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About this blog: is our free newsletter for individuals interested in technical trading and chart analysis. It is sent out twice a month via email. This blog contains early-access, preview versions of the articles that later appear in the official newsletter.

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ChartWatchers

Climactic Indicators and Sentiment Suggest Weakness in Week Ahead

by Erin Swenlin

The market made new all-time highs this week, but with the upcoming holiday and short trading week, look for consolidation or continued sell-off. The indicators in the very short term and short term are suggesting a selling initiation. Add to that the highly bullish sentiment charts and it spells weakness in the week ahead. The ultra-short-term indicators of breadth and the VIX show declining breadth numbers. Granted today advances did outrun declines, but the reading is still lower than the previous positive readings from earlier in the week. The VIX is getting very close to the lower Read More 

ChartWatchers

Late August Rebound in Foreign Stocks Helped Push U.S. Stocks to New Record

by John Murphy

Editor's Note: This article was originally published in John Murphy's Market Message on Wednesday, August 29th at 12:33pm ET. Before leaving on vacation on August 15, I expressed concern about the fact that foreign stock ETFs were lagging too far behind the U.S. which could threaten the uptrend in the S&P 500 which was nearing a test of its January high. The message suggested that U.S. stocks needed more help from foreign stocks in order to reach new highs. In the two weeks since then, foreign stock ETFs have actually risen more than in the states. That helped support new highs Read More 

ChartWatchers

Powerhouse Earnings Power Market Higher

by John Hopkins

Here's a fact: Traders gravitate towards companies that beat earnings expectations. Why? Because they know they are putting their money to work in companies that outperform. Here's another fact. MANY companies that report and beat earnings expectations often gap up - move higher - on positive news and ALWAYS (at some point) pullback to levels that make them attractive trading candidates. Here's a prime example below: As you can see from the above chart on GrubHub, they reported and beat earnings expectations that resulted in a significant gap up on extremely high volume on July 25. The Read More 

ChartWatchers

Facebook: Next Stop Is $150

by Tom Bowley

Facebook (FB) has been an internet and stock market leader for the last five years, but I believe the run is over.  Not only did FB report quarterly revenues that missed Wall Street consensus estimates for the first time in more than four years, but they also lowered future operating margins to the mid-30s% range.  Wall Street was expecting 44% and 45% for the next two years.  That type of operating margin reduction requires a steep discount in valuation and Wall Street is in the midst of revaluing FB.  While the deterioration in fundamentals resulted in a huge Read More 

ChartWatchers

This Week's Scoreboard Shake Up - Momentum Weakens

by Erin Swenlin

This week the market was rocking and rolling with large price swings. The DecisionPoint Scoreboards reflect new negative momentum for each of the indexes, but after logging those Price Momentum Oscillator (PMO) SELL signals, the market did an about-face and began to pull PMOs back up or slow their descent. The SPX and OEX have similar features to their charts so I'll talk about them first. The first thing that I noted visually was the possible head and shoulders pattern that could be developing on both indexes. This is very early in the formation stagethe right shoulder hasn't Read More 

ChartWatchers

Staying on the Right Side of the Market

by Arthur Hill

The first rule of trading is to stay on the right side of the broad market trend. There are different indexes and indicators we can use to determine the broad market trend, but few are as efficient as the S&P 500 and its 12-month EMA. The chart below shows monthly bars for the S&P 500 with the Percentage Price Oscillator (1,12,0), which measures the difference between the 1-month EMA and the 12-month EMA. Note that the 1-month EMA is essentially the monthly close. The long-term trend is up when the PPO is positive and down when the PPO is negative. Showing the PPO as a histogram Read More 

ChartWatchers

Cash Flow Stocks Break Out

by Greg Schnell

Investors in growth stocks had another troublesome week. The bifurcation continued as the NASDAQ 100 $NDX breadth data had a tough week while the $SPX breadth improved. Three stocks of interest showed up on the most active list for the $SPX to highlight the trend. Equifax had a data breach last year in September. While it has rallied well off the lows, this week it started to push above the resistance that has been in place since January.  With the SCTR moving above 80 and the MACD turning up while staying above zero, this looks like a good momentum move. Equifax Read More 

ChartWatchers

Life After Earnings

by John Hopkins

Q2 Earnings season has come and gone with the overall market response being mostly positive. And the good news for traders is there are plenty of companies that beat expectations, made nice moves higher and could become high reward to risk trading candidates on pullbacks. As just one example, take a look at the chart on GrubHub, a company that reported their numbers on July 24 and easily beat earnings and revenue expectations;     You can see from the chart above that the response Read More 

ChartWatchers

Stocks in Strong Rebound After Surviving Test of 50-Day Averages Yesterday

by John Murphy

Editor's Note: This article was originally published in John Murphy's Market Message on Thursday, August 16th at 2:12pm ET. U.S. stock indexes are having an unusually strong day. Chart 1 shows the Dow Jones Industrial Average climbing more than 400 points (1.6%) in afternoon trading. The Dow tested its 50-day average yesterday and held. Chart 2 shows the S&P 500 trading 1% higher. Yesteday's pullback held above its June peak and 50-day average as well. Chart 3 shows the Nasdaq Composite Index also holding above its 50-day line. All market sectors Read More 

ChartWatchers

Capturing the US stock market from different angles using Relative Rotation Graphs

by Julius de Kempenaer

Instead of showing asset class rotation or sector rotation, Relative Rotation Graphs can also be used to show rotation among various market segments. You have all seen or heard about a breakdown of the market in large-, mid-, and small-cap stocks. And maybe also the breakdown between growth and value stocks. The stock market can be seen from a lot of different angles. The good news is that index providers like Dow Jones are providing us with indexes that capture all these different market segments. In this post, I want to show you how you can use Relative Rotation Read More 

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