DOLLAR CONTINUES BOUNCE OFF DECEMBER LOW ... On Friday June 5, I showed the U.S. Dollar Index starting to bounce off chart support at its December low. I also showed the Euro pulling back from resistance at its December peak. I wrote that a drop in the Euro (dollar rally)... READ MORE
JANUARY HIGHS ARE THE KEY ... One of our readers asked for an update on Dow Theory. For those of you not familiar with it, Dow Theory requires that the Dow Industrials and Transports must both exceed a previous peak to signal that a "confirmed" uptrend exists. The key... READ MORE
ENERGY STOCKS LEAD THE MARKET... The Energy SPDR (XLE) led the market higher with a surge above resistance on Thursday. Chart 1 shows XLE breaking above resistance from the November-January highs. Prior to this breakout, XLE broke triangle resistance in late April and again in late May. The energy SPDR... READ MORE
DISSECTING DIVERGENCES ... There are some negative divergences to report, but first lets review the definition and look at some prior signals. A negative divergence occurs when the underlying security moves to a new high, but the indicator fails to exceed its prior high. This lower high in the indicator signals... READ MORE
POINT & FIGURE CHARTING... Although most of the charts shown in our Market Messages are bar and candlesticks, you should be aware of a third type of chart that can be extremely helpful in spotting market signals -- the point and figure chart. In my view, the main value of... READ MORE
2-YEAR TREASURY YIELD SPIKES ... On Friday, I showed the U.S. Dollar Index bouncing from chart support at its December low, and suggested that a dollar bounce could cause short-term profit-taking in stocks and commodities. We saw some of that on Monday morning as stocks and commodities started the week... READ MORE
DOLLAR INDEX BOUNCES OFF DECEMBER LOW... The US Dollar Index peaked in March and has since fallen to the lowest level in six months. The falling dollar has coincided with rallies in stocks and commodities over the last three months. That's why it's worth noting that... READ MORE
FINANCIALS LEAD THE MARKET HIGHER... Link for todays video. After commenting about relative weakness in the finance sector just yesterday, the Financials SPDR (XLF) perked up with a nice bounce on Thursday. This bounce keeps the medium-term uptrend alive and reinforces support from the late May lows (11.5). Despite... READ MORE
STOCKS PULL BACK ... Link for todays video. After a four day surge that produced consolidation breakouts, the major index ETFs pulled back on Wednesday. Chart 1 shows the S&P 500 ETF (SPY) with a flag/wedge breakout on Monday. With a ~6% surge the prior four days, some... READ MORE
S&P 500 TRADES OVER 200-DAY AVERAGE ... The market is off to a very strong start and a lot of market indexes and groups are either testing or breaking through their 200-day moving averages. The most important of all is the S&P 500 which is the standard... READ MORE
ROTATION INTO RISKIER ASSETS IS A GOOD SIGN... Although it's no surprise to read that some asset class rotations have been going on all spring, it's still helpful to see what's happening graphically. And to try to understand why it's happening. From... READ MORE
RANGE BOUND MARKET... Link for todays video. May has been the month of churn in the stock market so it seems appropriate to step back and look at the bigger picture. After a huge advance from early March until early May, a little churning is actually quite normal. The bears... READ MORE
DARK CLOUDS OVERHEAD... Link for todays video. The S&P 500 ETF (SPY) and the Dow Diamonds (DIA) opened strong and closed weak on Wednesday. Charts 1 and 2 show both giving back more than half of yesterdays big gain with long red candlesticks. In fact, SPY and DIA... READ MORE
SHORT-TERM STOCK SUPPORT HOLDS... A big surge in consumer confidence has gotten stocks off to a strong start in the holiday-shortened week. Charts 1 and 2 show the Dow Industrials and the S&P 500 trading more than 2% higher in early afternoon trading. Today's bounce has... READ MORE
50-DAY PRICE CHANNEL IS BEARISH FOR BONDS ... On Tuesday, I wrote about using 20-day price channels (or four weeks) for short-term trading purposes. I also suggested that price channels could be used in any market. Take bonds for example. Chart 1 applies 20-day channels to the 20- Year Treasury Bond... READ MORE
BROAD DECLINE ON WALL STREET... Link for todays video. Stocks moved lower on Thursday after S&P warned that they may cut their outlook for the United Kingdoms sovereign debt. While it is certainly a plausible excuse, I have my doubts. As a credit rating agency, S&P... READ MORE
LOW VOLUME BOUNCE ... Stocks surged on Monday and recorded small gains on Tuesday to start the week with two up days. Despite these gains, Charts 1 and 2 show Nasdaq and NYSE volume below average on both days. Keep in mind that this weeks bounce was in response to the... READ MORE
20-DAY PRICE CHANNELS... Here's a simple trading tool that you might want to incorporate into your work. It's called the "Price Channel" and you'll find it under the Overlays list below moving averages and Bollinger bands. One of the most popular versions... READ MORE
SELLS OFF ON BAD HOUSING DATA... An good earnings report in Home Depot was quickly erased by some negative news on housing. The 15-minute bars in Chart 1 show the schizophrenic action over the last two days. The nation's largest home improvement stock has fallen 5% to make... READ MORE
MARKET FAILS TEST OF JANUARY HIGH ... I started the week on Monday with the headline that "Upside price and time targets had been hit" and added that overbought readings suggested that the market was vulnerable to profit-taking. The NYSE Composite Index had just reached overhead resistance at its... READ MORE
NASDAQ DECLINES ON HIGH VOLUME ... Breadth indicators are one of my first ports of call after a big market move. With the major indices moving sharply lower on Wednesday, the breadth statistics can tell us if this decline was broad-based or relatively narrow. Charts 1 and 2 show Volume, Net... READ MORE
BROAD SELLING HITS WALL STREET ... The market declined sharply on Wednesday with broad selling pressure. All of the major indices were sharply lower. All nine sectors were lower with five declining over 3%. Chart 1 shows the S&P 500 hitting resistance at its January high last week and... READ MORE
CRB INDEX TESTS JANUARY HIGH ... On Friday May 1, I wrote a message headlined: "The S&P 500 and CRB Index appear to be forming head and shoulder bottoms". A test of that bottoming theory would be a rally to their January highs followed by a pullback... READ MORE
MAJOR INDEXES REACH JANUARY HIGH ... When this rally first started during March, I suggested that it could reach the January peak which would also bring some of the major stock indexes closer to their 200-day moving averages. On April 3, I added a time target into early May. That was... READ MORE
LIST OF CYCLICAL STOCKS ... On Monday, I wrote an article showing that the Morgan Stanley Cyclical Index (CYC) had led the stock rally since March, and suggested that was a good sign for the market and the economy. One reader asked what stocks were included in the index. Chart 1... READ MORE
SELLERS GREET STRONG OPEN... The Nasdaq 100 ETF (QQQQ) signaled that something was amiss when it opened strong and immediately moved lower for the second day running. Chart 1 shows the Nasdaq 100 ETF (QQQQ) with 15 minute candlesticks over the last four days. QQQQ opened strong with a gap... READ MORE
BANKS SURGE AHEAD OF STRESS TEST... With news leaking out all over the place, financials were sharply higher ahead of Thursday's stress test results. Officially, the results of the stress test are to be announced on Thursday. Unofficially, Bloomberg and other outlets have been reporting preliminary results over... READ MORE
SECTORS CHARTS DON'T HAVE TO LOOK ALIKE... One of our readers asked if the sectors that make up the S&P 500 need to be forming the same price pattern. The answer is no they don't. Some sectors usually rise faster than the S&... READ MORE
CYCLICALS LEAD S&P 500 HIGHER... The stock market is starting the week on a strong note. Chart 1 shows the S&P 500 trading 2% higher and reaching the highest level in four months. Even more impressive is the action in the Morgan Stanley Cyclicals Index (CYC)... READ MORE
FIRST THE S&P 500... On Friday April 17, I wrote about the possibility that the S&P 500 could be forming a "head and shoulders" bottom. I based that bullish view on the shape of its pattern since last November. Chart 1 shows the potential... READ MORE
SEMIS SURGE TOWARDS 200-DAY ... Chart 1 shows the Semiconductor HOLDRS (SMH) challenging its 200-day moving average with a move above 20 today. On the price chart, SMH broke above resistance from the December-February highs and then started working its way higher. The magenta trendlines show a channel of sorts taking... READ MORE
SMALL-CAPS LEAD BROAD ADVANCE... Stocks surged ahead of today's Fed meeting and held their gains after the policy statement. There were no surprises from of the Fed as the FOMC left the Fed Funds target at 0-.25%. Small-caps led the advance with the Russell 2000 ETF (IWM)... READ MORE
% NYSE STOCKS ABOVE 200 DAY MA TESTS DOWN TRENDLINE ... On April 16, I charted showed the improvement in the percent of NYSE stocks trading over their 200-day moving averages. Chart 1 shows that measure bottoming during the fourth quarter and recently moving up to the highest level in six months.... READ MORE
EMERGING MARKETS BACK OFF FROM 200-DAY AVERAGE... One of the ways to help determine the staying power of the current global rebound is to track the performance of the world's strongest markets. That happens to be in the emerging market area. Judging from the fact that several of... READ MORE
NASDAQ NEARS 200-DAY LINE ... The market bounce that started on March 9 remains intact. As has been the case all year, the technology-dominated Nasdaq market is leading the market higher. Chart 1 shows the Nasdaq Composite Index having cleared its January high and nearing a test of its 200-day moving... READ MORE
A TALE OF TWO MARKETS... Life revolves around the January highs for many stocks, indices and ETFs. Those trading above their January highs are leaders showing relative strength. Those trading below their January highs are the laggards showing less strength. Chart 2 shows the Nasdaq 100 ETF (QQQQ) trading above... READ MORE
DOW FALLS SHARPLY IN FINAL HOUR... Led by weakness in financials, the Dow Industrials gave up its afternoon gains to close with a modest loss on the Wednesday. Chart 1 shows the Average trading at around 8040 in the late afternoon before plunging below 7900 in the final hour of... READ MORE
SELLING PRESSURE INTENSIFIES... Even though the major-index ETFs (QQQQ,SPY,IWM, DIA) are in clear uptrends, they are also overbought and ripe for a correction or a consolidation. As noted on Monday, prior pullbacks were limited to two days as stocks recovered quite quickly. Monday's decline was sharp,... READ MORE
USING BOLLINGER BANDS ON DAILY CHARTS... Stocks bounced back from Monday's selloff. As a result, it's difficult to decide if the rally off the March 9 bottom is over or just pulling back a bit. If it does pullback, how far? One valuable tool to help... READ MORE
SPY EXTENDS HIGHER ON LOWER VOLUME... Despite a clear uptrend since early March, the current rally in SPY is getting stretched as volume declines and overbought conditions extend. Chart 1 shows the S&P 500 ETF (SPY) with a 28-day rally since early March. All told, SPY is up... READ MORE