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BUYING INDUSTRIALS AND TRANSPORTS WITH ONE ETF -- GE, TYCO, AND EMR TURN UP -- USE MARKET SUMMARY PAGE TO SPOT INDEX LEADERS -- PLUNGE IN OIL HELPS LAUNCH YEAREND RALLY

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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FALLING OIL AND RISING TECHS ARE GOOD FOR MARKET -- SO IS TODAY'S BREAKOUT IN BROKERAGE STOCKS -- FOURTH QUARTER RALLY HAS BEGUN

by John Murphy,

Chief Technical Analyst, StockCharts.com

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...   READ MORE 

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TRANSPORTS AND UTILITY STRENGTH MAY START PULLING INDUSTRIALS HIGHER -- THE DOW IS IN TRENDLINE SUPPORT AND IS DEEPLY OVERSOLD

by John Murphy,

Chief Technical Analyst, StockCharts.com

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...   READ MORE 

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AIG BOUNCE STEADIES THE DOW- BUYING LARGE-CAP VALUE -- DELTA LEADS AIRLINES HIGHER

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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BROKERAGE UPGRADE HELPS CHIPS -- BIOTECHS FALL -- SMALLER STOCKS HOLD UP OK -- NASDAQ HOLDS 1900 SUPPORT -- DOW LOOKS OVERSOLD

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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EURO AND GOLD TESTING 2004 HIGHS -- XAU/GOLD RATIO SUGGESTS HIGHER PRICES FOR BOTH -- WHY GOLD STOCKS ARE A BETTER BUY THAN OIL

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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COMBINING P&F WITH BAR CHARTS -- DOW HITS NEW 2004 LOW -- TRANSPORTS LOOK OVERBOUGHT -- TECH SELLING PULLS NASDAQ LOWER

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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DOW THEORY REVISITED -- DOES THE CURRENT NON-CONFIRMATION MEAN ANYTHING?

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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ROTATION INTO TECH PICKS UP STEAM -- LED BY INTERNET AND SOFTWARE -- ALTERA PULLS SOX UP

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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POINT AND FIGURE BULLISH PERCENT CHARTS

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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SELLING FINANCIALS AND BUYING CHIPS -- ROTATION IS THE NAME OF THE GAME

by John Murphy,

Chief Technical Analyst, StockCharts.com

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...   READ MORE 

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DOLLAR, GOLD AND INTEREST RATES ARE LINKED -- ASIAN BUYING IS KEEPING US RATES LOW -- RISING EURO AND YEN ARE BULLISH FOR GOLD

by John Murphy,

Chief Technical Analyst, StockCharts.com

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...   READ MORE 

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IBM AND TXN BOUNCE NOT ENOUGH TO OFFSET PLUNGE IN MATERIALS AND HEALTH INSURERS

by John Murphy,

Chief Technical Analyst, StockCharts.com

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...   READ MORE 

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DROP IN OIL BOOSTS MARKET -- BIOTECHS AND SOFTWARE PULL QQQ OVER 200-DAY LINE -- CHECK POINT AND MEDIMMUNE ARE STANDOUTS -- DOW SCORES UPSIDE REVERSAL

by John Murphy,

Chief Technical Analyst, StockCharts.com

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-...   READ MORE 

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SOFTWARE GROUP SHOWING TECH LEADERSHIP -- MSFT, CA, ORACLE, AND ADOBE ARE LEADERS

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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ENERGY STOCKS NOT CONFIRMING OIL HIGH -- PAPERS WEIGHING ON MATERIALS -- MMM HURTS DOW -- S&P 500 TESTING LATE-SEPTEMBER LOW

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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ENERGY AND MATERIALS MONEY IS MOVING INTO SOME CONSUMER LEADERS -- RETAILERS ARE DOING BETTER -- WAL-MART MAY BE A BARGAIN

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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ANOTHER JUMP IN OIL HURTS MARKET -- FINANCIALS FALL HARD -- CYCLICALS ARE WEAKENING -- NO SIGNS OF A BOTTOM YET

by John Murphy,

Chief Technical Analyst, StockCharts.com

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. When...   READ MORE 

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MARKET AVERAGES FALL ON HEAVY VOLUME -- SOX BOUNCE NOT ENOUGH TO OFFSET MATERIAL FALL -- NO ROTATION SEEN INTO STAPLES OR HEALTHCARE

by John Murphy,

Chief Technical Analyst, StockCharts.com

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...   READ MORE 

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INTEL HELPS SOX BOUNCE -- BUT ENERGY AND MATERIALS ARE WEIGHING ON MARKET

by John Murphy,

Chief Technical Analyst, StockCharts.com

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...   READ MORE 

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WATCHING THE OSX AND THE SOX -- MONEY MAY START ROTATING FROM AN OVERBOUGHT ENERGY SECTOR INTO AN OVERSOLD CHIP GROUP

by John Murphy,

Chief Technical Analyst, StockCharts.com

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...   READ MORE 

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OIL SECTOR HITS PARABOLIC SELL STOP WHICH HINTS THAT ENERGY HAS HIT SHORT-TERM TOP

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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MARKET PULLS BACK FROM SHORT-TERM OVERBOUGHT CONDITION -- CRB INDEX HITS 23-YEAR HIGH -- FALLING DOLLAR IS DRIVING MONEY TO FOREIGN COMMODITY PRODUCERS

by John Murphy,

Chief Technical Analyst, StockCharts.com

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...   READ MORE 

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WEAK SEPTEMBER JOBS REPORT HURTS DOLLAR BUT HELPS FOREIGN CURRENCIES AND GOLD -- USING DMI/ADX AND PARABOLICS ON XAU

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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WEAK DRUGS WEIGH ON BLUE CHIPS -- BIOTECH SELLING PULLS OVERBOUGHT NASDAQ LOWER -- MARKET COULD USE SOME HELP FROM LOWER OIL

by John Murphy,

Chief Technical Analyst, StockCharts.com

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...   READ MORE 

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USING ADX LINE TO SPOT A TOP -- ENERGY BPI REACHES 92 -- FIFTH UPLEG IN BULL MARKET IS LED BY MATERIALS AND ENERGY

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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STOCK BREAKOUTS IN LEADING GROUPS -- SMALL CAPS ARE LEADING -- SO ARE LARGE CAP VALUE STOCKS -- ANOTHER OIL INDICATOR

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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OVERBOUGHT ENERGY SECTOR KEEPS RISING -- HOW TO USE THE ENERGY BULLISH PERCENT INDEX

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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TELECOM ETF BREAKING OUT -- VERIZON AND SBC NEAR MULTI-YEAR HIGHS -- BELLSOUTH CLEARS SUMMER HIGH

by John Murphy,

Chief Technical Analyst, StockCharts.com

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...   READ MORE 

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SOX RALLY IS CONTRIBUTING TO GLOBAL LEADERSHIP IN ASIA -- SOUTH KOREA AND TAIWAN ETFS ARE LEADING GLOBAL RALLY -- TAIWAN SEMICONDUCTOR IS BOTTOMING

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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FOURTH QUARTER RALLY APPEARS TO HAVE BEGUN -- WHY NASDAQ LEADERSHIP IS IMPORTANT -- UPSIDE TARGET FOR FIFTH WAVE ADVANCE

by John Murphy,

Chief Technical Analyst, StockCharts.com

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...   READ MORE 

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MICROSOFT AND CHIPS LEAD TECH SECTOR HIGHER -- ASIA LEADS GLOBAL RALLY -- LOOKS LIKE THE FOURTH QUARTER RALLY IS STARTING

by John Murphy,

Chief Technical Analyst, StockCharts.com

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...   READ MORE 

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MERCK PLUNGE WEIGHS ON BLUE CHIPS WHILE SMALL CAPS AND TECHS CLOSE HIGHER -- GOLD HITS 6-MONTH HIGH -- MATERIALS ETF BREAKS OUT

by John Murphy,

Chief Technical Analyst, StockCharts.com

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 

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OILS CORRECT WHILE TECHS RALLY -- AMAZON LEADS INTERNET HIGHER -- DOW RECLAIMS 50-DAY AVERAGE -- CATERPILLAR EXPLODES

by John Murphy,

Chief Technical Analyst, StockCharts.com

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...   READ MORE 

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OIL STOCKS ARE DOWN WHILE THE SOX IS UP -- THAT'S A GOOD COMBINATION IF IT CONTINUES -- CATERPILLAR BREAKS OUT -- VERISIGN IS CLOSE

by John Murphy,

Chief Technical Analyst, StockCharts.com

OIL INDEX OVERBOUGHT ... I've mentioned several times over the past week that oil stocks are in a short-term overbought condition. With crude oil falling back from $50 today, some profit-taking is being seen in the energy patch. The 14-day RSI line carries a double message....   READ MORE 

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METALS LEAD MATERIAL SECTOR HIGHER -- MARKET ENJOYS OVERSOLD BOUNCE AS OIL TOUCHES $50

by John Murphy,

Chief Technical Analyst, StockCharts.com

MATERIALS SPDR IS STRONGEST SECTOR... Yesterday's article talked about using the Materials Select Sector SPDR as one way to participate in the industrial and precious metals rally. In today's trading, while everyone was looking at oil, metals markets turned in an even stronger performance. The XLB...   READ MORE 

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SOME RECENT OIL SERVICE BREAKOUTS INCLUDE BAKER HUGHES, SCHLUMBERGER, AND RIG

by John Murphy,

Chief Technical Analyst, StockCharts.com

OIL SERVICE INDEX HITS THREE-YEAR HIGH ... I recently suggested that although I thought the energy sector was over-extended on a short to intermediate term basis (and I still do), oil service stocks appear to offer the best value in the group. Chart 1 shows why. The last monthly...   READ MORE 

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RISING OIL HURTS JAPANESE YEN AND STOCKS -- BUT HELPS CANADIAN DOLLAR AND STOCKS

by John Murphy,

Chief Technical Analyst, StockCharts.com

JAPANESE STOCKS UNDER PRESSURE... Last Friday I showed some regions of the world that were benefitting from rising energy and commodity prices. Two of the top performers were Canada and Latin America. Both are big producers of natural resources. It works the opposite way for Japan. Japan is totally dependent...   READ MORE 

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USING ETFS TO BENEFIT FROM RISING COMMODITIES-- COPPER STOCKS LEAD BASIC MATERIALS GROUP -- ENERGY LOOKS OVERBOUGHT

by John Murphy,

Chief Technical Analyst, StockCharts.com

CRB INDEX HITS FOUR MONTH HIGH... The CRB Index (of seventeen commodities) gained 3.56 today to close over 281 for the first time in four months. Thirteen commodities rose. The fact that orange juice and cotton were among the biggest gainers may be due to hurricane activity. But that&...   READ MORE 

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CANADA AND LATIN AMERICA TOP GLOBAL FUNDS -- EMERGING MARKETS TURN UP -- WEAK DOLLAR FAVORS FOREIGN MARKETS AND GOLD

by John Murphy,

Chief Technical Analyst, StockCharts.com

CANADA IS WINNER FOR THE WEEK ... Most global markets are doing better than the U.S. market. One way to spot the country or regional leaders is to view the weekly (or monthly) international rankings on the Fidelity Fund Carpet, which can be accessed through the Market Carpet on the...   READ MORE