MICROSOFT TESTING TWO-YEAR HIGH ... Microsoft carries a lot of influence on the Dow and the Nasdaq because of its large size. That's why it's worth noting that the technology giant is on the verge of a major bullish breakout. Chart 1 shows MSFT moving up to... READ MORE
CHEMICALS ARE LEADERS... The last time we looked at the Materials Select Sector SPDR it was just starting to bounce off its late September low and its 200-day moving average after having a bad October. Since then, the group has recovered and more. Chart 1 shows the XLB breaking out... READ MORE
NO SURPRISES... I'm happy to see that the markets did pretty much what was expected while I was in Europe last week. Now that I'm back I thought I'd review some of the recent intermarket trends -- just to bring things up to date.... READ MORE
HANG IN THERE - JOHN WILL BE BACK NEXT WEEK... John is currently in Europe speaking at two different conferences. He will be back next week. In the mean time... A GOOD TIME FOR A REVIEW... I wanted to take this time to make sure that all of our Murphy... READ MORE
MURPHY MARKET MESSAGES INDEX... I'll be in Europe next week to give a speech at the International Federation of Technical Analysts Conference in Madrid, Spain and make a couple of other speaking stops along the way. My main topic will be the same market trends and sector rotations... READ MORE
OIL VS. THE AIRLINES ... I've been asked a lot lately to explain why the transports continue to climb in the face of rising oil prices. Historically, the transports are adversely affected by higher energy costs. This time it has been different at least for some transportation stocks. Ironically,... READ MORE
BUYING INDUSTRIALS AND TRANSPORTS WITH ONE TRADE... I've been writing a lot lately about the relationship between a strong transportation group and relatively weak industrial group. I wrote yesterday that I believed that the industrials were out of step with the transports (and utilities) and should start rising... READ MORE
DROP IN OIL CAUSES SELLING IN ENERGY STOCKS ... I've written several times recently about two things that needed to happen to ignite the much-anticipated fourth quarter market rally. One was upside leadership by the technology sector, which we've already seen. The second was a drop in... READ MORE
TWO OUT OF THREE ARE AT NEW HIGHS ... With the Dow Utilities jumping to a new 52-week high this week, I can't resist coming back to the glaring divergence between the three Dow Jones averages. Last Friday I wrote about the divergence between the strong transports and the... READ MORE
OVERSOLD AIG LEADING DOW HIGHER... I mentioned last evening that the Dow was in oversold territory and that it's drop looked overdone. It's getting some help today from American International Group which has been one of the Dow's weakest stocks owing to the recent... READ MORE
SOX STILL SHOWS DECENT RELATIVE STRENGTH ... A brokerage upgrade this morning gave a boost to the Semiconductor (SOX) Index and kept it in a position of relative strength. The chips stayed in the plus column all day even as the major market averages traded in the red. The SOX'... READ MORE
EURO AND GOLD ARE TESTING 2004 HIGHS... The Euro continues to surge against the dollar which is giving a big boost to gold and gold shares. Chart 1 shows the Euro right up against the high reached at the start of this year. The close correlation between the European unit... READ MORE
DOW BREAKS SUMMER LOW... Since I started writing about point and figure charts yesterday, I thought I'd use them again today to give a fresh look at the major market averages. I'll explain a little more about their construction. At the same time, I'll... READ MORE
DOW THEORY REVISITED... Technical analysts are trying to figure out the meaning of the current divergence between the rising Dow Transports and the falling Dow Industrials. Which brings us to a discussion of Dow Theory. Dow Theory is built on the idea that the industrials (companies that make goods) and... READ MORE
QQQ LEADERSHIP CONTINUES... Money coming out of some parts of the market continues to rotate into technology stocks. That's being seen in the relatively strong action of the Nasdaq 100 Shares (QQQ) which is the day's strongest index. Chart 1 shows the QQQ continuing to stay... READ MORE
BPI BASED ON POINT & FIGURE BUY SIGNALS... Back on October 5 I wrote a piece on how to use the Energy Bullish Percent Index. I explained that the Bullish Percent Index (BPI) for any group is based on the percentage of stocks that are on point & figure buy... READ MORE
FINANCIAL STOCKS CONTINUE TO TUMBLE ... Heavy selling that started in insurance stocks is spreading to the entire financial sector. Two of the day's biggest casualties are Countrywide Financial (Chart 1) and JP Morgan (Chart 2). CFC is trading under its August low and its 200-day moving average on... READ MORE
WHY LONG-TERM RATES AND THE DOLLAR ARE FALLING... In the normal intermarket course of events, a falling dollar produces higher commodity prices which in time pull long-term interest rates higher. There's no question that the major drop in the dollar since the start of 2002 has contributed to... READ MORE
IBM AND TXN LEAD TECH BOUNCE... First the good news. Positive reports from IBM and Texas Instruments are pushing both stocks higher and are giving a boost to the technology sector and semiconductors in particular. Chart 1 shows Big Blue gapping up to a new four-month high on rising volume.... READ MORE
OIL SERVICE HOLDERS ARE WEAKEST GROUP ... The rotation out of energy stocks that started last week is continuing. Energy was the day's weakest sector. Oil service was energy's weakest group. Chart 1 shows the Oil Service Holders backing off from new resistance at its (green) 20-day... READ MORE
SOFTWARE HOLDERS SHOW TECH LEADERSHIP... I've written several times about some new signs of market leadership coming from the technology sector. I've mentioned Internet stocks as an example of a group that is trying to lead the Nasdaq market higher. Software stocks qualify as another technology... READ MORE
MMM LEADS DOW LOWER... Although all the major averages are starting the week on the downside, the Dow is the biggest percentage loser. That's mainly due to today's chart breakdown in MMM. Chart 1 shows the big Dow stock falling under its spring low this morning... READ MORE
ROTATION OUT OF ENERGY AND MATERIALS ... The biggest market feature of the week was the fact that Energy and Materials were the two weakest sectors. This is a reversal of recent trends. The loss of leadership by those two former leaders contributed to this week's market selling. At... READ MORE
CYCLICAL FALL ALONG WITH CONSUMER STOCKS ... I mentioned yesterday that part of the market's problem is loss of leadership from former market leaders -- without any significant rotation into weaker groups. The first two charts show two market groups that usually compete with each other for market leadership.... READ MORE
SOX BOUNCES A BIT... With some help from Intel, Semiconductor Holders managed a modest gain today and on rising volume. That was enough to keep it above its 50-day moving average. But it closed near the bottom of its daily range. Even so, chips were one of the few bright... READ MORE
BOTH GOOD AND BAD NEWS ... Energy and basic material stocks are the two weakest sectors of the stock market today. Chart 1 shows the Energy Select Sector SPDR heading down toward its 50-day moving average after issuing a short-term sell signal on Monday. There's good and bad news... READ MORE
OIL SERVICE INDEX GIVES SHORT-TERM SELL ... I wrote yesterday that the oil service group (and the rest of the energy sector) had issued a short-term parabolic sell signal from an overbought condition. The short-term trend of the Oil Service Index (OSX) weakened even further today. Chart 1 shows the OSX... READ MORE
ENERGY SELECT SPDR HITS PARABOLIC SELL POINT... Since I wrote about applying the parabolic stopout points to the oil sector last week, I thought it only fair to point out that each of the energy indexes I follow are hitting their parabolic sell stops today for the first time in... READ MORE
BEAR MARKET IN DOLLAR CREATED BULL MARKET IN COMMODITIES... A weak September jobs report pushed the U.S. dollar sharply lower today. The dollar drop pushed gold to a six-month high and boosted gold shares which were the day's strongest market group. The dollar bear market is nothing... READ MORE
FOREIGN CURRENCIES JUMP AGAINST DOLLAR... Today's weaker than expected September jobs report is having a negative impact on the U.S. dollar which is falling against its major foreign counterparts. Charts 1 and 2 show today's jump in the Japanese yen and the Euro. The yen... READ MORE
DRUGS PULL DOW LOWER... The Dow lost over a hundred points today. But most of the selling was concentrated in its three big drug stocks. The three top percentage losers were Pfizer (-4%), Johnson & Johnson (-3%), and Merck (-2%). Chart 2 shows Pfizer tumbling to a new 52-week low... READ MORE
USING PARABOLIC STOPS IN AN OVERBOUGHT OIL MARKET... Yesterday I talked about using the Parabolic SAR dots to keep a tight protective sell stop in a rising but overbought energy sector. This sensitive trend-following system works best when a market like oil is in a strong uptrend -- as it... READ MORE
DUPONT IS DOW LEADER... Today I'm going to focus on individual stock leaders in several major indexes. I'm looking for stocks that are showing the best percentage gains combined with good chart action. What I mean by good chart action is a stock that's... READ MORE
THE ENERGY BULLISH PERCENT INDEX... A week ago I talked about how the energy sector was very overbought on both a short and long term basis and even suggested taking some partial profits (with emphasis on the word partial). With energy prices still rising, however, energy stocks keep hitting new... READ MORE
TELECOM ETFS HITS NEW 52-WEEK HIGHS... The telecom group is breaking through some significant resistance barriers. Back in late July (July 27, 2004) I wrote about the telecom ETF shown in Chart 1 just starting to bounce off its 200-day moving average (see red circle) and starting to show upside... READ MORE
TAIWAN AND SOUTH KOREA HAVE STRONG CHIP LINKS... Last Friday I mentioned strong gains in Asia on the back of an impressive rally in the Semiconductor (SOX) Index. Two Asian countries that I mentioned were South Korea and Taiwan. It's no coincidence that in today's trading... READ MORE
NASDAQ 100 TOPS 200-DAY LINE... One theme I keep repeating is the need for Nasdaq leadership during any fourth quarter rally. I'm happy to report that on the first day of the fourth quarter the Nasdaq 100 led a very impressive market rally that could carry through the... READ MORE
NASDAQ 100 BREAKING THROUGH 200-DAY AVERAGE... One of the points I've tried to make recently is that technology leadership is a necessary ingredient in any fourth quarter rally. On the first day of that fourth quarter, technology is spearheading a very impressive market rally. The next three charts... READ MORE
BASIC MATERIALS BREAK OUT... One of the rules I try to follow is to take whatever the market is giving. What I mean by that is there's usually at least one sector in the market that is doing especially well and that offers opportunities for profits. Our job... READ MORE
OILS CORRECT AS CRUDE BACKS OFF FROM $50 ... With crude oil back under $50, traders are taking some profits out of an overbought energy sector. Earlier today I showed the AMEX Oil Index pulling back from a short-term overbought condition. While energy was the biggest sector loser today, oil service... READ MORE