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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

Understanding and Adapting to the Broad Market Environment

by Arthur Hill

The broad market environment is perhaps the single most important factor to consider when selecting a trading or investing strategy for stocks. As with the weather, the broad market environment is subject to change and we need to adapt to current conditions. We should take extra precautions when it is wet and stormy and wear our Bermuda shorts when it is  dry and sunny. Ah, the sun. Similarly, we should take extra precautions when the market is trending lower with high volatility and take more risk when the market is trending higher with low volatility. Let's look at the shifting Read More 

ChartWatchers

Use Relative Rotation Graphs To Get A Handle On International Markets

by Julius de Kempenaer

With the US stock market declining investors (may) need to look for alternatives in order to preserve capital. Sure enough, there are good opportunities in the US with bonds, IEF is doing very well, and cash is a very viable alternative if you do not "need" to be invested. If you are in a position where you do need to be invested in stocks or you want to keep an allocation to stocks in your portfolio, even if it is an underweight position, you might need to look outside the US for alternatives. The Relative Rotation Read More 

ChartWatchers

Earning Misses - Profiting from Weakness

by John Hopkins

Most of you who read my blog know the name of our service is EarningsBeats.com. The name makes sense since, for many years during the bull market, we've zeroed in on those companies that beat earnings expectations that could be prime long candidates. Fast forward to today and we've got a new category to focus on; companies that miss earnings expectations and could be prime short candidates. To give you just one example, take a look at the chart below on XPO, a company that reported results in December, fell sharply on huge volume and has made its way up close to key technical resistance Read More 

ChartWatchers

Apple Plunges on Sales Warning

by John Murphy

Editor's Note: This article was originally published in John Murphy's Market Message on Thursday, January 3rd at 1:59pm ET. The price of Apple is plunging today after issuing a sales warning for the first quarter. The stock was already in trouble before that announcement. The weekly bars in Chart 1 show Apple (AAPL) falling today to the lowest level since the middle of 2017. An analyst on CNBC today sounded confident that the stock would do better than the rest of the market "on a relative basis". So far, that's not working out very well. The red line in the upper box is a ratio of Apple Read More 

ChartWatchers

The Financials Sentiment Indicators Suggest This Might Need More Time

by Greg Schnell

It looks like another tough month for the markets as year-end approaches. The index swings are getting increasingly aggressive and it feels like nearly every sector is getting yanked around. While there are lots of reasons to be bullish based on some of the "oversold" sentiment indicators, other reasons suggest a more worrisome stance. In the chart below, the top panel shows the KBE Bank ETF, which has sold off by 25%. The dip isn't quite as big (in percentage terms) as the big dips of 2011 (42%) and 2016 (28%) were.  Looking at the Financials Bullish Read More 

ChartWatchers

PMO Analysis - Wrong Direction and Not Oversold Enough

by Erin Swenlin

The Price Momentum Oscillator (PMO) is a great measure of acceleration/deceleration of price for individual entities. Combining each component's PMO readings within an index is especially advantageous in allowing us to understand how overbought or oversold it is in three timeframes. Although readings are oversold, they are still declining. This suggests that prices within the SPX, OEX and NDX are vulnerable to more downside price action. Let's review each of the panes below price. The first is the short-term indicator, which measures whether a PMO is rising. For reference, you Read More 

ChartWatchers

Want To Know The Difference Between A Correction And A Bear Market?

by Tom Bowley

Not a whole lot. I guess there are three primary differences.  First, there's the percentage drop as corrections are generally considered to see a drop of less than 20%, while bear markets tend to see declines well in excess of 20%.  Second, a bear market tends to last longer than a correction as the latter is nothing more than a basing period (that can still be extremely emotional) during a bull market.  Corrections are actually quite constructive for a longer-term rally.  Finally, there's a much stronger likelihood of an economic recession during a bear Read More 

ChartWatchers

The Yield Curve And The Business Cycle

by Julius de Kempenaer

The "Yield Curve" is a term often used in finance and refers to the relationship between (government) bonds with various maturities. The "Normal" relationship between the yield on various maturities is that the longer you lend money to someone. In this case the US government, the more "yield" you require. Similar to your mortgage, a fixed rate for five years is cheaper than a fixed rate for ten years or longer.  There are a few ways to look at yield curve relationships. 10-yr Minus 2-yr Yield Read More 

ChartWatchers

Consider This New Year's Stock Market Resolution And Change Your Financial Future

by John Hopkins

First, I'd like to wish everyone a Merry Christmas and a Happy New Year!   2018 has been a wild ride with volatility returning to extreme levels.  Unfortunately, 2019 looks like it will get even worse.  I believe we're in a bear market and, at EarningsBeats.com, we've already made preparations for it. A bear market doesn't have to mean losses in your portfolio.  You have options.  Sitting in cash increases your buying power when an ultimate bottom forms.  Trust me, being in cash while the stock market falls is the second best thing to making money!  We Read More 

ChartWatchers

Support Levels in Downtrends? Fuggedaboutit!

by Arthur Hill

As obvious as it seems, lower lows and lower highs are the order of the day in a downtrend. Thus, prices are expected to break prior lows and continue lower when the trend is down. Taking this downtrend concept one step further, one could also assume that support levels within downtrends are highly questionable and offer false hope. After all, lower lows are the norm, not the exception. Our first job as chartists is to identify the bigger trend at work. Once trend direction is established, we can then direct our focus and set our trading bias. I try to focus on resistance, bearish setups Read More 

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