

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MARKET BOUNCES ON DECENT VOLUME AND MAY HAVE MADE SHORT-TERM BOTTOM -- BANKS, INTERNET, AND RETAILERS LEAD RALLY -- GOLD CORRECTS

by John Murphy,

Chief Technical Analyst, StockCharts.com

OVERSOLD NYSE BOUNCES ON STRONG VOLUME... A lot has been written about the 200-day moving average lately. That's because a market that breaks that long-term support line -- and then stays below it -- can be in trouble. Several market indexes have broken that support line over the...   READ MORE 

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ENERGY STOCKS REMAIN IN FOURTH QUARTER CORRECTION -- WHY THAT'S NOT NECESSARILY GOOD FOR THE STOCK MARKET

by John Murphy,

Chief Technical Analyst, StockCharts.com

OIL SERVICE HOLDERS STILL IN CORRECTION ... On September 14 I wrote an article showing that the energy sector had moved into a long-range overbought condition. That article, however, allowed for more short-term buying until the short-term trend also became overbought. On September 23, I wrote that oil appeared to be...   READ MORE 

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WHY LONG-TERM TREND FAVORS GOLD -- STOCKS IN LOW-VOLUME OVERSOLD BOUNCE

by John Murphy,

Chief Technical Analyst, StockCharts.com

WHY NEXT TARGET FOR GOLD IS $500 ... After reaching $700 in 1980, the price of gold fell for the next twenty years before hitting bottom at $250 in late 1998. Bullion started to rise in early 2002 and is close to doubling in price. One of the ways to arrive...   READ MORE 

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NYSE BULLISH PERCENT INDEX TESTS IMPORTANT SUPPORT -- S&P 500 IS TESTING 80-WEEK AVERAGE WHICH IS STILL HOLDING -- WHY BEAR FUNDS SHOULDN'T BE USED AS A LONG-TERM INVESTMENT

by John Murphy,

Chief Technical Analyst, StockCharts.com

NYSE BULLISH PERCENT INDEX AT CRITICAL SUPPORT... I've been asked to update my views on the NYSE Bullish Percent Index (BPNYA). The BPNYA is the percent of stocks in the NYSE Index that are on point & figure buy signals. On September 26 I reported that the BPNYA...   READ MORE 

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A LOOK AT SOME BEAR MARKET FUNDS

by John Murphy,

Chief Technical Analyst, StockCharts.com

INVERSE FUNDS ... One of our readers asked which indicators to use when analyzing bear mutual funds. The answer is to use the exact same indicators that we use in the stock market. Bear funds are simply inverse funds. They're designed to move in the opposite direction of the...   READ MORE