一个笨蛋的股指交易记录-------地狱级炒手

hefeiddd · 发表于 2009-4-2 16:52

May 05, 2007THOSE LAGGING SMALL CAPS By Chip Anderson
Arthur Hill
Even though the Dow is trading at all time highs and the S&P 500 is trading above 1500 for the first time since 2000, the Russell 2000 continues having trouble with resistance around 830. Thinking in terms of Dow Theory, I view this as a non-confirmation. A bull signal is triggered or renewed when both the Dow Industrials AND the Dow Transports move to new highs. Failure by one of these averages results in a non-confirmation and this questions underlying strength.

The Dow and the S&P 500 cleared resistance with relative ease, but the Russell 2000 has been consolidating around 830 the last three weeks. Technically, the Russell 2000 closed above its February high in late April and again in early May. Realistically, the index has yet to forge a convincing breakout and relative weakness in small-caps is casting a shadow on the current rally. The Russell 2000 represents, uh, 2000 stocks and it would be nice to have them on board to confirm strength in large-caps.

Posted by Chip Anderson at 4:05 PM in Arthur Hill | Permalink

May 05, 2007MARKET IS BULLISH BUT OVERBOUGHT By Chip Anderson
Carl Swenlin
The weekly chart of the S&P 500 Index below reveal that prices are behaving in a very bullish fashion. The index has broken above the gradually rising trend channel that prevailed from 2004. In March prices pulled back and successfully tested the support provided by the top of the channel. Since then the rally resumed, making new highs and apparently establishing an even steeper rising trend channel.
Because prices have reached the top of the channel, we must consider that the market is overbought, and there are plenty of other indicators that will confirm this; however, there is no technical justification to turn bearish at this time. It is possible for prices to continue to rise just below the top of the channel, or another correction may take place, taking prices back to the bottom of the channel. Worse could happen, but I do not expect it.

Bottom Line: Overbought conditions in bull markets may cause more caution than usual, but higher prices can occur, even as the overbought condition corrects.

Posted by Chip Anderson at 4:04 PM in Carl Swenlin | Permalink

May 05, 2007NETWORK SPEED, CHILLER By Chip Anderson
Site News

NOTHING SPECIAL HAPPENING HERE - NOPE - It's certainly not worth your time to completely read Chip's article this week. Nope. I'd just skip it entirely.

NETWORK SPEED BACK TO NORMAL WITH ZERO ERRORS! - We've been slowly and steadily getting the speed of our network back up to Gigabit speed. (We had to slow it down last month in order to avoid some performance bottlenecks that had crept into things - see the last two newsletter for details.) I'm please to say we are back to our Gigabit speed and have been running for six days now with a grand total of zero internal network errors! Even on good days in the past, we always had a small but measurable amount of internal network errors - never again. At this point, even one internally dropped network packet is one too many!
CHILLER CHILLING Our huge new chiller (which will be used to cool our hot, hot servers) was turned on for the first time last week and is now generating 40-degree water in a testing mode. That's the last step in our long-running server room upgrade project. Soon we will be ready to re-locate our servers back into their new home. At this point, it looks like that will happen in two weeks but keep checking the "What's New" area of the Members Home Page for updates.

Posted by Chip Anderson at 4:02 PM in Site News | Permalink

May 05, 2007XAU INDEX IS TESTING ALL-TIME HIGH By Chip Anderson
John Murphy
One of the most consistent of all intermarket relationship is the inverse relationship between gold assets and the U.S. Dollar. Nowhere is that more evident than in the chart below. The green line plots the U.S. Dollar Index (which measures the dollar against six foreign currencies. The Euro has the biggest impact in the USD). The orange line is the Gold & Silver (XAU) Index of precious metal stocks. It's clear that they trend in opposite directions. For example, the 1996-2000 dollar rally coincided with a major downturn in the XAU (see arrows). The fall in the dollar at the start of 2001 helped launch a major upturn in gold shares. The most important feature of the chart is that both markets are at key junctures. The green line shows the Dollar Index testing its all-time low along the 80 level. The orange line shows the XAU testing its all-time highs around 150 reached in 1987 and 1996. The fact that the XAU is stalled at long-term resistance may also explain why precious metal stocks have lagged behind the commodity over the last year. That may also explain why the bull market in bullion has been stalled since last spring.

Posted by Chip Anderson at 4:01 PM in John Murphy | Permalink

May 05, 2007TAKE ADVANTAGE OF US, PLEASE! By Chip Anderson
Chip Anderson
Our Spring Special is running throughout the month of May! Let me repeat that in case you missed it: Our Spring Special is on from now until May 31st! Sorry for the blatant plug, but every time one of these special periods end, we get flooded with message from people who claim that they missed it. The reasons range from the comic to the tragic and we do our best to accommodate everyone but it is waaaaay better if everyone would sign up for the special NOW while it is on, instead of sending us panicky email after it ends.
I will now take questions from the audience:
Q: What the heck is the "Spring Special"? A: From now until the end of May, if you sign up for 12 months of any of our charting services, you will get 2 additional months for free. If you sign up for 6 months of any service, you will get 1 additional month for free. It's that simple. Click here to get started.
Q: I'm already a member. How can I take advantage of this special? A: No problemo. The same deal applies to anyone who extends their existing membership. Extend for 12 months and you'll get 2 free months. Extend for 6 months and you'll get 1 free month.
Q: My membership doesn't expire for a long time. Can I take advantage? A: Sure, if you want. You can "lock in" even more time at these special rates right now. We'll just push out your expiration date.
Q: Does the special apply to service upgrades? A: Nope - however, you can upgrade your service and then use the special rates to extend your new service for 7 or 14 months. BTW, always upgrade BEFORE extending your account! It will save you a significant amount of money.
Q: OMG! I just extended my account two days ago and now you guys are running a special! I can't believe I missed it! A: You probably didn't miss it. We started running the special several days ago. Check your email confirmation to see if you got the special rate. If you missed the special, you can always extend your account again right now to "lock in" more time at the special rates.
Q: I use StockCharts.com all the time. Can I get more than 14 months of service at this special rate? A: Sure. Just place two or more orders and we'll extend your account by the appropriate amount.
Q: Do I need a coupon code to qualify for the Spring Special? A: Nope.
Q: How frequently do you run specials? A: That depends on a variety of business factors. We make no guarantees about when or how often we will run specials. My advice is to take advantage of them when the appear because they might not be back for some time.
Q: Any price changes on the horizon? A: Not at this time however keep in mind that StockCharts.com has never changed its prices. That goes all the way back to January 2002 when we first introduced our full line of subscription services. How many other things do you know of that are the same price now that they were back then?
Q: Got any other specials for us? A: Glad you asked! As a special reward to everyone that has read this far in the newsletter, I have a secret coupon code that you can use in our on-line bookstore for a 25% discount on anything we sell there! Just use the coupon CWMay2007 when completing your bookstore order. This is the biggest discount we've ever offered for our bookstore. Don't let it pass you by - it also expires at the end of the month.

Posted by Chip Anderson at 4:00 PM in Chip Anderson | Permalink

April 21, 2007EARTH DAY HIATUS By Chip Anderson
Tom Bowley
Look for Tom's commentary next time.

Posted by Chip Anderson at 4:06 PM in Tom Bowley | Permalink

April 21, 2007SMALL CAPS LAGGING LARGE-CAPS By Chip Anderson
Arthur Hill
The Dow Diamonds (DIA) moved to a new all time high this past week and the S&P 500 ETF (SPY) recorded a multi-year high. En route to these highs, both exceeded their late February highs and large-caps are showing relative strength. In addition, both gapped higher on Monday and held these gaps throughout the week.
On the other side of the market, the Russell 2000 iShares (IWM) is having trouble with resistance from the late February high and small-caps are showing relative weakness. The ETF also pulled back rather sharply on Thursday and actually filled Monday's gap. IWM bounced back on Friday, but remains at resistance and has yet to breakout. The price relative (IWM:SPY) further confirms that IWM is not as strong as SPY. The indicator has been overlaid the IWM chart and it formed a lower high in April.

IWM is close to a breakout and a move above the February high would affirm the breakouts in SPY and DIA. Failure to breakout would show continued weakness and this would cast a shadow on the current rally. At the very least, relative weakness in IWM means we should favor large-caps over small-caps in the coming weeks and months.

Posted by Chip Anderson at 4:05 PM in Arthur Hill | Permalink

April 21, 2007CYCLE ORIENTATION IS BULLISH By Chip Anderson
Carl Swenlin
Back in November 2006 I speculated that the 4-Year Cycle trough had arrived in June/July 2006, and that the implication was bullish for stocks – bullish because we normally expect an extended rally out of those cycle lows. At this point, I think that assessment is proving to be correct because there has been a substantial rally, and the recent correction low has failed to challenge the 2006 lows. In other words, the first leg of the current 4-Year Cycle has shown unusual strength, and it is reasonable to assume that there could be a few more good up legs before the bull market finally tops out.
In a shorter-term context, we can also note that the March low also marks the cycle trough for the 9-Month Cycle that began last summer in conjunction with the 4-Year Cycle. I had expected the 9-Month Cycle trough to arrive this month (around April 16), but, since the S&P 500 has already exceeded its February high, I have to accept the March 14 low as being the cycle trough – having arrived one month early. Another feature of that cycle is that the high price point in the cycle (the crest) is located on the extreme right side of the cycle arc. This is a bullish configuration.
Assuming that we are beginning a new 9-Month Cycle, and assuming that the bullish configuration (right-hand cresting) persists, it will be about six months or more before the next important price top arrives. Regarding this estimate, I would pencil it in, rather than using chisel in stone.

A casual examination of the cycle chart will reveal that there really is no typical cycle configuration, and the spacing between troughs can be terribly inconsistent for the 9-Month Cycle and subordinate (shorter) cycles; however, cycle analysis does provide a certain context that can be applied to price movement, which can be useful to the intuitive side of the brain.
Bottom Line: Cycle analysis is an imperfect tool, but current cycle orientation is more clear than usual, and it is bullish for stocks, probably for several months.

Posted by Chip Anderson at 4:04 PM in Carl Swenlin | Permalink

April 21, 2007STOCK MARKET SEEING "ROTATION" By Chip Anderson
Richard Rhodes
The positive stock market rally is undergoing significant "rotation" within various indices, which in our opinion is quite important from both an investment and trading perspective. First, when we invest or trade, we want to run with the "fastest horses" in order to outperform the markets or one's particular benchmark. Therefore, it behests us to use technical analysis on specific ratio charts to discern where to put our money in order to earn outsized profits. This is relative investing 101. Last week, we will note that the large caps handily outperformed the small caps. This is a trend that has been ongoing for the past year, but one that hasn't really gotten the attention of the hedge funds and hot money. Well, that is about to change, and the media will begin to pick up on this material change and it shall have repurcussions throughout the trading world. If we analyze the ratio chart between the S&P 500 Large Caps (SPY) and the Russell 2000 Small Caps (IWM), we find a "major low" was forged in April-2006, and since then the ratio has held above its low and formed what appears to be a "right shoulder" of a larger "head & shoulders bottoming pattern." This is of course hugely bullish, for it portends months and years of outperformance by the large caps such as Wal-Mart (WMT), Citigroup (C), 3M (MMM) and Pfizer (PFE).

For this bullish pattern to be confirmed, a move above neckline resistance at 1.86 is required; however, we would become more confident a breakout is developing with a breakout above the longer-term 500-day moving average. The 40-day stochastic is showing strength from a higher low, which further increases the probability this bullish pattern will come to fruition. In other words, the ducks are lining up rather nicely.

And finally, we would also note that SPY isn't only poised to outperform IWM; it showing bullish technical patterns against European and Asian regional indices...and perhaps more importantly...the Emerging Markets. Hence, when we are long - we want to be long large caps; when we are short - we want to be short small caps and certain foreign regions or indices. It's just that simple right now.

Posted by Chip Anderson at 4:03 PM in Richard Rhodes | Permalink

April 21, 2007SITE SLOWNESS, SERVER ROOM By Chip Anderson
Site News

RECENT SITE SLOWNESS - For details on our recent website slowness, please see Chip's article above. To compensate our users for the problems, we have credited all members 2 additional weeks of service.

SERVER ROOM PROGRESS REPORT - Work continues to progress on our server room upgrade project. The chiller has finally been installed, and we are hoping to start it up for a test run sometime this coming week. If all goes well, we will be able to get all of our servers back in there permanent homes soon!

Posted by Chip Anderson at 4:02 PM in Site News | Permalink

April 21, 2007ASIA RECOVERS By Chip Anderson
John Murphy
Thursday's 4.5% drop in Chinese stocks caused nervous selling in other Asian markets. By the time the U.S. market opened, however, Europe had already started to recover and initial U.S. losses were modest. By day's end, the Dow had closed at a new record high. A strong Friday open in Asian markets set the stage for a strong day in global stock markets. Chart 1 is an hourly bar chart of the last ten days. It shows the Pacific Ex-Japan iShares (EPP) gapping down on Thursday (red arrow). The good news is that the EPP then gapped back up on Friday (green arrow). Thursday's isolated price bars (see circle) created an "island" bottom which is a short-term bullish pattern. [An ""island"" bottom occurs when a "down gap" is immediately followed by an "up gap"]. The U.S. market also got a big boost from large industrials like Caterpillar and Honeywell which led the Dow Industrials to a new record high. A big jump in Google pushed the Nasdaq up against its 2007 highs. Commodity markets like gold and oil that pulled back on Thursday (owing to concerns about higher Chinese interest rates) recovered strongly on Friday. Commodity-related stocks – like basic materials, energy, and precious metals – were among Friday's strongest groups. A weaker dollar is continuing to feed the commodity rally.

Posted by Chip Anderson at 4:01 PM in John Murphy | Permalink

April 21, 2007MORE SPEED LEADS TO HUGE SLOW DOWNS By Chip Anderson
Chip Anderson
The markets did great this week with the Dow hitting record highs and closing in on 13,000 however almost no one here at StockCharts.com was paying much attention. As most ChartWatchers know, we spent much of the week wrestling with technical glitches. I thought I'd take some time to explain what we've learned about the problems and the steps we are taking to prevent them from happening again. If you are not interested in computers and networks, now might be a good time to skip down to the other articles

.
About a year ago we started upgrading all of the equipment here at StockCharts.com from the slower 100 Megabit networking speed to the newer 1 Gigabit speed. (Most home networking equipment works at 100 Megabits although - like us - you can upgrade your stuff to 1 Gigabit relatively inexpensively these days.) Upgrading our network to the faster speed has many benefits to all of our users: our servers send around stock price data faster, the charts we create get sent out faster, we can backup our server data faster, etc. In order to upgrade a network, you have to replace (or upgrade) both the computers and the switches on the network. (A switch is a device that connects all of the wires from all the different computers. Most home networks have a switch built into the router/firewire device that the broadband modem plugs into.)
Now, there is a hidden problem with upgrading the speed of any network - a problem that most of the network equipment people don't tell you about. With few exceptions, there is always a point where your high speed network meets a slower speed device. In our case, our three connections to the Internet work at 45 Megabits and so, at some point, all of our outbound traffic has to slow dramatically in order to get out one of those wires.
The situation is analogous to a sink with a slow drain and a big faucet. The slow drain represents the slow connections to the Internet, The big faucet represents the fast connections to our charting servers, and the water represents all of the bits that make up our charts. The overall goal of the network is to keep the sink from overflowing.
If the water is able to go down the drain as fast as it is coming out of the faucet, everything is fine. The sink remains almost completely empty. Even if there are occasional high-speed bursts of water from the faucet, things are probably fine also. The extra water just stays in the sink until the drain has a chance to "catch up." The sink "buffers" the extra water for the drain.
Problems happen when the amount of water coming out of the faucet exceeds the amount of water going down the drain for a "long time" and the sink becomes completely full. At that point, any additional water that comes out of the faucet will get spilled (i.e., lost).
Coming back to the world of networking, this process of "buffering" (i.e., the sink) happens inside whichever device is connecting the high-speed network to the slower speed network - typically the switch (or the router/modem in most homes).
Now, when we started to upgrade our network to gigabit speed, the first thing we did was go out and buy some very nice, high-speed switches from a very well known network equipment manufacturer. Where a consumer level gigabit switch might cost $50 these days, the ones we got cost several thousand dollars (which is typical for enterprise networking). In return for that money, we supposedly got three things - long-lasting hardware, big sinks, and software that would tell us if the sinks ever overflowed. (See where I'm going with this?)
Ultimately, most of last week's problems were caused by a buffer overflowing inside one of those new switches. That is no surprise to any of us - it was one of the first things we looked for. The bigger problem was that everyone was confused by four facts:

When data went out through our slower ISP, everything worked fine.

Ironically, the answer to the mystery lay in the article that I wrote in the last newsletter - the one where I sort of bragged about how much faster we were able to generate charts these days. By increasing the speed at which we create our charts, we metaphorically increased the speed at which water was bursting into the sink from the faucet. The result was an overwhelmed sink and thus, data loss.
The immediate solution was to slow our network back down to 100 megabits. That smoothed out the flow of data and stopped the data loss at the switch. Obviously that is not the right long-term solution though because we lose all of the other advantages of gigabit networking. The long-term solution is to upgrade our switches to ones with HUGE sinks (i.e., memory buffers) which we will be doing this weekend. Once that work is complete, you can expect our site to be faster than ever.
In case you missed the announcements on the website, we have credited ALL subscribers with an additional two free weeks of service to make up for last week's problems. Thanks for continuing to support StockCharts.com.

Posted by Chip Anderson at 4:00 PM in Chip Anderson | Permalink

April 08, 2007USING THE PUT CALL RATIO By Chip Anderson
Tom Bowley
The put call ratio ("PC") is quite simply the total number of put options divided by the total number of call options. These options include both individual equity options and index options. Every day you can monitor the relationship between put options and call options at www.cboe.com. Once in the site, click on "Data", then "Intra Day Volume". Every half hour, the information is updated. This article is not the appropriate forum to discuss options strategies and definitions, but in its most basic form, put option buyers are expecting the market to decline and call option buyers are expecting the market to advance. The PC gives you a quick, concise picture of the relationship between the put buyers (bears) and call buyers (bulls). The beauty of the PC is that it's a contrarian indicator. When the put call ratio spikes above 1.0, it indicates the market is becoming oversold short-term so expect a rally. When the PC drops below 0.6, the market is becoming overbought short-term so expect a decline. I like to use the 5 day and 21 day moving averages of the PC. Any time the 21 day moving average of the PC approaches 1.0, start looking for a bottom in the market. Historical PC data is available at CBOE beginning in 1995. Let's take a look at how this reading of investor sentiment could have been used to identify recent bottoms in the S&P 500 chart.

Notice that both bottoms formed when the PC was at extreme readings. The PC at the recent March lows was the lowest 21 day moving average reading since the data was compiled. That reading is indicative of a long-term bottom, not a long-term top. Major tops are formed when the market is euphoric. The recent extreme pessimism suggests that this bull market still has legs - strong legs. We remain very bullish on equities for the balance of 2007 and into 2008.

Posted by Chip Anderson at 4:06 PM in Tom Bowley | Permalink

April 08, 2007UP SWING CONTINUES By Chip Anderson
Arthur Hill
The Nasdaq rally continued into its fourth week with a gap up on Tuesday and move into the late February gap zone. This late February gap started a sharp decline to the March lows and the recovery back above 2460 is quite impressive. Even though volume is not so impressive, the current swing is clearly up and we should at least respect this up swing until it is proven otherwise.
Just what would it take to reverse the current upswing? I am watching three items: Tuesday's gap, the late March lows and RSI. The Nasdaq gapped higher on Tuesday morning, closed strong on Tuesday and continued higher the next two days. This follow through is bullish and the gap is bullish as long as it holds. The index established support around 2400 with three indecisive candlesticks (blue oval). A move below Tuesday's gap and below the late March low would reverse the current upswing. Until these are broken, the bulls have a clear edge and we should expect higher prices.

RSI is trending higher and above 50. RSI turned oversold in early March and moved above 50 over the last few weeks. I drew a trendline extending up from the March low and RSI is also trending higher. Momentum continues to improve and this is also bullish. A break below this trendline and a move below 45 in RSI would reverse the uptrend in momentum. The bulls also have the momentum edge and we should not bet on lower prices until a bearish signal.

Posted by Chip Anderson at 4:05 PM in Arthur Hill | Permalink

hefeiddd · 发表于 2009-4-2 16:53

April 08, 2007THRUST/TREND MODEL NEARS BUY SIGNAL By Chip Anderson
Carl Swenlin
Our Thrust/Trend Model (T/TM) is so-named because it treats bottoms and tops differently – tops tend to be rounded trend changes, and bottoms tend to be formed by sharp changes in direction accompanied by internal up thrusts. At price tops, T/TM changes from a buy to neutral (or sell) based upon a downside crossover of the 50-EMA in relation to the 200-EMA, evidence that a change in trend from up to down has occurred. (The T/TM for the S&P 500 is currently in neutral.) At bottoms the model uses a double screen – the PMO (Price Momentum Oscillator) crossing up through its 10-EMA, and the Percent Buy Index (PBI) crossing up through its 32-EMA.
While PMO crossovers alone are useful for short-term work, there are a lot of whipsaws, so we use the additional screen of the PBI crossover to slow the model down, making it more suitable for medium-term work. On the chart below we display all the components of the T/TM. Of particular interest now are the two thrust components – the PMO and PBI. Note that the PMO upside crossover has already occurred (on the day of the giant one-day rally); however, while the PBI still remains below its 32-EMA, it has closed the gap. If the PBI does cross to the upside, the T/TM for the S&P 500 will switch to a buy signal, but my advice would be to not anticipate. Wait for it to happen.

Besides the normal need to maintain model discipline, one of the reasons for caution is that the PBI has still not dropped to the level of previous corrections. It is not absolutely necessary that it do this, but it would be a desirable sign that the correction had run a normal course and that a price bottom would not be suspect. I have drawn ellipses on the PBI in 2005 and 2006 to show the kind of PBI action we might expect.
Another concern is that the PMO looks as if it is trying to turn down below the zero line. If this were to happen, it is extremely negative for the short-term, possibly longer.
Bottom Line: We have had a number of positive events over the last few weeks, and the T/TM is close to generating a buy signal; however, there is reason to believe that the correction still has at least a few more weeks to go.

Posted by Chip Anderson at 4:04 PM in Carl Swenlin | Permalink

April 08, 2007LOOKING AT CRUDE OIL By Chip Anderson
Richard Rhodes
For the past couple of weeks, the markets have focused in upon crude oil prices and their attendant rise given the Iran hostage situation. The prevailing thought was that "geopolitical premium" was on the order of $4-to-$5 a barrel of the $67/barrel price; and that once the situation was concluded successfully - the premium would be lost rather quickly. Of course the situation was concluded last week, but the price of crude oil didn't "plunge" as expected. In fact, only not been the case as crude oil has lost only -$2.50 off its highs, with the decline quite orderly indeed. We cannot think of a more bullish respone than what was seen; obviously there are other mitigating factors extant in the price of crude oil that haven't allowed it to decline. Therefore, we think the current rally has "legs", with the recent weakness nothing more than a good old bit of profit-taking before an assault on the all-time highs. Technically, we can make the tentative "bullish case" given major support levels have held. Major trendline support has held; and the 200-week moving average has held; and minor trendline resistance was broken above. If the 60-week moving avearge just overhead can be cleared with a bit of authority, then our bullish confidence level will be raised materially.

Conversely, we can make the tentative "bearish case" that perhaps crude oil prices can "fail" at the 60-week moving average has it has done so for the past several days. Certainly this was the case in 2001 case where the flattening 60-week moving average turned prices lower by -33%. If this were to occur, then a 2001-like decline would target major support near $40. We think this is a remote probability, but a probablity nonetheless. Therefore, our current stance is quite simple: we are bullish of crude oil, energy stocks in general, and oil service shares in particular [Transocean (RIG) noted on Friday that demand for services was high and rising and likley to do so far into the future]. However, we understand the "risk" to the bullish trade, and can manage our risk easiliy using tight position stops.

Posted by Chip Anderson at 4:03 PM in Richard Rhodes | Permalink

April 08, 2007CHILLER INSTALLATION THIS WEEK!By Chip Anderson
Site News

Regular readers know that we've been trying to complete a big upgrade to our server room for almost a year now. It's been extremely frustrating dealing with the various powers-that-be about completing things, but we are on the verge of the last big step in the project - the installation of our outdoor "chiller" - a huge air conditioner that will generate cold water which will be used to keep our server room from getting too hot. We expect for that work to be completed next week. After that, we will start moving our servers from their temporary space back into their spiffy new digs. We'll then be able to continue expanding our server capacity for the foreseeable future!

Posted by Chip Anderson at 4:02 PM in Site News | Permalink

April 08, 2007EURO HITS TWO-YEAR HIGH AGAINST DOLLAR By Chip Anderson
John Murphy
The U.S. Dollar Index fell during the week and is drawing dangerously close to last December's low (green circle). The foreign currency with the biggest influence on the USD is the Euro. Expectation for continuing economic strength in Europe – and the likelihood for further ECB rate hikes – pushed the Euro (blue line) to a new two-year high against the dollar. The weekly bars in Chart 2 show the Euro (blue line) moving up to challenge its late 2004 peak near 136. A close above that chart barrier would increase the odds for the USD to threaten its corresponding low near 80. That would be a very important test for the U.S. currency.

Posted by Chip Anderson at 4:01 PM in John Murphy | Permalink

April 08, 2007WHICH CHARTS DO I LOOK AT? By Chip Anderson
Chip Anderson
Hello Fellow ChartWatchers!
This week I thought we'd look at something different - the charts that matter the most to me personally. Now, brace yourself... these charts are not financial charts. Nope. These are the charts that tell us at an instant how well the StockCharts.com website is performing. If there is trouble with the site, these charts frequently help us find and fix the problem. In addition, whenever we add or reconfigure our servers, these charts can tell us if the improvements we expect to see actually occur.

This first chart shows the memory utilization of just one of our 17 charting servers - the computers that actually create the chart images you see. See the even "sawtooth" pattern? That's a good thing. It means that the server is able to keep up with it's charting duties easily. One of the first signs that a server is overloaded is a change is that pattern.

The chart above shows the results of a server stress test. This server was pounded with just over 4,000 chart requests from 40 simulated users in a very short span of time. The little black dots on the chart show the time (in milliseconds) it took for each chart request to be completed. The blue line shows the running average of all those times. In this case, the server was able to create each chart in around 274 milliseconds (on average). Everytime we get new servers or make changes to our system, we rerun these stress tests to make sure our average chart generation time doesn't slip. In fact, since we've started adding our new 4-CPU servers from Sun Microsystems, the average chart generation time has decreased by about 25% - something we are very excited about.
If all of our users were located in our offices, they would get their charts in about the same time it takes the servers to create them - i.e. ~1/3rd of a second. Unfortunately, that isn't the case. There's another factor in site performance that we monitor closely - the speed of the Internet itself. Many people take their Internet connection for granted - we don't. Here's one of the key charts we use to see if everything about our site is working well

This chart was created for us by a company called Keynote Systems. They have computers located all over the world that are programmed to download selected pages from our website and measure how long it takes for those pages to arrive. Each one of the green dots on that chart represents one timing test from one of Keynote's 45 different computers. As you can see, at the time this chart was created, we were able to push complete pages out to those computers in anywhere from 2 to 6 seconds.
Much of the variation in those times have to do with each server's physical distance from our offices - but some of the times are obviously affected by other factors. See the green dots that are near the top of the chart? It turns out that most of those were coming from just one of Keynotes computers - specifically, the server in Pittsburgh, PA on the Savvis.net ISP connection. That means that - at the time this graph was created - some of the people in the Pittsburgh area might have been experiencing slowness because of problems at Savvis.net.
While such problems are not uncommon, they are frustrating to track down because the problems can appear and disappear in a heartbeat. Typically these kind of problems get corrected within 24 hours. If we get reports from our users about slowness that persists for several days, we try to help them report the problem to their ISP because they have the best chance of fixing the problem. Another thing we do is to run more detailed tests from the Keynote server with the problem. In this case, here's what those results look like:

This chart shows the time it took for all of the parts of our homepage to show up in Pittsburgh. In this case, everything worked great. We were actually able to get all of our parts shipped out in around 4.5 seconds. The final 2 seconds were due to the time it took for the banner ad to come down from our advertising partner (something we don't have control over). Since things worked fine this time, we suspect that the problem at Savvis.net has been fixed (or will be soon).
While these charts don't really tell you anything about the market, they help us keep StockCharts.com up and working as quickly as possible. Hopefully you enjoyed this "peek behind the curtain" at some of the charts that we stare at every day.

Posted by Chip Anderson at 4:00 PM in Chip Anderson | Permalink

March 17, 2007KEY SECTORS SHOW RELATIVE WEAKNESS By Chip Anderson
Arthur Hill
The sector rotations since 26-Feb reflect a defensive and nervous market. Things started changing on Wall Street with the sharp decline on 27-Feb and the PerfChart below shows sector performance since this decline. The Utility SPDR (XLU), the Industrials SPDR (XLI) and the Consumer Staples SPDR (XLP) are the strongest sectors. Strength in XLP and XLU shows a preference for defensive sectors. The Consumer Discretionary SPDR (XLY) and Finance SPDR (XLF) are the weakest sectors and this is not a good sign.

As its name implies the Consumer Discretionary sector represents companies that are sensitive to economic fluctuation. This includes retail, media, leisure, homebuilding and restaurant stocks. These are the first to get hit when there are signs of weakness in the economy. Relative weakness in this sector points to upcoming weakness in the economy.

Finance is the single biggest sector in the S&P 500 and XLF represents the banks and brokers. We are already aware of the sub-prime lending problems and this continues to hang over the Finance sector. The sub-prime problems are probably not enough to bring down the big banks, but continued uncertainty is keeping buyers on the sidelines. The S&P 500 is going to have a hard time rising as long as these two KEY sectors show relative weakness.

Posted by Chip Anderson at 4:05 PM in Arthur Hill | Permalink

March 17, 2007ARE WE BEAR YET? By Chip Anderson
Carl Swenlin
One of my colleagues has been harassing me (in a friendly way) for not yet having declared myself a bear. The truth is that top picking is a treacherous business, and I have given it up in favor of letting trend models make my declarations for me. For example, I changed from bullish to neutral (medium-term) on stocks on March 6, and some readers have wondered why I didn't go all the way to bearish instead of just neutral. The reason is that my long-term trend model must be bearish at the time the medium-term mechanical model issues a sell signal in order for me to become medium-term bearish. My long-term trend model also defines, for me, whether the market is in a bull or bear mode over all.
The long-term trend model is driven by the relationship of the 50- and 200-EMAs (exponential moving averages) of the price index. If the 50-EMA is above the 200-EMA, we are in a bull market, and we are in a bear market if the 50-EMA moves below the 200-EMA. In the chart below you can see that this model has performed brilliantly from late-2000 to the present. The downside crossover in October 2000 cleanly declared that a bear market was in progress, and the upside crossover in May 2003 confirmed that a bull market had begun. After that, there were four bull market corrections that caused the 50-EMA to approach the 200-EMA, but a downside crossover never happened, and the bull market, by this measure, remained in force.
Now another correction is in progress, and it has caused the 50-EMA to turn down, but, as you can see, we are a long way from a downside crossover, assuming that no major crash occurs. Until proven otherwise, I think it is safest to assume that the recent decline is a bull market correction. This doesn't mean that we have our guard totally down. Our medium-term model has us out of the market, but the long-term model prevents us from becoming aggressive on the short side.

While the long-term trend model has done well in the last six years, I should emphasize that it is not always this perfect, and it too slow to side step major crashes, like 1929 and 1987. For that we need more sensitive tools, focused in the medium-term. The long-term trend model is best used as a tool to objectively define bull and bear markets, so, for example, if someone asks me, "Is it a bear?", I can look at the chart, see that the 50-EMA is above the 200-EMA, and reply, "Not yet!"
Bottom Line: It is useful to have an objective method to define bull and bear markets, and we use simple crossover signals generated by longer-term moving averages. I do not claim that this is the best method, but it is very effective for our purposes.

Posted by Chip Anderson at 4:04 PM in Carl Swenlin | Permalink

March 17, 2007REVIEWING THE "YEN-CARRY TRADE" By Chip Anderson
Richard Rhodes
The recent focus of the equity markets is upon the "sub-prime" mortgage problem; and upon the "yen-carry trade". We think both are valid concerns; however, the question of the "yen-carry trade" is more important in our mind than the "sub-prime implosion." Perhaps the sub-prime problem is the "catalyst" to start the correction ball rolling, while the "yen-carry" is the horse that does the heavy-pulling, and the heavy-pulling in this regard is a correction that takes stocks back to more traditional oversold levels.

That said, looking at the Yen-S&P 500 ratio, we find two clear periods in the past decade - one short and one long - where the yen rose against the S&P. And in both cases, when the yen was rising against the S&P 500, the S&P 500 was in an absolute correction. The first period was short, and coincided with the 1998 Russian currency crisis, which took the S&P lower by -22%; whereas the second period was more prolonged and coincided with the technology "bubble". The result was quite a larger bear market with the S&P dropping 50%. Thus there is precedent for a larger decline coincident with a rising ratio.

Hence we must be concerned given the ratio is starting to show nascent signs of wanting to rally once again. The initial "spike higher", coupled with the oversold 40-week stochastic certainly concerns us. Moreover, the yen is right upon its 80-week trading moving average, of which a break above it would be the first time it has closed above it since 2005. Obviously, this would usher in higher yen prices. So, we think the ratio rally continues, and we clearly believe stocks will falter.

And in ending, this begs the question as to just how "deep" a correction are we looking at. If we simply look at the weekly and monthly S&P charts, we find major weekly support crosses at 1330...or its 80-week moving average. Monthly support however, is at the 40-month moving average, which crosses at 1230. Therefore, we think it would be rather reasonable for a test of this zone to occur; of which the total decline off the high would be roughly -9% and -16% respectively. Normal corrections on the order of -10% are common; hence we are willing to split the zone difference leaving our target at roughly S&P 1280. Obviously, this means are are selling rallies.

Posted by Chip Anderson at 4:03 PM in Richard Rhodes | Permalink

March 17, 2007DAYLIGHT SAVINGS TIME TROUBLES By Chip Anderson
Site News

In preparing for the change in start time for US Daylight Savings Time, we had to complete four different tasks ahead of Monday's open: 1.) Automatically patch our Linux and Windows 2003 servers, 2.) Manually patch all of our Java virtual machines, 3.) Review our code for any assumptions about DST, and 4.) Manually patch our Windows 2000 servers (because Microsoft refused to provide an automatic patch). We took care of #1, #2 and #3 well ahead of time. #4 was a serious pain - Microsoft's instructions for manually updating Windows 2000 were long and confusing - but we also completed that task ahead of the Monday AM deadline... or so we thought.
Due to the complexity involved, we were unable to thoroughly simulate the effects that the DST change would have on our systems prior to the time change. Unfortunately - you guessed it - not everything was ready. Our changes to the Windows 2000 servers didn't "stick" for some reason and we found a low-level time library inside some of our systems that needed to be updated. Once identified, these problems were quickly fixed but the damage was done.
Again, we apologize for the outage that occurred on Monday and we have credited all of our subscribers with two additional days of service as a result. As long-term members know, whenever a disruption like this happens, we try to take concrete steps to prevent it from happening again. While another DST change is unlikely, we ARE using this episode to accelerate our move away from Microsoft server platforms. This weekend we have converted all 28 of our Windows 2000 servers to Ubuntu Linux. We expect to migrate all of our other servers to Linux by the end of the year. We believe that this step will prevent similar issues from occurring in the future.

Posted by Chip Anderson at 4:02 PM in Site News | Permalink

March 17, 2007FINANCIALS HOLD THE KEY TO THE MARKET By Chip Anderson
John Murphy
It's no secret that one of the main problems pulling the market down over the last month has been the fallout from subprime mortages. It's also no surprise to read that financial stocks (mainly banks and brokers) have been the weakest part of the market over the last couple of weeks. That's a concern because financial stocks are historically viewed as market leaders. They had been leading the market higher over the last two years. Not anymore. The line on top of Chart 1 is a ratio of the Financials Select SPDR (XLF) divided by the S&P 500. That ratio peaked in October of last year, and failed to confirm this year's move to new high ground (red arrow). Even worse, the ratio has fallen to the lowest level since last May. The group itself is now in the process of testing some long-term support lines. One is the 200-day moving average. That support line line hasn't been decisively broken for eighteen months (red circles). Chart 2 shows the XLF also testing a four-year uptrend line (drawn on a log scale). Chart 10 holds some other warnings. One is the unusually heavy downside volume over the last month. Another is the fact that the 14-month RSI is turning down from major overbought territory over 70 (down arrow). The financial sector is undergoing a major test of its long-term uptrend. That's a big test for the rest of the market as well.

Posted by Chip Anderson at 4:01 PM in John Murphy | Permalink

March 17, 2007MARKET'S FIRST RECOVERY ATTEMPT FAILS By Chip Anderson
Chip Anderson
Hello Fellow Chartwatchers!
Last week's recovery rally was crushed by Tuesday's big decline and while the Dow quickly rose back above 12,000, the technical damage was done. The chart below shows the important technical developments for the Dow in recent days. See if you can spot the key signals.

For me, the key signals include:

Support at 12,000 remains strong (so far) - but that's about the only bullish technical signal right now.

Posted by Chip Anderson at 4:00 PM in Chip Anderson | Permalink

« Previous | Next »

hefeiddd · 发表于 2009-4-2 16:54

April 08, 2007THRUST/TREND MODEL NEARS BUY SIGNAL By Chip Anderson
Carl Swenlin
Our Thrust/Trend Model (T/TM) is so-named because it treats bottoms and tops differently – tops tend to be rounded trend changes, and bottoms tend to be formed by sharp changes in direction accompanied by internal up thrusts. At price tops, T/TM changes from a buy to neutral (or sell) based upon a downside crossover of the 50-EMA in relation to the 200-EMA, evidence that a change in trend from up to down has occurred. (The T/TM for the S&P 500 is currently in neutral.) At bottoms the model uses a double screen – the PMO (Price Momentum Oscillator) crossing up through its 10-EMA, and the Percent Buy Index (PBI) crossing up through its 32-EMA.
While PMO crossovers alone are useful for short-term work, there are a lot of whipsaws, so we use the additional screen of the PBI crossover to slow the model down, making it more suitable for medium-term work. On the chart below we display all the components of the T/TM. Of particular interest now are the two thrust components – the PMO and PBI. Note that the PMO upside crossover has already occurred (on the day of the giant one-day rally); however, while the PBI still remains below its 32-EMA, it has closed the gap. If the PBI does cross to the upside, the T/TM for the S&P 500 will switch to a buy signal, but my advice would be to not anticipate. Wait for it to happen.

Besides the normal need to maintain model discipline, one of the reasons for caution is that the PBI has still not dropped to the level of previous corrections. It is not absolutely necessary that it do this, but it would be a desirable sign that the correction had run a normal course and that a price bottom would not be suspect. I have drawn ellipses on the PBI in 2005 and 2006 to show the kind of PBI action we might expect.
Another concern is that the PMO looks as if it is trying to turn down below the zero line. If this were to happen, it is extremely negative for the short-term, possibly longer.
Bottom Line: We have had a number of positive events over the last few weeks, and the T/TM is close to generating a buy signal; however, there is reason to believe that the correction still has at least a few more weeks to go.

Posted by Chip Anderson at 4:04 PM in Carl Swenlin | Permalink

April 08, 2007LOOKING AT CRUDE OIL By Chip Anderson
Richard Rhodes
For the past couple of weeks, the markets have focused in upon crude oil prices and their attendant rise given the Iran hostage situation. The prevailing thought was that "geopolitical premium" was on the order of $4-to-$5 a barrel of the $67/barrel price; and that once the situation was concluded successfully - the premium would be lost rather quickly. Of course the situation was concluded last week, but the price of crude oil didn't "plunge" as expected. In fact, only not been the case as crude oil has lost only -$2.50 off its highs, with the decline quite orderly indeed. We cannot think of a more bullish respone than what was seen; obviously there are other mitigating factors extant in the price of crude oil that haven't allowed it to decline. Therefore, we think the current rally has "legs", with the recent weakness nothing more than a good old bit of profit-taking before an assault on the all-time highs. Technically, we can make the tentative "bullish case" given major support levels have held. Major trendline support has held; and the 200-week moving average has held; and minor trendline resistance was broken above. If the 60-week moving avearge just overhead can be cleared with a bit of authority, then our bullish confidence level will be raised materially.

Conversely, we can make the tentative "bearish case" that perhaps crude oil prices can "fail" at the 60-week moving average has it has done so for the past several days. Certainly this was the case in 2001 case where the flattening 60-week moving average turned prices lower by -33%. If this were to occur, then a 2001-like decline would target major support near $40. We think this is a remote probability, but a probablity nonetheless. Therefore, our current stance is quite simple: we are bullish of crude oil, energy stocks in general, and oil service shares in particular [Transocean (RIG) noted on Friday that demand for services was high and rising and likley to do so far into the future]. However, we understand the "risk" to the bullish trade, and can manage our risk easiliy using tight position stops.

Posted by Chip Anderson at 4:03 PM in Richard Rhodes | Permalink

April 08, 2007EURO HITS TWO-YEAR HIGH AGAINST DOLLAR By Chip Anderson
John Murphy
The U.S. Dollar Index fell during the week and is drawing dangerously close to last December's low (green circle). The foreign currency with the biggest influence on the USD is the Euro. Expectation for continuing economic strength in Europe – and the likelihood for further ECB rate hikes – pushed the Euro (blue line) to a new two-year high against the dollar. The weekly bars in Chart 2 show the Euro (blue line) moving up to challenge its late 2004 peak near 136. A close above that chart barrier would increase the odds for the USD to threaten its corresponding low near 80. That would be a very important test for the U.S. currency.

Posted by Chip Anderson at 4:01 PM in John Murphy | Permalink

April 08, 2007WHICH CHARTS DO I LOOK AT? By Chip Anderson
Chip Anderson
Hello Fellow ChartWatchers!
This week I thought we'd look at something different - the charts that matter the most to me personally. Now, brace yourself... these charts are not financial charts. Nope. These are the charts that tell us at an instant how well the StockCharts.com website is performing. If there is trouble with the site, these charts frequently help us find and fix the problem. In addition, whenever we add or reconfigure our servers, these charts can tell us if the improvements we expect to see actually occur.

This first chart shows the memory utilization of just one of our 17 charting servers - the computers that actually create the chart images you see. See the even "sawtooth" pattern? That's a good thing. It means that the server is able to keep up with it's charting duties easily. One of the first signs that a server is overloaded is a change is that pattern.

The chart above shows the results of a server stress test. This server was pounded with just over 4,000 chart requests from 40 simulated users in a very short span of time. The little black dots on the chart show the time (in milliseconds) it took for each chart request to be completed. The blue line shows the running average of all those times. In this case, the server was able to create each chart in around 274 milliseconds (on average). Everytime we get new servers or make changes to our system, we rerun these stress tests to make sure our average chart generation time doesn't slip. In fact, since we've started adding our new 4-CPU servers from Sun Microsystems, the average chart generation time has decreased by about 25% - something we are very excited about.
If all of our users were located in our offices, they would get their charts in about the same time it takes the servers to create them - i.e. ~1/3rd of a second. Unfortunately, that isn't the case. There's another factor in site performance that we monitor closely - the speed of the Internet itself. Many people take their Internet connection for granted - we don't. Here's one of the key charts we use to see if everything about our site is working well

This chart was created for us by a company called Keynote Systems. They have computers located all over the world that are programmed to download selected pages from our website and measure how long it takes for those pages to arrive. Each one of the green dots on that chart represents one timing test from one of Keynote's 45 different computers. As you can see, at the time this chart was created, we were able to push complete pages out to those computers in anywhere from 2 to 6 seconds.
Much of the variation in those times have to do with each server's physical distance from our offices - but some of the times are obviously affected by other factors. See the green dots that are near the top of the chart? It turns out that most of those were coming from just one of Keynotes computers - specifically, the server in Pittsburgh, PA on the Savvis.net ISP connection. That means that - at the time this graph was created - some of the people in the Pittsburgh area might have been experiencing slowness because of problems at Savvis.net.
While such problems are not uncommon, they are frustrating to track down because the problems can appear and disappear in a heartbeat. Typically these kind of problems get corrected within 24 hours. If we get reports from our users about slowness that persists for several days, we try to help them report the problem to their ISP because they have the best chance of fixing the problem. Another thing we do is to run more detailed tests from the Keynote server with the problem. In this case, here's what those results look like:

This chart shows the time it took for all of the parts of our homepage to show up in Pittsburgh. In this case, everything worked great. We were actually able to get all of our parts shipped out in around 4.5 seconds. The final 2 seconds were due to the time it took for the banner ad to come down from our advertising partner (something we don't have control over). Since things worked fine this time, we suspect that the problem at Savvis.net has been fixed (or will be soon).
While these charts don't really tell you anything about the market, they help us keep StockCharts.com up and working as quickly as possible. Hopefully you enjoyed this "peek behind the curtain" at some of the charts that we stare at every day.

Posted by Chip Anderson at 4:00 PM in Chip Anderson | Permalink

March 17, 2007KEY SECTORS SHOW RELATIVE WEAKNESS By Chip Anderson
Arthur Hill
The sector rotations since 26-Feb reflect a defensive and nervous market. Things started changing on Wall Street with the sharp decline on 27-Feb and the PerfChart below shows sector performance since this decline. The Utility SPDR (XLU), the Industrials SPDR (XLI) and the Consumer Staples SPDR (XLP) are the strongest sectors. Strength in XLP and XLU shows a preference for defensive sectors. The Consumer Discretionary SPDR (XLY) and Finance SPDR (XLF) are the weakest sectors and this is not a good sign.

As its name implies the Consumer Discretionary sector represents companies that are sensitive to economic fluctuation. This includes retail, media, leisure, homebuilding and restaurant stocks. These are the first to get hit when there are signs of weakness in the economy. Relative weakness in this sector points to upcoming weakness in the economy.

Finance is the single biggest sector in the S&P 500 and XLF represents the banks and brokers. We are already aware of the sub-prime lending problems and this continues to hang over the Finance sector. The sub-prime problems are probably not enough to bring down the big banks, but continued uncertainty is keeping buyers on the sidelines. The S&P 500 is going to have a hard time rising as long as these two KEY sectors show relative weakness.

Posted by Chip Anderson at 4:05 PM in Arthur Hill | Permalink

March 17, 2007ARE WE BEAR YET? By Chip Anderson
Carl Swenlin
One of my colleagues has been harassing me (in a friendly way) for not yet having declared myself a bear. The truth is that top picking is a treacherous business, and I have given it up in favor of letting trend models make my declarations for me. For example, I changed from bullish to neutral (medium-term) on stocks on March 6, and some readers have wondered why I didn't go all the way to bearish instead of just neutral. The reason is that my long-term trend model must be bearish at the time the medium-term mechanical model issues a sell signal in order for me to become medium-term bearish. My long-term trend model also defines, for me, whether the market is in a bull or bear mode over all.
The long-term trend model is driven by the relationship of the 50- and 200-EMAs (exponential moving averages) of the price index. If the 50-EMA is above the 200-EMA, we are in a bull market, and we are in a bear market if the 50-EMA moves below the 200-EMA. In the chart below you can see that this model has performed brilliantly from late-2000 to the present. The downside crossover in October 2000 cleanly declared that a bear market was in progress, and the upside crossover in May 2003 confirmed that a bull market had begun. After that, there were four bull market corrections that caused the 50-EMA to approach the 200-EMA, but a downside crossover never happened, and the bull market, by this measure, remained in force.
Now another correction is in progress, and it has caused the 50-EMA to turn down, but, as you can see, we are a long way from a downside crossover, assuming that no major crash occurs. Until proven otherwise, I think it is safest to assume that the recent decline is a bull market correction. This doesn't mean that we have our guard totally down. Our medium-term model has us out of the market, but the long-term model prevents us from becoming aggressive on the short side.

While the long-term trend model has done well in the last six years, I should emphasize that it is not always this perfect, and it too slow to side step major crashes, like 1929 and 1987. For that we need more sensitive tools, focused in the medium-term. The long-term trend model is best used as a tool to objectively define bull and bear markets, so, for example, if someone asks me, "Is it a bear?", I can look at the chart, see that the 50-EMA is above the 200-EMA, and reply, "Not yet!"
Bottom Line: It is useful to have an objective method to define bull and bear markets, and we use simple crossover signals generated by longer-term moving averages. I do not claim that this is the best method, but it is very effective for our purposes.

Posted by Chip Anderson at 4:04 PM in Carl Swenlin | Permalink

March 17, 2007REVIEWING THE "YEN-CARRY TRADE" By Chip Anderson
Richard Rhodes
The recent focus of the equity markets is upon the "sub-prime" mortgage problem; and upon the "yen-carry trade". We think both are valid concerns; however, the question of the "yen-carry trade" is more important in our mind than the "sub-prime implosion." Perhaps the sub-prime problem is the "catalyst" to start the correction ball rolling, while the "yen-carry" is the horse that does the heavy-pulling, and the heavy-pulling in this regard is a correction that takes stocks back to more traditional oversold levels.

That said, looking at the Yen-S&P 500 ratio, we find two clear periods in the past decade - one short and one long - where the yen rose against the S&P. And in both cases, when the yen was rising against the S&P 500, the S&P 500 was in an absolute correction. The first period was short, and coincided with the 1998 Russian currency crisis, which took the S&P lower by -22%; whereas the second period was more prolonged and coincided with the technology "bubble". The result was quite a larger bear market with the S&P dropping 50%. Thus there is precedent for a larger decline coincident with a rising ratio.

Hence we must be concerned given the ratio is starting to show nascent signs of wanting to rally once again. The initial "spike higher", coupled with the oversold 40-week stochastic certainly concerns us. Moreover, the yen is right upon its 80-week trading moving average, of which a break above it would be the first time it has closed above it since 2005. Obviously, this would usher in higher yen prices. So, we think the ratio rally continues, and we clearly believe stocks will falter.

And in ending, this begs the question as to just how "deep" a correction are we looking at. If we simply look at the weekly and monthly S&P charts, we find major weekly support crosses at 1330...or its 80-week moving average. Monthly support however, is at the 40-month moving average, which crosses at 1230. Therefore, we think it would be rather reasonable for a test of this zone to occur; of which the total decline off the high would be roughly -9% and -16% respectively. Normal corrections on the order of -10% are common; hence we are willing to split the zone difference leaving our target at roughly S&P 1280. Obviously, this means are are selling rallies.

Posted by Chip Anderson at 4:03 PM in Richard Rhodes | Permalink

March 17, 2007FINANCIALS HOLD THE KEY TO THE MARKET By Chip Anderson
John Murphy
It's no secret that one of the main problems pulling the market down over the last month has been the fallout from subprime mortages. It's also no surprise to read that financial stocks (mainly banks and brokers) have been the weakest part of the market over the last couple of weeks. That's a concern because financial stocks are historically viewed as market leaders. They had been leading the market higher over the last two years. Not anymore. The line on top of Chart 1 is a ratio of the Financials Select SPDR (XLF) divided by the S&P 500. That ratio peaked in October of last year, and failed to confirm this year's move to new high ground (red arrow). Even worse, the ratio has fallen to the lowest level since last May. The group itself is now in the process of testing some long-term support lines. One is the 200-day moving average. That support line line hasn't been decisively broken for eighteen months (red circles). Chart 2 shows the XLF also testing a four-year uptrend line (drawn on a log scale). Chart 10 holds some other warnings. One is the unusually heavy downside volume over the last month. Another is the fact that the 14-month RSI is turning down from major overbought territory over 70 (down arrow). The financial sector is undergoing a major test of its long-term uptrend. That's a big test for the rest of the market as well.

Posted by Chip Anderson at 4:01 PM in John Murphy | Permalink

March 17, 2007MARKET'S FIRST RECOVERY ATTEMPT FAILS By Chip Anderson
Chip Anderson
Hello Fellow Chartwatchers!
Last week's recovery rally was crushed by Tuesday's big decline and while the Dow quickly rose back above 12,000, the technical damage was done. The chart below shows the important technical developments for the Dow in recent days. See if you can spot the key signals.

For me, the key signals include:

Support at 12,000 remains strong (so far) - but that's about the only bullish technical signal right now.

Posted by Chip Anderson at 4:00 PM in Chip Anderson | Permalink

« Previous | Next »

hefeiddd · 发表于 2009-4-2 16:56

April 08, 2007THRUST/TREND MODEL NEARS BUY SIGNAL By Chip Anderson
Carl Swenlin
Our Thrust/Trend Model (T/TM) is so-named because it treats bottoms and tops differently – tops tend to be rounded trend changes, and bottoms tend to be formed by sharp changes in direction accompanied by internal up thrusts. At price tops, T/TM changes from a buy to neutral (or sell) based upon a downside crossover of the 50-EMA in relation to the 200-EMA, evidence that a change in trend from up to down has occurred. (The T/TM for the S&P 500 is currently in neutral.) At bottoms the model uses a double screen – the PMO (Price Momentum Oscillator) crossing up through its 10-EMA, and the Percent Buy Index (PBI) crossing up through its 32-EMA.
While PMO crossovers alone are useful for short-term work, there are a lot of whipsaws, so we use the additional screen of the PBI crossover to slow the model down, making it more suitable for medium-term work. On the chart below we display all the components of the T/TM. Of particular interest now are the two thrust components – the PMO and PBI. Note that the PMO upside crossover has already occurred (on the day of the giant one-day rally); however, while the PBI still remains below its 32-EMA, it has closed the gap. If the PBI does cross to the upside, the T/TM for the S&P 500 will switch to a buy signal, but my advice would be to not anticipate. Wait for it to happen.

Besides the normal need to maintain model discipline, one of the reasons for caution is that the PBI has still not dropped to the level of previous corrections. It is not absolutely necessary that it do this, but it would be a desirable sign that the correction had run a normal course and that a price bottom would not be suspect. I have drawn ellipses on the PBI in 2005 and 2006 to show the kind of PBI action we might expect.
Another concern is that the PMO looks as if it is trying to turn down below the zero line. If this were to happen, it is extremely negative for the short-term, possibly longer.
Bottom Line: We have had a number of positive events over the last few weeks, and the T/TM is close to generating a buy signal; however, there is reason to believe that the correction still has at least a few more weeks to go.

Posted by Chip Anderson at 4:04 PM in Carl Swenlin | Permalink

April 08, 2007LOOKING AT CRUDE OIL By Chip Anderson
Richard Rhodes
For the past couple of weeks, the markets have focused in upon crude oil prices and their attendant rise given the Iran hostage situation. The prevailing thought was that "geopolitical premium" was on the order of $4-to-$5 a barrel of the $67/barrel price; and that once the situation was concluded successfully - the premium would be lost rather quickly. Of course the situation was concluded last week, but the price of crude oil didn't "plunge" as expected. In fact, only not been the case as crude oil has lost only -$2.50 off its highs, with the decline quite orderly indeed. We cannot think of a more bullish respone than what was seen; obviously there are other mitigating factors extant in the price of crude oil that haven't allowed it to decline. Therefore, we think the current rally has "legs", with the recent weakness nothing more than a good old bit of profit-taking before an assault on the all-time highs. Technically, we can make the tentative "bullish case" given major support levels have held. Major trendline support has held; and the 200-week moving average has held; and minor trendline resistance was broken above. If the 60-week moving avearge just overhead can be cleared with a bit of authority, then our bullish confidence level will be raised materially.

Conversely, we can make the tentative "bearish case" that perhaps crude oil prices can "fail" at the 60-week moving average has it has done so for the past several days. Certainly this was the case in 2001 case where the flattening 60-week moving average turned prices lower by -33%. If this were to occur, then a 2001-like decline would target major support near $40. We think this is a remote probability, but a probablity nonetheless. Therefore, our current stance is quite simple: we are bullish of crude oil, energy stocks in general, and oil service shares in particular [Transocean (RIG) noted on Friday that demand for services was high and rising and likley to do so far into the future]. However, we understand the "risk" to the bullish trade, and can manage our risk easiliy using tight position stops.

Posted by Chip Anderson at 4:03 PM in Richard Rhodes | Permalink

April 08, 2007EURO HITS TWO-YEAR HIGH AGAINST DOLLAR By Chip Anderson
John Murphy
The U.S. Dollar Index fell during the week and is drawing dangerously close to last December's low (green circle). The foreign currency with the biggest influence on the USD is the Euro. Expectation for continuing economic strength in Europe – and the likelihood for further ECB rate hikes – pushed the Euro (blue line) to a new two-year high against the dollar. The weekly bars in Chart 2 show the Euro (blue line) moving up to challenge its late 2004 peak near 136. A close above that chart barrier would increase the odds for the USD to threaten its corresponding low near 80. That would be a very important test for the U.S. currency.

Posted by Chip Anderson at 4:01 PM in John Murphy | Permalink

March 17, 2007ARE WE BEAR YET? By Chip Anderson
Carl Swenlin
One of my colleagues has been harassing me (in a friendly way) for not yet having declared myself a bear. The truth is that top picking is a treacherous business, and I have given it up in favor of letting trend models make my declarations for me. For example, I changed from bullish to neutral (medium-term) on stocks on March 6, and some readers have wondered why I didn't go all the way to bearish instead of just neutral. The reason is that my long-term trend model must be bearish at the time the medium-term mechanical model issues a sell signal in order for me to become medium-term bearish. My long-term trend model also defines, for me, whether the market is in a bull or bear mode over all.
The long-term trend model is driven by the relationship of the 50- and 200-EMAs (exponential moving averages) of the price index. If the 50-EMA is above the 200-EMA, we are in a bull market, and we are in a bear market if the 50-EMA moves below the 200-EMA. In the chart below you can see that this model has performed brilliantly from late-2000 to the present. The downside crossover in October 2000 cleanly declared that a bear market was in progress, and the upside crossover in May 2003 confirmed that a bull market had begun. After that, there were four bull market corrections that caused the 50-EMA to approach the 200-EMA, but a downside crossover never happened, and the bull market, by this measure, remained in force.
Now another correction is in progress, and it has caused the 50-EMA to turn down, but, as you can see, we are a long way from a downside crossover, assuming that no major crash occurs. Until proven otherwise, I think it is safest to assume that the recent decline is a bull market correction. This doesn't mean that we have our guard totally down. Our medium-term model has us out of the market, but the long-term model prevents us from becoming aggressive on the short side.

While the long-term trend model has done well in the last six years, I should emphasize that it is not always this perfect, and it too slow to side step major crashes, like 1929 and 1987. For that we need more sensitive tools, focused in the medium-term. The long-term trend model is best used as a tool to objectively define bull and bear markets, so, for example, if someone asks me, "Is it a bear?", I can look at the chart, see that the 50-EMA is above the 200-EMA, and reply, "Not yet!"
Bottom Line: It is useful to have an objective method to define bull and bear markets, and we use simple crossover signals generated by longer-term moving averages. I do not claim that this is the best method, but it is very effective for our purposes.

Posted by Chip Anderson at 4:04 PM in Carl Swenlin | Permalink

March 17, 2007REVIEWING THE "YEN-CARRY TRADE" By Chip Anderson
Richard Rhodes
The

Posted by Chip Anderson at 4:03 PM in Richard Rhodes | Permalink

March 17, 2007FINANCIALS HOLD THE KEY TO THE MARKET By Chip Anderson
John Murphy
It's no secret that one of the main problems pulling the market down over the last month has been the fallout from subprime mortages. It's also no surprise to read that financial stocks (mainly banks and brokers) have been the weakest part of the market over the last couple of weeks. That's a concern because financial stocks are historically viewed as market leaders. They had been leading the market higher over the last two years. Not anymore. The line on top of Chart 1 is a ratio of the Financials Select SPDR (XLF) divided by the S&P 500. That ratio peaked in October of last year, and failed to confirm this year's move to new high ground (red arrow). Even worse, the ratio has fallen to the lowest level since last May. The group itself is now in the process of testing some long-term support lines. One is the 200-day moving average. That support line line hasn't been decisively broken for eighteen months (red circles). Chart 2 shows the XLF also testing a four-year uptrend line (drawn on a log scale). Chart 10 holds some other warnings. One is the unusually heavy downside volume over the last month. Another is the fact that the 14-month RSI is turning down from major overbought territory over 70 (down arrow). The financial sector is undergoing a major test of its long-term uptrend. That's a big test for the rest of the market as well.

Posted by Chip Anderson at 4:01 PM in John Murphy | Permalink

March 17, 2007MARKET'S FIRST RECOVERY ATTEMPT FAILS By Chip Anderson
Chip Anderson
Hello Fellow Chartwatchers!
Last week's recovery rally was crushed by Tuesday's big decline and while the Dow quickly rose back above 12,000, the technical damage was done. The chart below shows the important technical developments for the Dow in recent days. See if you can spot the key signals.

For me, the key signals include:

Support at 12,000 remains strong (so far) - but that's about the only bullish technical signal right now.

Posted by Chip Anderson at 4:00 PM in Chip Anderson | Permalink

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hefeiddd · 发表于 2009-4-2 16:57

March 04, 2007ENERGY - A BULLISH VIEW By Chip Anderson
Tom Bowley
We have been in the bearish camp on energy and over the past several months and for now remain on the bearish side. But anytime you take a position on the bullish or bearish side, you need to realize patterns that could change your view. The price of oil broke a five year uptrend in 2006 that has us very cautious on the energy sector in 2007. There are circumstances and patterns that could develop to change our bearish view. Oil prices have been bouncing, from lows just under $50 per barrel to our recent highs back over $62 per barrel. Will the sudden uptrend continue or will the rally fade? No one knows the answer for sure, although there is a formidable bullish pattern that is potentially forming - the bullish inverse head and shoulder continuation pattern. Take a look at the following chart:

Off of a significant uptrend, we saw oil pull back in the fourth quarter of 2006 touching $57-$58 per barrel (inverse left shoulder). After a quick reaction bounce to $64 (first point of neckline) approaching the 50 day SMA, oil found a new low near $50 per barrel (inverse head). Now we're watching oil climb again, perhaps to test that $64 area (second point of neckline). Could we then witness one more pullback under $60 to form a potential inverse right shoulder before ultimately breaking out above $64? If that pattern develops, the breakout would measure to $78 or so, testing the highs from last summer. We realize we're getting a bit ahead of ourselves and we do not anticipate oil completing this bullish pattern. However, as a trader, you need to be able to recognize the possible bullish and bearish patterns that develop not only to maximize gains from opportunities, but more importantly, to minimize losses from mistakes. Let's watch the action unfold in the coming days and weeks and be prepared to react accordingly.

Posted by Chip Anderson at 5:06 PM in Tom Bowley | Permalink

March 04, 2007CORRECTION AHEAD FOR S&P 500? By Chip Anderson
Arthur Hill
The current breakdown in the S&P 500 looks quite similar to the May-June 2006 breakdown. Let's look at the May-June 2006 break down first. The S&P 500 surged from mid October to mid December (2005) and then began a slower zigzag higher until early May (2006). Despite slowing momentum, the trend was in good shape as long as the index kept forging higher highs and higher lows. The break down started with a sharp decline and break below the April low in mid May. There was a brief reaction rally back above 1280 and then another move lower to forge the mid June low. The total decline retraced 62% of the Oct-May advance.

On the current S&P 500 chart, the index advanced sharply from mid July to late November and then began a slower zigzag higher from December to February. Despite slowing upside momentum, this advance was in good shape as long as the index kept forging higher highs and higher lows. With a gap down and sharp decline this week, the index broke below the February and January lows. This breaks the string of higher lows and argues for a trend reversal. At the very least, we should expect a correction. Should the index follow the May-June script, a 62% retracement of the Jul-Feb advance would target a correction to around 1314.

Posted by Chip Anderson at 5:05 PM in Arthur Hill | Permalink

March 04, 2007UPDATED CRASH ANALYSIS By Chip Anderson
Carl Swenlin
In light of this week's sharp decline (mini-crash?), the most obvious subject for discussion in this week's article is to question whether or not we are on the verge of another major crash. In my 12/8/2006 article, Crash Talk Is Premature, I stated:
". . . my analysis of the price structure and internal indicators leads me to the conclusion that there is not a crash anywhere in sight. This does not preclude a crash triggered by an external event of which we can have no advance knowledge, but the visible deterioration that typically precedes a crash does not currently exist."

"To illustrate, we can look at charts (below) of the two most famous crashes of the last 80 years – the Crash of 1929 and the Crash of 1987. There are two chart configurations that preceded these two major crashes. First, was the price action – a major price top, followed by a lower top, followed by a break below the price low between the two tops. This kind of event doesn't always lead to a major crash, but it is always a sign of danger, and can be part of a market correction."

"The second element is internal deterioration visible in a breadth indicator. In the case of the two charts below we can see that, when the second price top formed, the ITBM Oscillator also topped, and it topped below the zero line as a result of an extended period of deterioration. Below zero indicator tops are another danger sign that should not be ignored."

Now let's take a look at a current chart of the ITBM/ITVM Oscillators. We can see that prior to the mini-crash, the indicators were overbought and showing a negative divergence; however, we can also see numerous instances where negative divergences and overbought conditions did not lead immediate, serious declines. In other words, there was nothing on this chart that would hint at a crash. The most logical actions prior to the decline would have been to hold current longs and wait for better (oversold) conditions before opening new longs.
The important point to be made here is that we currently do not have the kind of setup that preceded the 1929 and 1987 Crashes; and, while the recent decline was rather precipitous, the market has only declined about 4% from its recent highs. Having said that, it is unlikely that the correction is over, and continued negative action could indeed lead to a technical setup similar to the ones that formed prior to the Big Crashes.

One big positive that the market has going for it is the major support that can be seen on the next chart. The recent rally pushed the S&P 500 above the top of its long-term rising trend channel. Where the top of the channel used to be resistance, it is now support, and the remainder of the correction could be played out above the support line.

Bottom Line: We have gone seven months without a medium-term correction, and, while I am surprised at the violence with which it was initiated, I am not surprised that a correction has begun. I personally do not believe that we are setting up for a big crash or a bear market, but I will be guided by future market action. Regardless of my personal opinion, we rely on mechanical trend models to determine our market posture. Below is a recent snapshot of our primary trend-following timing model status for the major indexes and sectors we track.

Posted by Chip Anderson at 5:04 PM in Carl Swenlin | Permalink

March 04, 2007RECENT DECLINE MORE THAN JUST A CORRECTION? By Chip Anderson
Richard Rhodes
Last week's market decline was quite interesting from a number of perspectives. First, the decline clearly mirrors the movement in Japanese Yen as the "carry-trade" is unwound; if one watches these closely, one will see that stock traders are cleary focused on the yen. We will have more to say on this in the future; but suffice to say, a major reversal higher in the yen has taken place. Secondly, and perhaps more importantly from an economic perspective in the US - is that our simple interest rate model of the ratio between the 5-year note and 10-year note ($FVX:$TNX) has broken important support at its "fulcrum point" of its 60-week moving average. Over the past 10-years, this model has generally kept one long during corrections if it is above its 60-week moving average; but for the first time since September-2001...it has broken below its 60-week moving average after attaining the 1.0 level. What we think the market fears is not "inflation", but slowing growth. And this is exactly what happened during the 2001-2002 broader market decline; and we all know just how "deep" and "gut wrenching" that bear market was. Thus, the odds of this decline being more than just a normal correction have increased given the interest rate model. Those who have followed it have done well. Our strategy at this point is to "short rallies" going forward until "the facts change".

Posted by Chip Anderson at 5:03 PM in Richard Rhodes | Permalink

March 04, 2007SITE MAINTENANCE NEXT SATURDAY By Chip Anderson
Site News

The next phase in our Server Room upgrade project is almost here. Next weekend we will be hooking up our new, larger UPS system. During that process, we will have to take the site offline for about an hour. Currently, we plan on doing that Saturday morning starting about 11AM Eastern time. Check the "What's New" area on the website for specific details at the end of the week.

Posted by Chip Anderson at 5:02 PM in Site News | Permalink

March 04, 2007YEN/EURO IS IN MAJOR SUPPORT AREA AND OVERSOLD By Chip Anderson
John Murphy
Our main concern here is the relationship between the world's strongest currencies and the Japanese yen. Since 2000, the world's strongest currency has been the Euro (followed by the Swiss Franc, Canadian and Aussie Dollars, and the British Pound. The yen has been the weakest global currency). Chart 1 measures the yen against the Euro (XJY:XEU ratio). The yen has been falling against the Euro (and all other currencies) since 2000. The Yen:Euro ratio, however, has reached a major support level at its 1998 lows and is in oversold territory as measured by the monthly stochastic lines. Purely on technical grounds, this would be a logical time to start reversing the "yen carry trade" that's existed for seven years. In other words, it may be time for the yen to start rising against the world's major currencies (including the Dollar). Chart 2 shows that the yen is bouncing off a nine-year support line (versus the U.S. Dollar). The monthly stochastic lines are turning up from oversold territory. The yen may be done with "carrying" the rest of the world's markets. That's why everyone is very nervous about the bouncing yen.

Posted by Chip Anderson at 5:01 PM in John Murphy | Permalink

March 04, 2007P&F CHARTS PROVIDE PERSPECTIVE By Chip Anderson
Chip Anderson
Hello Fellow Chartwatchers!
This week's market gyrations have caused many people to stop and question the market's current position - sometimes quite emotionally. In times like this I like to go back to basics and look at some of the most impartial charts out there - Point and Figure charts. Check out this chart of the S&P 500 index:

Again, P&F charts compress long uptrends and downtrends into vertical columns of rising X's and falling O's. (The red numbers & letters in the boxes indicate which box was filled first during the corresponding month.) By compressing uptrends and downtrends, more time can be represented on the chart and therefore a longer-term perspective can be gained. In this case, this chart goes back to the middle of 2003. Most of the chart shows a clear, healthy uptrend from 2004 through mid 2005 with the 45-degree rule for P&F trendlines clearly visible.
Things get interesting in the last column of X's on the right side of the chart. That column represents an uptrend that started back in July of last year. Things continued to rise without a significant pause through August ("8"), September ("9"), October ("A"), November ("B"), December ("C"), and then into January ("1") and February ("2") of this year. The chart really shows how atypical such a steep, continuous rise in prices was. Something had to give...
Looking at this chart, things may have to fall a little further to get back into the "normal" channel of the long-term uptrend. That's not my emotion talking. That's the verdict from the impartial P&F perspective.
(For more on P&F charts, see our ChartSchool article on the topic.)

Posted by Chip Anderson at 5:00 PM in Chip Anderson | Permalink

February 14, 2007SEMICONDUCTORS FINALLY PROVIDING A LIFT By Chip Anderson
Tom Bowley
We have been very bullish the equity market for months and we continue to be. But one wild card has been the semiconductors. In order to truly sustain a nice market rally, we felt the semiconductors would need to participate. Well, we've been waiting...and waiting...and waiting. Finally, a critical technical move was made this week. Semiconductors got the fundamental lift from Analog Devices (ADI) which said that January business conditions were improving. That was music to technology investors' ears. We've seen the fundamental news before, however. We wanted to see price action follow. On Thursday, price action followed in a big way. We had two technical issues to resolve on semiconductors. First, we needed to break a recent downtrend line spanning the last thirteen months. That issue was resolved on Thursday, as can be seen below (Chart 1):

There still remains a longer-term technical picture that must be resolved. Yes, the intermediate-term break of resistance was bullish this past week. But we will need a catalyst to break the symmetrical triangle that has developed over the last six years (Chart 2):

KLA Tencor (KLAC) added a little bullish semiconductor fuel Thursday after hours as they said they were "accelerating" their $750 million repurchase program and authorized another 10 million shares to be repurchased. That's a serious vote of confidence from the Board of Directors and shouldn't be ignored. However, we haven't seen the long-term symmetrical triangle break. Money speaks louder than words. While the break of the recent downtrend line was quite bullish, semiconductors still have much work to do.

We favor the group at this time and expect their contributions to be felt for weeks and months as the bull market continues to gain momentum.

Posted by Chip Anderson at 5:06 PM in Tom Bowley | Permalink

February 14, 2007STRONG BUYING PRESSURE IN IWM By Chip Anderson
Arthur Hill
The Russell 2000 iShares (IWM) broke consolidation resistance this month and two key volume-based indicators point to strong buying pressure.
The first chart shows the Russell 2000 iShares (IWM) and volume. The ETF surged from mid August to mid November and then consolidated for 10 weeks. This consolidation represents a rest in the uptrend and the breakout signals a continuation of the uptrend. Notice that broken resistance is turning into support and the ETF is holding above broken resistance. This shows strength and a move back below the resistance breakout would be the first sign of trouble.

The next chart shows two classic volume-based indicators: On Balance Volume and the Accumulation Distribution Line. OBV is a cumulative indicator based on the close from one day to the next. Volume is added on up days and subtracted on down days. The Accumulation Distribution Line is based on the level of the close relative to the high-low range. Accumulation takes place when the close is above the midpoint of the high-low range and distribution takes place when the close is below the midpoint of the high-low range.

On Balance Volume (blue) and the Accumulation Distribution Line (green) show strong buying pressure and this bodes well for further strength in IWM. First, notice that both broke out ahead of IWM. The blue dotted line shows the indicator breakouts in early January. This is a few weeks earlier than IWM. Second, notice that both indicators are trading near their highs and continue strong. Buying pressure is not letting up and this points to higher prices in IWM.

Posted by Chip Anderson at 5:05 PM in Arthur Hill | Permalink

hefeiddd · 发表于 2009-4-2 16:58

February 14, 2007A NEW OPINION ON RYDEX CASH FLOW By Chip Anderson
Carl Swenlin
In my 2/16/2007 article, Cash Flow Shows Wall of Worry, I asserted that the dearth of bullish Rydex cash flow was a sign that the rally would probably continue because the bulls were still not committing in a big way. For the sake of variety I try not to repeat a topic too soon, but I received an unusual amount of mail about this, much of it asserting that ETFs and other products are siphoning bullish funds from Rydex and other mutual fund groups. The following letter makes the point very well.
Hi Carl,

While I don't disagree with your overall opinion about the market 'climbing a wall of worry', I do think you're missing the boat regarding what the Rydex data is telling us. If you look closely at the Rydex Asset Analysis Total Bull+Bear+Sector+MM chart you will notice that total assets have been diminishing since the beginning of '06. How could this be? Well I'll tell you. I've been trading Rydex funds for over 10yrs. It's a bears den. It does not make for a valid picture of overall market sentiment during bull markets.

The reason total assets have been declining is because the funds/investors/etc. that use Rydex for bearish positioning are now bullish and allocating their assets outside of Rydex. A long time ago I realized that there is no better vehicle than Rydex to establish short positions. Where else (except other Rydex clones) can you establish a short position with a limited downside risk outside of the options markets? Thats why Rydex is the (smart) bears choice. There are however far more efficient vehicles to establish bull positions. During an extended bull market like we have right now, assets leave the Rydex funds in general. This is normal as Rydex is an expensive place to ride a long position. When (if) the market starts heading down for any extended period you will see money flow back into Rydex. The bears will be back.

The total asset data doesn't tell us where these previous assets have gone, but I assure you its generally long. That means the data is still useful because its telling us there are very few bears in this market right now . . . a dangerous (if you're long) situation for sure. Bull markets can and do continue far longer and higher than most of us can guess or even stomach. Thats their nature to flummox the disbelievers into submission, and then they're done for awhile.

I really appreciate your efforts to organize the Rydex data. I use it all the time. I do however respectfully disagree with the way you divine overall market sentiment from it. You are taking one slice of market participation (a bears den) and applying far too much importance to it, especially in an extended bull market.

Respectfully,
Tim Herbert
DecisionPoint.com Subscriber
I want to thank Tim Herbert for giving me much food for thought. I don't agree with all his points, but, after much thought and chart gazing, I believe he is correct that the migration of bull money from Rydex into ETFs and other instruments is now a significant factor, but it is a relatively recent one. In any case, it does make me have second thoughts about my conclusions in last week's article.
Under this new concept, we are going to have to develop new techniques to analyze the Rydex data. This will not be the first time. As you can see by the chart below, the Ratio has had three distinctive phases and ranges. In the early days the range was very wide because there were fewer assets involved in calculating the ratio. During the bear market the range narrowed, and, when the bull market began, the range shifted lower and was more regular and stable than ever before.
During the period between the beginning of 2003 to mid-2006 the Ratio was a superb measure of extremes in bullish and bearish sentiment. That it was not such a good top picker, is not a weakness that is limited to the Ratio. During bull markets, there are virtually no indicators/oscillators that can reliably identify price tops.

In the next chart we look at bull, bear, and total cash flow. On the Bull plus Sector panel you can see three cash flow peaks followed by cash flow declines that I have emphasized with sloping trend lines. What we are observing here is money going into bull funds, then being withdrawn during the topping process that takes up to several months. Is the withdrawal evidence of money moving into ETFs? That is not a reasonable assumption. Why would a person who is using Rydex bull/sector funds suddenly close profitable positions to open bullish ETF positions?
The first real evidence we have of Rydex bull funds being abandoned for ETFs is the period following the June/July 2006 lows. Note the absence of an upward surge in bullish cash flow associated with the rally. Last week I concluded that this was evidence of a "wall of worry", and that the bulls had not yet accepted the rally. I now believe that conclusion was wrong, and that investors are shunning Rydex bull funds in favor of ETFs. I think this conclusion is borne out by the bottom panel on the chart which shows total cash flow beginning to trend downward.

Finally, notice how in the last few months bull cash flow is declining and bear cash flow is rising. This is a similar pattern to the three prior bull cash flow peaks, albeit much smaller. As in the previous cases, I think this shift is a precursor to a correction or consolidation.
Bottom Line: The Rydex Cash Flow Ratio is probably being influenced by a significant lack of interest by investors in Rydex bull funds – ETFs now being the vehicle of choice. This shift in emphasis will necessitate our being more cautious in our interpretation of the Ratio until we can see what kind of new pattern, if any, emerges.

Posted by Chip Anderson at 5:04 PM in Carl Swenlin | Permalink

February 14, 2007HAVE THE SEMICONDUCTORS BECOME "DEAD MONEY"? By Chip Anderson
Richard Rhodes
The technology rally from July-to-present has occurred without the participation of the Semiconductor Index ($SOX). We find this rather "odd" to be sure, for one of the basic tenets of any broader market rally were that they were led in general by the technology sector, and more specifically the "high-beta" semiconductor industry. That hasn't been the case recently however, for the semis have lagged rather badly , and the question before us is whether they are "dead money" or not. A reasonable question we think.

Our opinion: the semis are poised to trade sharply higher...if...if they can get some "gitty up and go" behind them to breakout of either the ugly "head & shoulders" pattern or the more "neat" pennant formation. It matters not to us which pattern; we are only concerned with the results once trendline resistance is given...whether sharply higher prices materialize as anticipated. We give this more than a 50/50 chance given major support at the 200-week moving average held and turned prices higher; with the 20-week stochastic poised to reverse higher from "postive numbers". This would imply "strength", which would target nearly a 100% rally over the course of the next several years. And of further support to our thesis, the Semi/S&P 500 and Semi/NASDAQ 100 relative ratio charts are turning higher as well.
Therefore, we are carefully watching semiconductor price action, for we feel they are poised for a major breakout...with our favorite individual stock being Lam Research (LRCX).

Want more of Richard's award-winning advice? Check out his Web site: TheRhodesReport.com

Posted by Chip Anderson at 5:03 PM in Richard Rhodes | Permalink

February 14, 2007ONE OF THE NICEST KUDOS WE'VE SEEN! By Chip Anderson
Site News

Someone, we honestly don't know who exactly, sent us the following feedback earlier this week. It completely blew us away:

"I'm astonished at how customer friendly your service, website, and daily charts are. Thank you, thank you, thank you. This is my first day with your service but I have noticed some things about your website that let me know your organization will be good to work with. Your organization a.) does not force me to renew the service beyond what I pay up front (you give me an OPTION for auto renewal or NOT); b.) your service is reasonably priced and allows for monthly payments; c.) you consistently have space for feedback; d.) you offer free service to those who recommend your service to others; e.) you give chart examples in more than one form, which demonstrates your desire for the technical analyst to be flexible in learning. I am just so overwhelmed that I need to dig into your product. Earlier this year I tried a charting product software that costs over 4x's as much as what you offer and I was terribly disappointed with their website, how the software was structured, and the customer service. Once again, thank you for structuring your product as if you care about your customers. I'm beginning to see why StockCharts is a consistent award winner by S&C. Thank you. Thank you....!"
No, Thank you!

Posted by Chip Anderson at 5:02 PM in Site News | Permalink

February 14, 2007COMMODITY PRICES ARE RISING AGAIN By Chip Anderson
John Murphy
Just when it seemed like inflation was on the wane, another rally in commodity markets suggests just the opposite. [This week's unexpected jump in the core CPI also caught the market's attention]. Chart 1 shows the DB Commodities Tracking Fund (DBC) challenging its late November peak at 25.33. A close above that chart barrier would signal even higher commodity prices. Most commodity indexes benefitted from crude oil closing back over $60 and strong gains in precious metals, copper, and agricultural markets. [Corn hit a new 10-year high]. Since most commodity indexes have a heavy energy weight, they've been held down by energy prices since the start of the year. Chart 2 gives a better idea of how commodity markets are doing outside of energy. The CRB Continuous Index (CCI) has a smaller energy weighting than most other commodity indexes (including the CRB Reuters/Jefferies Index) and a heavier agricultural weighting. Chart 2 shows the CCI breaking out to a new record high on Thursday. The commodity bull market is alive and well. The Fed recently cited the drop in commodity prices as evidence that inflation was slowing. This week's upturn may cause some rethinking of that view.

Posted by Chip Anderson at 5:01 PM in John Murphy | Permalink

February 14, 2007PERCENTAGE ABOVE/BELOW THE EXPONENTIAL MOVING AVERAGE By Chip Anderson
Chip Anderson
Mary W. writes "I'd like to see how much above or below the 200-day moving average a stock currently is. Does your charting system show that?"
While we don't have a specific indicator for "Percentage above/below the Moving Average", clever chartists that understand how the "Price Oscillator (PPO)" works can create such an indicator easily. The PPO is very similar to the well-known MACD Indicator. Both are based on the difference between two exponential moving averages. The PPO differs from the MACD in that it's values are converted into a "percentage difference" rather than the "absolute difference" used by the MACD.
Essentially, PPO(#1, #2) = Percentage Difference of EMA #1 from EMA #2.
Remember, what Mary asked to chart is "Percentage Difference of the Closing value from the 200-day Moving Average."
See the similarity in those two statements? If Mary is willing to use the difference between the close and a 200-day Exponential Moving Average, then we can accommodate her. The final piece of the puzzle is to recognize that "Closing value" is equal to "EMA(1)." Given that, then
PPO(1, 200) = Percentage Difference of EMA(1) (i.e., Close) to EMA(200).
Thus all we need to do is plot PPO(1, 200) to see the line that Mary is asking for.

Viola! With a couple of setting changes, we can overlay that indicator on our price plot:

Click either chart to see how they were constructed. Last we heard, Mary was happily charting percentage differences left and right. Hopefully, this trick can help your chart analysis also!

Posted by Chip Anderson at 5:00 PM in Chip Anderson | Permalink

February 03, 2007TRANSPORTS LOOKING SOLID By Chip Anderson
Tom Bowley
Money generally rotates from one sector to another. Identifying the rotation early in the cycle can make a big difference in trading successfully. If you look at a long-term chart of the Dow Jones Transportation Index (below), you'll see that the group has been trending higher for several years. However, there have been periods when money has rotated out of the group as transports consolidated prior gains. In the past week, we have seen transportation issues rise to the front of the pack. This past week saw transports finish at an all-time high close. Volume was accelerating during this rise, indicative of accumulation. Outside of temporary pullbacks, expect continued strength in this group until proven otherwise.

Notice the inverse head and shoulders pattern that has formed over the past nine months or so. This represents a continuation pattern that upon breakout measures to 5900 in time. Continue to look for solid trading ideas in this group and you'll likely be rewarded during 2007.

Posted by Chip Anderson at 5:06 PM in Tom Bowley | Permalink

February 03, 2007GETTING CHOOSY By Chip Anderson
Arthur Hill
The S&P Small-Cap iShares (IJR) hit a new all time high this week and led the market higher over the last six days. Just a few weeks ago, this group was lagging and relative weakness hung over the market The ETF broke above its December high and this is a vote of confidence for both small-caps and the market as a whole.

Unfortunately, this vote of confidence from small-caps is overshadowed by a no-confidence vote from techs. Like small-caps, tech stocks typically have higher betas, higher volatility and higher risk. Investors are risk loving when these two groups lead and risk averse when these groups lag. Small-caps are doing their part with a breakout and new highs, but techs are not keeping up and investors are getting choosy.

The Nasdaq 100 ETF (QQQQ) broke resistance on 11-January, but failed to hold this breakout and moved right back into the December trading range. The broader non-tech portion of the market rallied this week with the S&P Small-Cap iShares (IJR), the Dow Diamonds (DIA) and the S&P 500 ETF (SPY) hitting 52-week highs. In contrast, QQQQ could not even break above last week's high at 44.47. This no-confidence vote casts a shadow over the broader bull market and I will be watching key support at 43 quite closely.

Posted by Chip Anderson at 5:05 PM in Arthur Hill | Permalink

hefeiddd · 发表于 2009-4-2 16:59

February 03, 2007BOND TIMING By Chip Anderson
Carl Swenlin
Timer Digest has ranked Decision Point #1 Bond Timer for the 52-week period ending 1/26/2007. We were also ranked #3 Bond Timer for the year 2006, and #5 Bond Timer for the last five years. Since past performance does not guarantee future results, this information is not particularly useful, except to highlight that we have done something right in the last year or so. Perhaps it would be more accurate to say that the market has favored our methodology, because sometimes it does not. Rather than focusing on the capture of the elusive prize, I thought it would be useful to describe the methodology we are using.
Nearly two years ago I stopped making discretionary calls for bonds (my best guess for market direction), and decided to use a mechanical model that I call the Trend Model, so named because it is driven strictly by trend-following tools, and relies only on the movement of the price index to generate decisions.
The model uses crossovers of the 20-, 50-, and 200-EMAs (exponential moving averages) of price to generate buy, sell, and neutral signals. The relationship of the 50-EMA to the 200-EMA determines if the price index is in a long-term bull or bear market. For example, it the 50-EMA is above the 200-EMA, it is a bull market.
Crossovers of the 20-EMA and 50-EMA actually generate the signals. If the 20-EMA crosses up through the 50-EMA, a buy signal is generated. When the 20-EMA crosses down through the 50-EMA a sell signal is generated if the 50-EMA is below the 200-EMA, otherwise the model switches to neutral. This is an important feature, because we don't want to be short in a bull market.
The chart below shows important signals generated in the last year. As you can see, the Trend Model is an effective decision-making tool under favorable market conditions.

Then there are unfavorable market conditions. On the next chart we can see how the model gets chopped up when a price index decides to move sideways for an extended period of time. On a positive note, it is also clear why the model goes neutral instead of short during a bull market.

Bottom Line: Trend-following models can be very effective when prices move in one direction for extended periods, but whipsaw is always a problem. This is why money management is important. It is also important to apply a timing model across a broad range of price indexes with different price behavior (multiformity), rather than put all your money in a single index/position.
Below is a recent snapshot of our primary timing model status. The indexes marked with an asterisk (*) have signals generated by the Trend Model.

Posted by Chip Anderson at 5:04 PM in Carl Swenlin | Permalink

February 03, 2007SPY OUTPERFORMING XLY By Chip Anderson
Richard Rhodes
From our vantage point; the S&P 500 SPDR (SPY) is poised to outperform the Consumer Discrectionary SPDR (XLY) in all-time frames (short-intermediate-long), with a new highs expected to be reached in the late-2007 to 2008 time frame. Our reasoning is such:

First, the fibonacci 62% retracement level was obatined, and indeed did hold as it should during a bull market.

Secondly, a bullish declining wedge is confirmed, of which steep trendline resistance was broken. Prices are consolidating short-term, but given the postive 20-day stochastic divergence...the path of least resistance is higher.

Thirdly, if the 60-day moving average is broken, then we would expect to see mean reversion in the least to the 200-day moving average. This will be next "large fulcrum point" upon which we can either confirm or deny our thesis of new highs dependent upon whether prices breakout above this level or not.

And lastly, even if we are wrong in our long-term assessment and prices are headed lower, we shall have ample time and an optimal entry point as prices "fail" to brekaout above the 200-day moving average level.

How to trade: One can either buy SPY and sell short XLY in equal dollar amounts; or, one can focus in upon shorting the consumer discretionary stocks given the general SPY overbought conditions. We are focusing in upon shorting the consumer discretionary stocks; and in particular...are looking for a high in the homebuilders after they have retraced quite some distances of their declines. Also, we have put on a "long energy/short consumer discretionary" trade that is proving to be quite profitable.

Posted by Chip Anderson at 5:03 PM in Richard Rhodes | Permalink

February 03, 2007SERVER ROOM, DATA FEED, CHARTSCHOOL By Chip Anderson
Site News

SERVER ROOM PROGRESS REPORT - We've had a bit of a set back on the construction front for our new server facilities. The building management team veto'd some of our construction plans at the last second (Chip was livid) and we are redesigning some things as a result. It has set back our schedule by about a month. The good news is that we have found ways to upgrade our servers even before the new server room is completely finished. Look for us to start installing more servers in the next couple of weeks as we continue to expand our capabilities.
DATA FEED CAPACITY DOUBLED - In addition to expanding the servers that we use to drive the site, last week we completed an upgrade to our Thomson Datafeed servers that doubled their capacity. In addition to giving us data faster, this change will allow us to upgrade the data feed servers in the future without impacting the website's performance.
CHARTSCHOOL UPGRADE - We've just moved our ChartSchool content into a new web page management system (a "wiki"). At this point, the content should be the same as before but some pages will have slightly different formatting. Moving forward, this change enables us to continue expanding ChartSchool quickly and easily.

Posted by Chip Anderson at 5:02 PM in Site News | Permalink

February 03, 2007REVUE OF A SUCCESSFUL MOVING AVERAGE TECHNIQUE By Chip Anderson
John Murphy
Last July, I reviewed a moving average technique that used weekly exponential moving averages. [I first described this system in October 2005]. I'm revisiting it today because it continues to do remarkably well. And I'd like to suggest expanding its usefulness. The technique is a moving average crossover system. In other words, trading signals are given when the shorter m.a. line crosses the longer. The two moving averages are the 13 and 34 week exponential moving avarages (EMAs). [EMAs are more sensitive than simple moving averages because they give greater weight to more recent price data]. Chart 1 shows the two lines over the last six years for the S&P 500 (absent the price action). Only one crossing (signal) has taken place in those six years. That was a bullish crossing in the spring of 2003 just as the new bull market in stocks was beginning (green circle). Although the two lines converged four times during the four year bull market, the 13 week EMA has never crossed below the 34 EMA. Chart 2 overlays the weekly S&P 500 bars on the two EMA lines for the last two years. The S&P dipped below both lines during the last three market corrections. That doesn't matter. What does matter is that the two moving average lines didn't cross.

Posted by Chip Anderson at 5:01 PM in John Murphy | Permalink

January 20, 2007BULLISH ON BIOTECHS By Chip Anderson
Tom Bowley
Healthcare stocks have been performing quite nicely over the past few weeks. Looking at the Biotech Index, it appears more bullishness is on the way for this sub-sector. After a nasty 20% selloff from March through May, biotechs stabilized during the summer months before beginning an uptrend that netted over 160 index points in a three month span beginning in August. The continuation pattern that formed over the past two months is the cup and handle pattern. On the chart below, I've highlighted the cup formation. Just to the right of the cup, you'll see the sideways consolidation, or handle. As its name implies, a continuation pattern is one in which the prior trend resumes after a brief consolidation, or basing period, is completed.

Watch for a breakout above the handle that is forming. Though the biotechs appear poised for yet another move higher, keep in mind this group carries with it a tremendous amount of risk. You should consult your financial advisor before considering a position in this volatile sector.

Posted by Chip Anderson at 5:06 PM in Tom Bowley | Permalink

January 20, 2007USO: OVERSOLD AND AT SUPPORT By Chip Anderson
Arthur Hill
The U.S. Oil Fund ETF (USO) remains in a clear downtrend on the daily chart, but became oversold and reached long-term support on the monthly chart. The combination of oversold conditions and support argue for at least a consolidation and quite possibly an oversold bounce back to broken support at 50.

On the daily chart, I am using RSI to identify oversold conditions. RSI moved below 30 (oversold) in early January and stayed oversold until Friday (19-Jan). The indicator is making a move back above 30 and this is the first positive sign in 2007. Before getting too excited, notice that RSI was oversold all of September and moved above 30 in October. However, USO traded flat and there was not much of a bounce until late November. A bounce could take time.

In addition to oversold conditions, I see reason to expect support around 42-45. For the falling price channel, I drew the upper trendline first and the lower trendline is parallel to this trendline. The lower trendline extends to around 42.5 and this trendline acts as support. USO firmed between 42.5 and 45 this week to affirm channel support. The monthly chart also confirms support around 42.5 with the Nov-99 trendline and support from broken resistance.

Posted by Chip Anderson at 5:05 PM in Arthur Hill | Permalink

January 20, 2007ENERGY SECTOR CORRECTION ALMOST OVER By Chip Anderson
Carl Swenlin
Energy stocks as represented by the Energy Spider (XLE) have been moving in a more or less sideways direction since crude oil topped out in July and entered a bear market. I find it peculiar that energy stocks have consolidated at the same time that crude oil was crashing, but it does give us a clear sign of strength from that sector. Now I am seeing evidence that the correction in energy stocks is nearly over.
First, on the chart below we can see that crude oil is very oversold and is probably ready for a bounce. I would not care to speculate whether or not the bear market is over, but a 42% decline certainly entitles crude oil to a reaction rally or at least a correction. Either way, this would benefit energy stocks.

On the next chart the evidence is even more compelling. The Percent of PMO Crossover Buy Signals shows that the XLE stocks are very oversold in the short-term, and this condition happens to coincide with a medium-term oversold condition reflected by the Percent Buy Index, an alignment that implies that the expected rally should have staying power.

Bottom Line: I am not suggesting that we try to pick a bottom here, but the conditions are favorable for a good rally in energy stocks once prices begin moving upward enough to trigger a buy signal. I should point out that timing model performance on this sector has been marginal because of the sideways chop of the last year or so.

Posted by Chip Anderson at 5:04 PM in Carl Swenlin | Permalink

January 20, 2007LOOKING AT A PAIRS TRADE By Chip Anderson
Richard Rhodes
Today we want to look at a "pairs trade" theme we think has good fundamental and technical merit; it is a "long energy/short consumer discretionary shares" trade. Recently, we have begun to put this trade on in various ways; and one that we intend on adding to as it becomes more profitable. From a technical perspective, we use the S&P Energy and S&P Consumer Discretionary ratio (XLE/XLY) as our guide. As we look at the chart, we note that over the course of the past year, the ratio has been in a steady if not relentless decline. However, this decline has taken the ratio from overbought levels to oversold levels, and more importantly...into several major long-term support levels. We believe those support levels will hold; and obviously turn the ratio higher. Hence, one is to be long XLE and short XLY. We also have the trade on using long positions in Weatherford Int'l (WFT) and Peabody Energy (BTU); whilst being short Ryland Homes (RYL) and CarMax (KMX). As time moves forward and the trade becomes more engrained, we intend on fine-tuning the trade via swapping out these stocks for those that have greater potential; we want the most out the trade, for it is one that the "hedge and mutual funds" have taken the other side of. The rush to the exit will be quick; it will be fierce...and we will add to the trade as it occurs.

Posted by Chip Anderson at 5:03 PM in Richard Rhodes | Permalink

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hefeiddd · 发表于 2009-4-2 17:00

January 20, 2007NASDAQ HOLDS 50-DAY LINE...NYSE NEARS HIGH By Chip Anderson
John Murphy
The market closed the week on an upnote. The most important action took place in the Nasdaq market which bounced off its 50-day moving average (Chart 1). Broader market measures have held up much better. Chart 2 shows the NYSE Composite Index ending the week just shy of its old high. It's well above moving average support. It remains to be seen if today's oversold rally in the oil market continues next week and if that causes any short-term profit-taking in the market. Even so, the NYA would have to break its January low to warrant any real concern. Chart 3 ends with a point & figure chart of the NYA. [Each box is worth 50 points]. It shows the continuing uptrend that started at 8050 during June. The NYA needs a close at 9250 or higher to resume its uptrend. It requires a close at 8950 or lower to trigger a sell signal.

Posted by Chip Anderson at 5:01 PM in John Murphy | Permalink

January 20, 2007WEATHER, WEATHER EVERYWHERE By Chip Anderson
Chip Anderson
Hopefully things have been better at your house than they have been here in the Pacific Northwest. So far this winter we've had record rainfall, huge windstorms, long power outages, lots of snow, tsunami warnings, icy roads and record cold. The joke these days is "What else?" - although I really don't want to think about the possible answers to that!
Despite Mother Nature's wrath, the market has continued to climb albeit more slowly than last month. Our intrepid commentators have been watching with keen interest and their reports are below. While John sees reason for near-term optimism with the Nasdaq, Richard, Carl and Arthur all have their attention on the energy sector and Tom Bolin talks about biotechs.
Take care out there! Spring will be here soon...

Posted by Chip Anderson at 5:00 PM in Chip Anderson | Permalink

January 05, 2007AIRLINES FLYING HIGH By Chip Anderson
Tom Bowley
Don't look now, but the airlines have found their wings. After drifting lower for the better part of 7-8 years, something strange has happened. Could it be? Yes, airlines are breaking out! I know it sounds impossible, but airlines for the first time in nearly a decade have become an attractive investment. Take a look at Chart 1 and you'll see that the multiple tops just above 56 were taken out in mid-November. Since that time, we've seen a nice retest of the breakout level and a reset of the momentum oscillators. The MACD came all the way back down to touch its zero line, or centerline. RSI and Stochastics, both overbought after the breakout, reset into neutral territory during the retracement period.

The sector has worked through mountainous debt and excess capacity and now actually appears to be in a position to raise prices in 2007. Combine that with potentially lower oil prices in 2007 and you can see why smart money seems to be rotating into the group. In Chart 2, check out the breakdown in crude oil. First, we saw the long-term trendline break late in the third quarter, coincidentally just before airlines broke out. Second, we've seen a head and shoulder top form on the crude oil chart with the neckline failing to hold support this week as crude oil saw its largest two day drop in more than two years.

For the first time since 1998, airlines may have earned a trip into your portfolio. Happy trading!

Posted by Chip Anderson at 5:06 PM in Tom Bowley | Permalink

January 05, 2007HHH STARTS 2007 WITH A BANG By Chip Anderson
Arthur Hill
The Internet HOLDRS (HHH) started 2007 with strong move on good volume, but the ETF was knocked back on Friday and remains just short of breakout. Follow through is the key.
The Internet HOLDRS (HHH) formed a falling flag/wedge over the last six weeks. These are typical for mild corrections, but the correction is not over until there is a breakout. This week's surge carried HHH to the upper trendline and follow through above the December high at 55 would be most bullish. I would also like to see expanding volume for confirmation. Also note that Google (GOOG), Yahoo! (YHOO) and Ebay (EBAY) have similar patterns working and Yahoo! is taking the lead.
The January surge reinforces support at 52. There are a number of reasons for support at 52. First, HHH broke above the 200-day moving average in early November and this moving average now becomes support around 52. Second, the August trendline extends up to around 52 in early January and has been touched at least three times. Third, there is a small consolidation in late October and early November that argues for some support around 52 (gray oval). Failure to hold the early January gains and a move below the January low at 51.93 would be bearish for HHH.

Posted by Chip Anderson at 5:05 PM in Arthur Hill | Permalink

January 05, 2007NEW NYSE COMMON STOCK ONLY INDICATORS By Chip Anderson
Carl Swenlin
The purpose of this article is to introduce a new set of market indicators that DecisionPoint.com has recently released, indicators constructed from only common stocks listed on the NYSE.
A little background, at its inception The NYSE Composite Index was composed of all the issues listed on the New York Stock Exchange. The approximately 3,500 components were cap-weighted by total shares outstanding, and the NYSE Composite was one of the dullest indexes in existence. In January 2003 this all changed in a major way. The composition of the index was changed to include only common stocks listed on the NYSE (approximately 2,050), and they are cap-weighted based on the float (the shares available for trading). The result has been that the new NYSE Composite is now one of the top performing broad market indexes. For example, during the rally that launched off the July 2005 lows, the NYSE Composite had gains second only to the Nasdaq 100 Index.
When the NYSE Composite was reconstituted in January 2003, the NYSE failed to publish statistical breadth and volume data related to only the 2,050 components on the index. Rather, the NYSE and all media sources continued to publish data based all the 3,500 issues listed on the exchange, and most technicians (me included) continued to use these flawed data to construct indicators for the NYSE Composite. It was, after all, the only data available, but the resulting indicators had to be taken with a grain of salt. Let me explain why.
The NYSE Composite components are only common stocks, whereas the approximately 1,500 issues excluded from the Index are mostly not common stocks and are primarily issues sensitive to interest rates. By using data from all NYSE issues listed, indicator results are being contaminated by 1,500 issues that are totally unrelated to the Composite Index, and that often behave as a group in a manner completely different from the 2,050 index components. As a consequence, market indicators generated from this questionable data must necessarily be considered somewhat unreliable.
In late-2005 we decided to fix this problem. Since we track the list of NYSE Composite component stocks, we began collecting these Common Stock Only (CSO) data, and we developed a standard set of indicators based upon it. We also back-calculated the raw data and indicators back to January 2003. We have just released the new set of 10 indicators to our subscribers. If I may be allowed for a moment to be humility-challenged, the release of these indicators is a very big deal for many technical analysts. The scarcity of the raw data means that few services can offer these indicators, and some of these indicators are only available from DecisionPoint.com.
Is there any real difference between the Common Stock Only (CSO) indicators and those based upon All NYSE Issues? Yes, there are many differences, ranging from subtle to significant. Let's look at New High New Low charts as an example. Obviously, the CSO highs and lows have a smaller range because there are fewer stocks involved, but one difference that really stands out is the huge down spike of All Issues New Lows in May 2004, whereas, the CSO version shows merely a slight down blip.

Bottom Line: Whenever possible, market indicators should be constructed from data derived from the component stocks of the index to which the indicator is applied. In other words, the S&P 500 Advance-Decline Line should be constructed from the action of S&P 500 stocks. For too long NYSE Composite indicators have been corrupted by data from stocks that are not part of the NYSE Composite Index. It is with great pleasure that DecisionPoint.com has released a set of NYSE Composite indicators that are based on real NYSE Composite Index data.

Posted by Chip Anderson at 5:04 PM in Carl Swenlin | Permalink

January 05, 2007KEEPING AN EYE ON ENERGY By Chip Anderson
Richard Rhodes
With the first week of the year out of the way; we have seen a rather sharp and violent sell-off in a number of asset classes including energy. Our interest is energy stocks: we think the sell-off has gotten a bit "overdone" to be sure as the oil service sector has dropped -7%; but as we know - markets can remain irrational far longer than we can stay solvent fighting them. But a buying opportunity is being created; however, it isn't in the oil service shares where we want to place our trading capital...it is in the integrated oil producers such as Anadarko Petroleum (APC); Conoco-Phillips (COP) Hess Corp (HES); Occidental Petroleum (OXY) and Valero Energy (VLO).
Our reasoning is technically oriented; the integrated oil vs oil service ratio has broken out to the upside through trenldine resistance, and has indeed found support recently at the 200-week moving average. Moreover, the 14-week stochastic has corrected an overbought condition, and nascently turning higher. Given this, we think that previous high resistance of mid-2002 and mid-2005 at 6.4 will be broken, with a move thereafter upwards of the 2001 high at 7.6.

Posted by Chip Anderson at 5:03 PM in Richard Rhodes | Permalink

January 05, 2007SERVER ROOM IMPROVEMENTS STATUS REPORT By Chip Anderson
Site News

Back in November, work started in earnest on our new server facility. The new facility will have much more power and cooling capacity and will allow us to install bigger and better computers to drive our website. December's big wind storm set the schedule back by a week or so (not too bad considering) and we now have about 3 more weeks of work before everything is complete. In fact, later this week, we will receive our "Chiller Plant" - a huge aluminum machine about the size of a small house that will sit outside our offices chilling water that will in turn cool our servers.
ARTHUR HILL JOINS JOHN MURPHY ON WEDNESDAYS - Long time ChartWatchers know that Arthur Hill has been a mainstay on StockCharts.com for years. Starting next week, Arthur will provide commentary to John Murphy's subscribers every Wednesday. When Arthur filled in for John over the holidays, the feedback was so positive that John and Chip decided to bring Arthur aboard on a regular basis. His alternate perspective should really help John's subscribers get an even better picture of the market.

Posted by Chip Anderson at 5:02 PM in Site News | Permalink

January 05, 2007EMERGING MARKETS SUFFER WEEKLY REVERSAL By Chip Anderson
John Murphy
The MSCI Emerging Markets iShares (EEM) suffered a downside weekly reversal on heavy volume as shown in the chart below. In fact, the EEM had its biggest weekly fall in more than three months. At the very least, that suggests that a pullback of some type is probably in store. That cautious view is supported by the 14-week RSI line (blue line) which had been trading in overbought territory over 70 for the first time since last May. The RSI line has fallen below 70 for the first time since the last EEM peak eight months ago. Since emerging markets had been leading the global rally during the second half of 2006, any serious pullback in that group would most likely weaken most other global stock markets – including the US.

Posted by Chip Anderson at 5:01 PM in John Murphy | Permalink

January 05, 20072006 REVIEW, 2007 PREVIEW By Chip Anderson
Chip Anderson
Happy New Year's ChartWatchers!
Hopefully the start of 2007 finds you more prosperous than you were at the start of 2006. That's always the goal and, given the performance of the major averages during 2006, it looks like many people achieved it.

Basically, everything was up about 17% for the year except the Nasdaq which had a flat start and then was overly punished during a big drop in mid-May. The Amex had the most "interesting" journey through the year as its oil-heavy nature caused it to outperform everything else during the middle of the year.
So, what's up for the start of 2007? Well, the current technical word for the markets is "overbought". A strong, long rally has pushed most technical indicators into overbought readings. This chart of the Dow shows the situation clearly:

As I have said on many occasions, the Chaiken Money Flow (CMF) is one of my favorite "quick" indicators because it combines price action with volume action and gives very clear signals. The fact that the CMF recently went from positive to negative territory should not be ignored. With the MACD and the RSI both moving lower as well, caution is indicated.
WHAT TO EXPECT FROM STOCKCHARTS IN 2007
2006 was another great year for StockCharts.com. We set records for revenue, subscribership, charts served, ticker symbols followed, and just about every other category you can think of. Key accomplishments include the successful launch of SharpCharts2 back in May, our first charting contest, improved Google-based site searches, a new wiki-based ChartSchool, a 40% increase in our bandwidth capacity and the installation of a completely redesigned server facility.
2006 also saw us reinvest more money into our technical infrastructure than ever before. We continue to improve our ability to serve high-quality charts quickly and consistantly to all corners of the globe.
So, what's up for 2007? In two words: Scans and Favorites. While we will continue to improve all areas of the site, our key developers hope to focus on making significant improvements to our Scan Engine and to our Favorites management tools this year. Stay tuned for more details on our progress in the coming months!

Posted by Chip Anderson at 5:00 PM in Chip Anderson | Permalink

December 09, 2006ARE COMMODITIES BOUNCING BACK, OR JUST BOUNCING? By Chip Anderson
Tom Bowley
We've seen commodity prices skyrocket over the past several years and equities that have exposure to commodities have gone along for the ride. Should we be concerned now that those commodities have experienced weakness over the past couple months? Or should we instead be focused on the ensuing rally over the past few weeks? That is a very good question. Commodity prices, in our opinion, are in the process of topping. In May 2006, while the CRB Index was moving to yet another high at 365, a long-term negative divergence on the MACD formed (Chart 1). That led to the subsequent selloff and loss of support at 330. We are now looking at short-term resistance near that 330 level and we're fast approaching.

That's a glimpse at the last eighteen months of activity. A longer term ten year view (Chart 2) paints a more probable topping picture. There was a clear break of five year trendline support during the summer months and a subsequent low that appears to be the right side of the neckline of a long-term head and shoulders top. We are potentially forming the right shoulder whose top could be our current level, or possibly coincide with the aforementioned short-term resistance at 330.

Either way given the chart pattern, it would seem prudent to at least recognize the red flag that is present and protect your portfolio accordingly.

Posted by Chip Anderson at 5:06 PM in Tom Bowley | Permalink

hefeiddd · 发表于 2009-4-2 17:01

December 09, 2006XLE AND USO: SOMETHING HAS TO GIVE By Chip Anderson
Arthur Hill
The Energy SPDR (XLE) surged over the last two months and is challenging resistance, but the U.S. Oil Fund ETF (USO) remains relatively weak and continues testing support. These two are out of sync and something has to give. As I see it, either XLE will fail at resistance and pull back to trading range support or USO will break resistance and confirm the surge in XLE.
The Energy SPDR (XLE) broke above trading range resistance at 60 in late November and this is bullish. The breakout occurred with a long white candlestick and the ETF stalled this past week with a doji. The last two candlesticks form a harami cross and this is a potentially bearish candlestick reversal pattern. A move below the low of the long white candlestick (57) would confirm this pattern and target a decline back to trading range support. As long as the breakout at 60 holds, the trend is up and XLE remains in bull mode.

The U.S. Oil Fund ETF (USO) declined to support at 50 and firmed over the last two months. The ETF surged at the end of November with a long white candlestick and is challenging resistance from the mid October high. USO then pulled back this past week and formed a small black candlestick. The ETF remains short of a breakout and needs to clear last week's high (55.21) to trigger a bullish signal. This would target a move to broken support around 60. A breakout would confirm strength in XLE and failure to breakout will likely weigh on XLE.

Posted by Chip Anderson at 5:05 PM in Arthur Hill | Permalink

December 09, 2006CRASH TALK IS PREMATURE By Chip Anderson
Carl Swenlin
I have heard that a number of people have been predicting a crash. I don't know what evidence they are citing, but my analysis of the price structure and internal indicators leads me to the conclusion that there is not a crash anywhere in sight. This does not preclude a crash triggered by an external event of which we can have no advance knowledge, but the visible deterioration that typically precedes a crash does not currently exist.
To illustrate, we can look at charts (below) of the two most famous crashes of the last 80 years – the Crash of 1929 and the Crash of 1987. There are two chart configurations that preceded these two major crashes. First, was the price action – a major price top, followed by a lower top, followed by a break below the price low between the two tops. This kind of event doesn't always lead to a major crash, but it is always a sign of danger, and can be part of a market correction.
The second element is internal deterioration visible in a breadth indicator. In the case of the two charts below we can see that, when the second price top formed, the ITBM Oscillator also topped, and it topped below the zero line as a result of an extended period of deterioration. Below zero indicator tops are another danger sign that should not be ignored.

The next chart shows the current market status. The market is clearly overbought, but prices are making new highs, and the ITBM does not reflect any serious deterioration. The market is definitely due for a correction, but, other than the overbought condition, there is scant evidence that a correction, let alone a crash, is definitely about to occur.

Bottom Line: History shows us that structural crashes do not materialize out of thin air. That is to say, if the market is making new highs, it will take several weeks or months after the final top to allow for sufficient deterioration before the bottom falls out.

Posted by Chip Anderson at 5:04 PM in Carl Swenlin | Permalink

December 09, 2006A CORRECTION - OR SOMETHING LARGER? By Chip Anderson
Richard Rhodes
The recent "slowdown" in the major averages has produced "rotational undercurrents" between these averages; the most poignant we observe is the bullish breakout in the ratio of the S&P 500 Spyders (SPY) and the NASDAQ 100 (QQQQ). The reason we focus upon this is that it has implications in terms of traders taking on risk; in a normal bull run, traders tend to put on high-beta technology shares to increase returns above the market. Hence, when we begin to see strength in the ratio - it implies traders are shunning risk, which suggests a potential trend change is in the very near future. Perhaps it is merely a correction; perhaps it is something larger and deeper. History will be the final arbiter.
Technically speaking; the ratio chart has now broken out above it's shorter-term 35-day moving average, which given the 40-day stochastic is exhibiting positive divergences with the ratio...further suggests the ratio is headed higher. The real question is whether the more intermediate-term 130-day halts the rise and turns the ratio lower to new lows. In any case; it is our opinion that tactical short positions can now be considered with a greater probability of success than in recent months.

Posted by Chip Anderson at 5:03 PM in Richard Rhodes | Permalink

December 09, 2006SENTIMENT INDICATORS SHOW A MARKET ENTERING OVERBOUGHT TERRITORY By Chip Anderson
John Murphy
% NYSE STOCKS ABOVE 200-DAY AVERAGES ... I've received requests to look at some long-term market sentiment indicators. I've chosen a couple that you can plot by yourself on Stockcharts. One of those is the % of NYSE stocks above their 200-day moving average ($NYA200R). That's the reddish line in Chart 1 (the blue line is the NYSE Composite Index). As with all sentiment indicators, there are two main considerations. One is the level. At the end of a major bear market (like at the start of 2003), readings below 30 often mark major bottoms. During bull market corrections, however, readings around 50 usually market intermediate bottoms. That was the case in mid-2004, late 2005, and mid-2006. Readings over 80 usually mean an overbought market. That often leads to downside corrections (and, in some cases, major tops). At the moment, the % of NYSE stocks above their 200-day average has reached 79. That's the highest level in two years and puts it very close to overbought territory. But that's not enough to signal the start of a market downturn.

THE TREND IS STILL UP ... As with most things in market analysis, the trend is the most important factor. Chart 2 is a point & figure chart of the same indicator shown in Chart 1. There are two points that jump out at me. One is that the value of this indicator has exceeded its early 2006 which is a sign of market strength. The second is that the trend is still up. The first buy signal was given at 56 during July, and there have been six buy signals since then. [A buy signal exists when an x column exceeds a previous x column. Obviously, the first two or three signals are always the best]. Although the indicator is moving into overbought territory over 80, the trend is still up. The indicator would have to drop to 72 to give an actual sell signal. It would have to fall to 76 to suffer a downside three-box reversal. Although the sentiment indicator is entering overbought territory, it doesn't show any sign of weakening

Posted by Chip Anderson at 5:01 PM in John Murphy | Permalink

December 09, 2006DOW LOOKING "TOPPY" By Chip Anderson
Chip Anderson
The Dow Jones Industrial Average had a significant technical development in the middle of last week when it failed to surpass it's previous "peak" for the first time in months. After hitting 12,361 on November 22nd, the index sank to 12,072 a week later. The crucial rebound started on November 29th but stalled at 12,360 on December 5th.

The failure to punch through the 12,360 level is technically significant. It signals the end of the very strong uptrend that the market has been in and the possible start of a reversal or, in the best case, a consolidation period. The key levels to watch for in the coming days are 12,360 on the upside and 12,100 on the downside. A close above 12,360 means this was (hopefully) a temporary glitch and the rally is back on. A close below 12,100 means that the index has reversed and we should expect lower prices.
Finally, Happy Holidays everyone! Our next newsletter will be after the new year.

Posted by Chip Anderson at 5:00 PM in Chip Anderson | Permalink

November 18, 2006WILL THE NASDAQ RALLY FIZZLE? By Chip Anderson
Tom Bowley
Not very likely. We've seen a very strong earnings season. Economic report after economic report suggests the Fed is done with its interest rate hike campaign. There are too many non-believers in the market's advance, just take a look at the short-sellers. Lots of cash sits on the sidelines - on corporate balance sheets and in money markets. Applied Materials reported earnings this week and indicated they had reduced the outstanding number of shares in their float by 10% due to an aggressive share buyback plan. We are seeing increasing interest among private investors in taking public companies private. These are clear signs that equity valuations are cheap. As interest rates decrease, and we've witnessed this over the past few months on the ten year treasury bond yield, earnings become more valuable and multiples naturally expand. But this rally has added fuel. It's the supply and demand relationship. Applied M aterials is just one example of many companies who are aggressively buying back their own shares, thus reducing supply. Notice the attention recent IPO's have received. There is a thirst for equities. Short-sellers have all but guaranted there will be demand to fuel this rally. A few weeks back, I posted an article describing the "axis of normal returns", then showing visually where the NASDAQ might be headed in the next couple years. I was hugely bullish then and I remain so now. Yes, the NASDAQ has advanced over 20% off its recent bottom, but history suggests there could be much more to this current rally. Look at the chart below. I deliberately ignored the 1999-2000 melt up and focused on other time periods where we've seen an uptrending NASDAQ. Notice many of the other "straight up" moves have jumped by considerable percentages. The NASDAQ's current move pales in comparison.

Posted by Chip Anderson at 5:05 PM in Tom Bowley | Permalink

November 18, 2006THIRD BREAKOUT FOR QQQQ By Chip Anderson
Arthur Hill
For the third time in three months, QQQQ broke consolidation resistance and the uptrend shows no signs of abating. The gray ovals show consolidations in the second halves of August, September and October. These were followed by breakouts in early September, early October and early November. Broken resistance turned into support at 39.5 in September and again at 41 in October. These breakouts held and QQQQ never looked back. That shows strength.
On the most recent breakout, broken resistance at 43 turns into support and this is the first level to watch for signs of trouble. A strong ETF should hold its breakout and this is exactly what QQQQ did in September and October. A move below 43 would be negative and call for a re-evaluation.
Even though a move below 43 would be negative, I would not turn bearish right away. There is a big support zone around 41.5-43 from the October consolidation. In addition, RSI held above 50 since mid August and this level marks key support for momentum. QQQQ would have to break below the October lows (41.5) and RSI would have to break below 50 to reverse the medium-term uptrend. As long as both hold, the trend is firmly bullish and further gains should be expected. In Dow Theory talk, the trend is in place until proven otherwise and I have yet to see any evidence to the contrary.

Posted by Chip Anderson at 5:04 PM in Arthur Hill | Permalink

November 18, 20064-YEAR CYCLE RULES By Chip Anderson
Carl Swenlin
For quite a while I have been saying that the rally that began in July has been driven by persistent bearishness among investors. I still think this was a significant element, and it was encouraged by a strong belief that a major decline would be occurring in October in conjunction with the long-awaited 4-Year Cycle trough. Unfortunately for the bears, it appears that the 4-Year Cycle trough arrived early and without much fanfare (because the price decline into the cycle low was not very impressive).
On our first chart we can see that the Cycle trough occurred after a mere 7.5% decline and appeared in the form of a double bottom in June and July.

While the Cycle low was easy enough to spot on a one-year daily chart, it shows up only as a small blip on the long-term monthly semi-log chart below. While it clearly fits into the nominal 4-year periodicity, the decline was not nearly as dramatic as many others in the past, and it is easy to see why many investors were fooled into waiting for a deeper decline in the traditional October time frame.

Assuming that my cycle assessment is correct (some will say that it isn't), and assuming that the new 4-Year Cycle unfolds in a "textbook" fashion (it very well may not), it is most likely that we have begun another up leg in the bull market that will last for a few years. While that is a distinct possibility, I personally will not count on it too heavily, because we can clearly see on the chart above that some cycles are far from typical.
The cycle model can help explain current market action, and it can help us anticipate future price moves; however, rather than try to predict the future, I still find it best to let our trend-following tools/models point the way and drive our decision-making. The table below shows the status of those models as of Thursday.

This table is updated for subscribers every trading day in the Decision Point Alert Daily Report.
Bottom Line: Many investors are still expecting a major decline later this year, but I think that is unlikely because a new 4-Year Cycle is beginning. Prices should remain in an up trend for several months, if the cycle unfolds in a typical fashion.

Posted by Chip Anderson at 5:03 PM in Carl Swenlin | Permalink

hefeiddd · 发表于 2009-4-2 17:02

November 18, 2006FALLING COMMODITIES HURT CANADA, EMERGING MARKETS LAG By Chip Anderson
John Murphy
FALLING COMMODITIES HURT CANADA ... When commodity prices started to slide several months ago, I suggested that certain global stocks markets might suffer from falling raw material prices. One of them was Canada. Chart 1 shows the Toronto 300 Index (TSE) in the process of challenging its spring high. That's not too bad unless we consider that most other global markets have moved well beyond that chart barrier. The more important line on the chart is ratio of the TSE to the Dow Jones World Stock Index (solid line). Notice that the line has been falling since May. The means that the Canadian stock market has gone from a global leader to a global laggard during 2006. The line below the chart is the CRB Index which peaked in May. You can see a close correlation between the falling CRB Index and the falling relative strength line for Canada. Canada benefited from the bull market in commodities for several years. It's now being restrained by falling commodity prices.

EMERGING MARKETS ARE ALSO LAGGING ... I also suggested over the summer that emerging markets might suffer from falling commodity markets. I suspect there are other forces at work including a move away from riskier assets to more established large-cap stocks in developed stock markets. Even so, emerging markets as a group have become global laggards over the last six months. Chart 2 shows the Emerging Markets Ishares (EEM) still trading below their spring peak. The solid line is a ratio of the EEM to the Dow Jones World Stock Index, and it shows global underperformance by emerging markets since May. I suspect falling commodity prices have something to do with that since many emerging markets are producers of raw materials. Global leadership appears to have shifted to Europe and Asia (ex-Japan).

Posted by Chip Anderson at 5:01 PM in John Murphy | Permalink

November 18, 2006STRONG TECHNICALS? By Chip Anderson
Chip Anderson
Here's what a strong techincal picture looks like:

Record closes for each of the past 4 days. Steady volume. Increasing Money Flow values. Quick recovery from a recent downturn. Bullish MACD cross-over. This chart has it all!
Unless...
Maybe too many good signs is a bad sign. Maybe this baby is too "overbought" and is due for a correction. Things cannot possible get any better, right?
This is the classic problem that investors face during a bull market. Reversed, this is the same dilemma that they face in a bear market too. However, this is really NOT a problem for disciplined technical analysts. The charts are good and therefore you buy (or hold). Period. End of discussion. End of doubt.
Now sure, you watch carefully for changes in the charts and you move your stop loss levels accordingly. But until the chart changes - until your trendline is broken or your indicator turns down, you just enjoy the ride. Done correctly, Technical Analysis should remove fear and doubt from your investing, not add to it.

Posted by Chip Anderson at 5:00 PM in Chip Anderson | Permalink

November 04, 2006UNDERSTANDING THE MACD - NEGATIVE DIVERGENCES By Chip Anderson
Tom Bowley
On the technical side, we believe the combination of price and volume is paramount to successfully trading the stock market. A strong second place finish goes to the Moving Average Convergence Divergence, or the "MACD". The standard settings on the MACD are 12, 26, 9. On daily charts, the MACD is the difference between the 12 day exponential moving average (12 day EMA) and the 26 day exponential moving average (26 day EMA) and this difference is plotted on StockCharts as the "thick black line". The 9 refers to the 9 day moving average of the MACD and is the "thin blue line". So what does the MACD do? Well, it is a momentum indicator. When a stock or index is rising, the 12 day EMA will be higher than the 26 day EMA and the MACD will be positive and above the zero line, or centerline. When a stock or index is falling, the 12 day EMA will be lower than the 26 day EMA and the MACD will be negative and below the zero line, or centerline. The beauty of the MACD is that as prices put in higher highs, the MACD will sometimes put in a lower reading. The significance here is that on the surface momentum appears to be strong if looking only at price action. Underneath the surface, however, the MACD begins to signal a very different message. The difference between the 12 day and 26 day EMA's is actually beginning to shrink, suggesting slowing momentum. These "negative divergences" can be a precursor to lower prices, and in some instances even predict a long-term top. Let's take a look at two examples. First in Chart 1, you'll see the Semiconductor Index which in mid-October experienced a rally that carried it beyond September highs. But take a look at the MACD reading on that higher October high. The MACD reading was actually lower, indicating that the momentum was waning. Astute technicians would have taken notice and lightened up on the sector or simply looked for opportunities elsewhere. We have seen a similar pattern unfold with retailers over the past week or two. Notice in Chart 2 below that the Dow Jones US Apparel Retailers Index continued to trade higher throughout October, but the MACD mysteriously lost its momentum. We're just beginning to feel the effects of that negative divergence now.

The primary purpose of technical analysis is to gauge supply and demand. Use the MACD and its signals to better manage your portfolio and trading success

Posted by Chip Anderson at 5:06 PM in Tom Bowley | Permalink

November 04, 2006BEARISH DEVELOPMENTS IN SMH By Chip Anderson
Arthur Hill
The Semiconductor group is important to the performance of the Nasdaq and the Nasdaq is important to the performance of the overall market. Recent bearish developments in the Semiconductor HOLDRS (SMH) bode ill for the group and this is likely to weigh on both the Nasdaq and the S&P 500.

There are two bearish patterns at work and momentum recently turned negative. First, the advance from 29 to 36 formed a rising wedge and the mid October decline broke the lower trendline. Second, the ETF formed a head-and-shoulders pattern that extends back to early September and broke neckline support with a gap down on Thursday. For momentum, I am using RSI and this key indicator moved below 50 over the last few weeks. Notice how the stock held strong as long as RSI was above 50 (green box). The recent move below 50 shows a clear negative shift in momentum.
Until there is evidence to the contrary, I expect lower prices in SMH and this will weigh on the Nasdaq. What would it take to prove the bearish case otherwise? The right shoulder amounts to a consolidation with support at 33.3 and resistance at 34.5. SMH would have to recover the support break AND move above resistance from the right shoulder. Momentum would also have to improve and I would make RSI move above the late October high (53). These developments would be bullish and project further strength to 39. Let's see it happen first though.

Posted by Chip Anderson at 5:05 PM in Arthur Hill | Permalink

November 04, 2006GOLD IS COMING BACK By Chip Anderson
Carl Swenlin
Since gold peaked around $725 in May of this year, it has been going through the process of digesting the huge advance that took place a year prior to that peak. At first it was not clear whether or not the gold bull market was over, but, as you can see on the chart below, the initially violent correction transformed into a sideways consolidation in the shape of a triangle. This week, over five months from the May top, gold decisively broke up through the top of the triangle, giving a pretty clear signal that the correction is over.

On the weekly chart below the breakout appears even more dramatic, and there is the added bonus that the weekly PMO (Price Momentum Oscillator) has bottomed. The picture is turning very positive.

With interest in gold likely to increase dramatically as prices advance, now is probably a good time to introduce a new vehicle for owning gold – Central Gold Trust (AMEX: GTU). GTU is a closed-end fund that owns gold bullion (only gold bullion), which is stored in a Canadian bank vault. The fund is run by the same folks that run Central Fund of Canada (CEF), which differs from GTU in that it owns both gold and silver.
GTU began trading on the Toronto Exchange last year, but the chart below shows that it was thinly traded until it debuted on the AMEX in September where volume increased significantly. I think this will probably become one of the best vehicles available for owning and trading gold. It is my understanding that GTU qualifies for capital gains tax, which, for tax purposes, makes it superior to the gold ETFs and bullion. Do not take my word for it – check with your tax professional.

Bottom Line: Our trend model for gold turned bullish on 11/3/2006, and the chart picture looks very good. In my opinion, the correction in gold is over, and the next leg up is beginning.

Posted by Chip Anderson at 5:04 PM in Carl Swenlin | Permalink

November 04, 2006ANALYZING THE NASDAQ COMPOSITE By Chip Anderson
Richard Rhodes
The broader market rally off the June/July lows has pushed all the major indices higher; and in particular the Nasdaq Composite has outperformed rather noticeably if one looks at the Composite/S&P 500 Ratio. It has moved from 1.625 to 1.725; not a very large move, but a relatively profitable one to those wise enough to have been overweight technology shares. In that technical vein, we cannot help but note the very long and drawn out bullish consolidation forming; one that is nearly 3-years old right now, and that will become older until a clear breakout above trendline resistance is obtained, or until it breaks down. Time will only tell. But remember, the longer consolidations take to form, the more powerful the move after the breakout. Then, and quite obviously, the first signs a breakout move was under way would be a move above the 170-week moving avearge, with confirmation coming on a break above trendline resistance. This would target a ratio level somewhere upwards of 2.07 if we use the October-2002 rally into January-2004 as a guide. Further, the time frame in which it is likely to do so is within a 12-18 months. Therefore, we are intently focused upon the 170-week moving avearge; once this occurs, then we are willing buyers of the ratio, which generally coincides with a broader Composite rally.

Posted by Chip Anderson at 5:03 PM in Richard Rhodes | Permalink

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hefeiddd · 发表于 2009-4-2 17:03

November 04, 2006ENERGY STOCKS ARE BOUNCING AGAIN By Chip Anderson
John Murphy
The last time I showed the Energy Sector SPDR (XLE) it was starting to bounce off chart support along its 2006 lows (see circles). Chart 1 shows that the XLE has climbed back over its moving average lines and may be heading toward the top of its 2006 trading range. Its relative strength ratio is starting to bounce as well. Oil Service stocks have been the weakest part of the energy patch. Chart 2 shows the Oil Service Holders (OIH) having broken their June/October downtrend line. I've suggested before that buying in energy stocks usually leads to buying in the commodities themselves. Rising bond yields on Friday gave a boost to the dollar. In an impressive show of strength, gold continued its recent climb.

Posted by Chip Anderson at 5:01 PM in John Murphy | Permalink

November 04, 2006AVERAGING THE HIGHS AND THE LOWS By Chip Anderson
Chip Anderson
There is a lot more power inside our SharpCharts2 charting engine than we currently make available to our users. The problem is making that power available in an easy-to-use way. A great example of that is the ability to calculate indicators based on something other than the closing value in the underlying dataset. Imagine seeing a MACD display based on a stock's High values rather than it's close. Or image seeing a Bollinger Band plot based on the Lows of the day.
This week we took a step towards providing that level of flexibility by modifying the way that Simple Moving Averages and Exponential Moving Averages work. Now, you can add an optional letter to the end of any moving averages parameter box that will change the data value that we use to calculate the average. If you don't specify a letter, we will use the closing value like we always have.
For example, to plot the 10-period Simple Moving Average of the daily Highs for the Dow, use the string "10,H" in the "Parameters" box beside the Overlay dropdown. To plot the 10-period Simple Moving Average of the Lows, use "10,L". Here is an example of what that chart would look like:

(Click on the chart to see the new settings in action.)
You can use the letter "O" for the Open, "H" for the Highs, "L" for the Lows, and "C" for the Close. If you don't specify a letter, the closing values will be used. Again, this new feature only works for Simple and Exponential Moving Averages right now.
You can combine this new ability with the existing ability to offset a moving average to create some very interesting charts. Here's a chart off the 1-period MA of the Highs and the 1-period MA of the Lows - only the 1-period MA of the Lows is offset by one day. In addition the price bars have been hidden so that they don't clutter things up.

(Again, Click on the chart to see the exact settings.)
Please experiment with these new options and let us know what you think.

Posted by Chip Anderson at 5:00 PM in Chip Anderson | Permalink

October 21, 2006FLIGHT TO SAFETY By Chip Anderson
Tom Bowley
Recall in my last article the "axis of normal returns" showing the potential move of the NASDAQ over the next 2-3 years to return to its "normal line". This time I'd like to approach the NASDAQ's potential move from another angle - studying the relationship that has existed between the Dow Jones Industrial Average and the NASDAQ over the past 26 years. We all hear the phrase "flight to safety", but look at the chart below to get a visual picture of what happens when the more "aggressive" NASDAQ leads the market versus what happens when there is a "flight to safety" to the Dow. Point A on the chart in 1983 shows that the Dow Jones/NASDAQ ratio (hereinafter referred to as the Flight To Safety Ratio, or FTS Ratio) dropped to a low of 3.7, below the "normal zone" where the FTS Ratio has generally been situated during the majority of the time frame reviewed. Once the bear market of 1984 hit, the 7 year flight to safety culminated in 1991 with the FTS Ratio peaking at 7.5 (Point B), meaning that the Dow Jones traded at 7.5 times greater than the NASDAQ in terms of index points. After the 1991 peak, the NASDAQ enjoyed a 9 year period of outperformance over the Dow that ended in March 2000, with the FTS Ratio dropping to an all-time low of less than 2.0 (Point C). When the bubble burst, there was a rush out of equities, but the bleeding was far deeper on the NASDAQ as the FTS Ratio cleared the upper end of the "normal zone" once again, peaking at 7.0 (Point D) in 2002.

So where does the FTS Ratio go from here? Well, if it follows recent history, we'll see the next break out of the "normal zone" to the downside over the next couple years, perhaps to 3.50-4.00. That could coincide with a NASDAQ 4000-4500, right on the "axis of normal returns". Yes, I'm very bullish the NASDAQ.

Posted by Chip Anderson at 4:06 PM in Tom Bowley | Permalink

October 21, 2006A BULL FLAG FOR THE CONSUMER STAPLES SPDR (XLP) By Chip Anderson
Arthur Hill
The Consumer Staples SPDR (XLP) was a top performer from April to September, but went through a period of underperformance over the last 4-5 weeks. The Dow Industrials and S&P 500 kept right on trucking in September and October. The Dow recorded a new all time high above 12000 and the S&P 500 is trading at levels not seen since February 2001. In contrast, XLP is trading below its September high and has not kept pace with the Dow or S&P 500 in recent weeks.
Despite this underperformance, the decline over the last few weeks looks like a bull flag (green trendlines). I elected to draw through the spike low on 4-Oct. Bullish flags slope down and act as minor corrections. XLP recorded a 52-week high in early September and the long-term trend is clearly up. Relatively small declines should be viewed as corrections when the long-term trend is up.
XLP declined to around 25.1, firmed just above 25 and broke flag resistance this past week. The breakout reinforces support at 25 and projects further strength above the September high. In addition, momentum is rebounding as MACD moved above its signal line and upside volume has been strong the last few weeks. Strong upside volume, a MACD crossover and a flag breakout all point to higher prices ahead for XLP.

Posted by Chip Anderson at 4:05 PM in Arthur Hill | Permalink

October 21, 2006WINDSOCK VERSUS CRYSTAL BALL By Chip Anderson
Carl Swenlin
For several months these articles have included a reminder that "Technical analysis is a windsock, not a crystal ball." To clarify, a windsock is used to ascertain the current wind direction and intensity. A crystal ball is used to predict the future. As a practical matter, if we make decisions in response to known market conditions, we are operating in a mode that will allow us to adjust our stance as conditions change. Conversely, if we position ourselves based upon a prediction about the future, we are stuck with defending that prediction until it comes true or sticking with it until we lose enough that we are forced to capitulate.
Market action during the period from May 2006 to the present serves as a prime example of how the crystal ball can get cracked. During the decline from the May top it was broadly accepted that the bull market top was finally in place and that a major decline was beginning. The rally out of the summer lows was viewed as a short-term technical bounce in the context of a longer-term decline. The bears held fast. As prices approached the level of the May top, hope was born that a bearish double top was forming. The bears held fast . . . until the last three weeks of rally left the bears with little on which to hang their hats.

That is not to say that the bears did not have convincing arguments – I certainly agreed with most of them – but I have become more of a "windsock" kind of guy, and find there is less stress when I rely on our mechanical Thrust/Trend Model to help me align with current market conditions. The Model turned neutral during the decline from the May top, but it turned bullish again as the market rallied off the July lows. The table below shows how it has performed with the 16 indexes to which it is applied:

These are decent results, and we should be able to capture some of the profits if the market turns down at this point, but I don't want to leave the impression that there is any sure thing here. The Model has been marginally profitable for the last few years as market chopped higher in a fairly narrow range. And if the bears had been right more recently, the Model would have been whipsawed for some small losses. But that would not have been as distressing as hoping for a bearish outcome all the way from the July lows to the recent highs.
Checking current market conditions, the next chart shows the percentage of stocks in the S&P 500 Index that are above their 20-, 50-, and 200-EMAs, and it shows that the market is currently overbought in all three time frames. That doesn't mean that there will be a decline – the market was similarly overbought about a year ago, yet prices continued to rise for several months. Nevertheless, the market is vulnerable under these conditions and is it not a good time to add to positions.

Bottom Line: Whether the current up trend continues or ends, we are fortunate that the Model got us in early. When the market finally turns, we can be reasonably confident that the Model will take us out and preserve some of the gains in the process. Keep in mind that Model signals do not predict what is going to happen, they merely point us in the direction the market seems to be going at the time.

Posted by Chip Anderson at 4:04 PM in Carl Swenlin | Permalink

October 21, 2006OIL SERVICES TAKING A BEATING By Chip Anderson
Richard Rhodes
First, much continues to be made of the decline in crude oil prices, and the positive impact of lower energy prices upon the world consumer et al. This much is known; but oil service stocks have been "taken to the proverbial woodshed" and beaten to death, which creates a very interesting and perhaps very profitable opportunity to buy these stocks as crude oil continues to move lower.
Our interest stems from the technical perspective of the Oil Service Index vs. Crude Oil Ratio ($OSX:$WTIC). We think it is rather clear on a historical basis, the ratio is trading now too far off its lows of the past several years, which gives rise to the emerging "rounding bottom". Thi is confirmed with the now rising 100-week moving average. Too, we find trendline resistance above it coming into play; a clear breakout above this level would serve to push prices sharply higher towards 5.0.
So, in the end, no matter how crude oil trades...oil service is likely to trade better and outperform. Our favorite individual plays in the sector for the months and years ahead are: Nabors Industries (NBR), Transocean Offshore (RIG) and Weatherford International (WFT).

Posted by Chip Anderson at 4:03 PM in Richard Rhodes | Permalink

October 21, 2006SERVER ROOM EXPANSION By Chip Anderson
Site News

JOHN MURPHY TRAVELLING THIS WEEK - John will be presenting at the IFTA Conference in Switzerland this week and will not be online after Monday. We've arranged for Arthur Hill (you can read he column below) to contribute commentary while John is away.
NEW METHOD FOR REQUESTING MISSING STOCKS - We will be rolling out a new web-form for people to use whenever they want us to add a new ticker symbol to our database. This new form will help you help us get new symbols into our database as quickly as possible. Watch for the link to appear soon on our main "Support" page.
DAY-LONG SITE OUTAGE LOOMING - As part of our server room expansion project, we will soon need to physically move all of our computer equipment from its current location into a new temporary space. If everything goes as planned (hard to know right now), we will move all of our equipment next Saturday, October 28th. During the time we are moving stuff, the site will be offline. Please watch the "What's New" area of the site for specific details and plan accordingly. While painful, once the expansion project is complete, we will have three times more power and cooling capacity (critical for servers) than we do now.
MORE DATA-FEED SERVERS ORDERED - In order to ensure that we can get information reliably from our data vendor even when one of their servers is down, we have ordered two more of their data-feed servers (for a total of four). The new servers should reduce the likelihood of data problems like we had several weeks ago. We hope to have them installed later this week.
ALMANAC SPECIAL HELD OVER - Wow, over 200 people ordered the 2007 Stock Traders Alamanac from us last week making it our most popular special ever! In case you missed it, we decided to continue it through the end of this month. Check out all the glowing things we said about it in the last newsletter, then order your copy before the special ends.

Posted by Chip Anderson at 4:02 PM in Site News | Permalink

October 21, 2006A WEAKENED HOUSING MARKET By Chip Anderson
John Murphy
CATERPILLAR HURT BY WEAK HOUSING ... A plunge in Caterpillar on Friday, Oct 20th, unsettled the market. And for good reason. The bad news from the stock was blamed on a weak housing sector. Why that's worth noting is because Wall Street seems to be dismissing the housing meltdown as not very important. I beg to differ. There are subtle signs beneath the surface that weak housing is having a negative impact on parts of the market tied to the economy. Chart 1 attempts to show a positive correlation between Caterpillar (green line) and the PHLX Housing Index (brown line) since the bull market started four years ago. Both turned up together at the start of 2003 (green circle) and rallied together until the end of 2005. Notice that the plunge in housing stocks at the start of this year was followed shortly by a downturn in Caterpillar (red circle). That weak action isn't limited to CAT. It's generally true of most stocks tied to the economy.

WEAK HOUSING IS HURTING CYCLICAL STOCKS... The brown line in Chart 2 is the Housing Index (HGX). The blue line is a ratio of the Morgan Stanley Cyclical Index (CYC) divided by the S&P 500. The chart shows that economically-sensitive stocks have done much worse than the S&P 500 since May and shortly after the peak in housing. Cyclical stocks are very closely tied to the economy. The fact that they're doing so badly suggests that the market is already preparing itself for an economic slowdown resulting from the weak housing sector. It's no concidence either that some of the market's strongest groups have been in the defensive sector. I wrote yesterday about strength in healthcare and utilities. Another group that usually benefits when cyclicals (and the economy) weaken is consumer staples.

Posted by Chip Anderson at 4:01 PM in John Murphy | Permalink

October 21, 2006INTERESTING STATISTICS By Chip Anderson
Chip Anderson
The Dow Industrials continued to set new highs last week and several interesting sectors led the way - but I'm not going to talk about that. (Our expert columnists have it covered below anyways.) I'm going to share some interested statistics with you about how StockCharts.com is used these days. Recently, we upgraded our statistics reporting tools and we are now getting new insights into how people are using StockCharts.com to make better investing decisions. Here are some of those results:
Did you know?

Mozilla Firefox

strongly

relatively inexpensive

Word-of-mouth remains the #1 way that people learn about our website? We want to thank everyone out there for that.

There are tons more site statistics but those are the most interesting to me. Thanks again to everyone that uses our site to make better investment decisions - a truly win-win situation if there ever was one.

Posted by Chip Anderson at 4:00 PM in Chip Anderson | Permalink

October 07, 2006IS IT TOO LATE TO CATCH THE NASDAQ TRAIN? By Chip Anderson
Tom Bowley
After a decent run up in stock prices, one of the questions always heard is "is it too late to buy?" Well, there's never a guaranteed right answer and a lot of analysts would say the bull market is long in the teeth and has run its course. I am not in that camp - far from it. The stock market has a history of volatility where it becomes almost euphoric near long-term market tops and utterly depressed at bottoms. Market prices move higher over time because earnings, over time, grow. But we also know that earnings can swing wildly in both directions, especially on the technology-heavy NASDAQ. Earnings multiples can expand quickly in rising markets and compress just as quickly in descending markets. So how can you truly value a market or determine whether a market is overvalued or undervalued? Let's start with the realization that the stock market is inefficient over short periods of time, but very efficient over longer periods of t ime. In the end, the market generally gets it right.

I refer to the chart below as the "axis of normal returns." It's a chart that dates back to 1980 on the NASDAQ and attempts to find the "middle of the road" in terms of market valuation, where approximately half the time the market is overvalued and the other half undervalued. The theory here is that the market goes too far in both directions and it takes time to steer it back on course. It's simple to look back and say the NASDAQ was incredibly overvalued in 2000. That doesn't matter any more though. Those days are over. The current question is, based on history, are we overvalued or undervalued NOW? Based on the chart, I'd say we're undervalued, perhaps significantly so. We've had swings above and below the "axis of normal returns", but we've always gravitated back to the normal line. I see no reason to think any different this time.

Many market pundits would suggest this bull market has run its course. I argue that what we've seen since 2002 is just the beginning of a move that takes us back to that "axis of normal returns." Time will tell who's right.

Posted by Chip Anderson at 4:06 PM in Tom Bowley | Permalink

hefeiddd · 发表于 2009-4-2 17:05