Trend Check with Tushar Chande

Tushar Chande
About the author: , PhD, MBA, is the inventor behind an impressive collection of technical indicators, including the Aroon and Stochastic RSI. He has written several books, holds both a PhD in Engineering and an MBA in Finance, and has over two decades of experience trading the financial markets. Follow Tushar in this blog as he highlights his new "Trend Meter" indicator and shares his analysis of current market conditions.

Latest Posts

Trend Check with Tushar Chande

Downside Targets As Retest Resumes

by Tushar Chande

Now that the market has resumed its sell-off, the retest of the February lows I was looking for seems to have arrived (see here and here).  What might be useful here is an estimate for down-side targets, so we can have some levels to anticipate.  Remember, the levels are just guesses, and could easily be ignored or overrun by the market. Chart 1: The dashed red line is just around the February lows.  The two vertical lines help scale the initial drop and then a tool to project the second drop after the recovery highs.  So the Read More 

Trend Check with Tushar Chande

Be Bold: Buy and Hold (Inspirations from the 2017 Warren Buffet Letter)

by Tushar Chande

Today I want to consider a counter-intuitive idea: trading (nay investing) with a very long holding period (think decades, i.e. no stops). Trading horizons today seem to have shortened with social-media inputs, easy access to data, powerful technical analysis tools and low-cost, lightning-fast trade execution. Perhaps this opens the door to counter-trend thinking. In his 2017 letter published recently, Warren Buffet shows the four worst draw-downs in Berkshire's stock (ranging from -37% to -59%) and makes the case for holding a position through such draw-downs (see Figure 1).  Now Read More 

Trend Check with Tushar Chande

SPX Sets Up Shallow Down-trend Channel: Heading Towards Retest of Recent Lows?

by Tushar Chande

The S&P 500 Index has set up a shallow down-trend channel, possibly setting up a retest of the recent lows.  Three days in a row, the market has closed below the open, and the past four days show relatively long upper shadows on candlestick charts denoting overhead resistance.  Besides, the $VIX index remains above 17, and the market thus remains unsettled, primarily due to the bond market, which is testing critical support.   Chart 1: The $SPX has set up a shallow down-trend channel over the past few sessions. Note how the Chande Trend Meter has fallen below 20 Read More 

Trend Check with Tushar Chande

A Model For S&P 500 Bottoms (Are We There Yet?)

by Tushar Chande

Here I explore recent key lows and bottoming patterns in the S&P 500 in order to understand how they may apply to the current market decline. Naturally, the past may give us clues, but there is always uncertainty about how the bottom will form this time.  For obvious reasons, I will ignore "V" bottoms, that often form during up-trends, since they require no further elaboration.   Chart 1: A template for S&P 500 Double Bottoms. The initial low is followed by a rebound into the Fibonacci retracement zone.  A relatively rapid 8-10 day decline is a firm test of the Read More 

Trend Check with Tushar Chande

If You Only Learn One Lesson From This Sell-off (Learn This One)

by Tushar Chande

The recent sell-off in the market is among the worst 10 sell-offs since 2010 (see Chart 1), which means a rebound cannot be too far away. The all-important gauge of market skittishness, the $VIX, has not exceeded the level of 50 identified as the peak in my previous post, and has now closed below the five previous closes, implying that the most intense selling panic is probably over (see Chart 2).  The bottoming process is not complete, and may take various forms, and depends on  whether we get a "V" bottom or a re-test of the lows over the next 1-4 weeks (as in 2015-16) or Read More 

Trend Check with Tushar Chande

$SPX Forms Key Bottom Near 2600 (As Expected)

by Tushar Chande

In my post on Jan 27 I wrote about the $SPX that a "a drop to 2600 is not impossible" and showed a 50% retracement level at 2598.50.  Today, the market bottomed at 2593.07 within a whisker of my forecast.  The blow up in the $VIX index suggests a tradable bottom has formed, though we will need several days of backing and filling, and even a retest of the low.  Wall Street conventional wisdom gurus have also called this a bottom, so we can expect a bottom building process to commence at these levels.   Chart 1: The $SPX found Read More 

Trend Check with Tushar Chande

Markets Fall Out of Parabolic Patterns After Well-timed Warning

by Tushar Chande

After my well-timed warning last weekend, the markets fell out of their parabolic patterns on Monday, responding to the external trigger of rising rates.  For example, the New York Composite was the first to fall out of the pattern and fell decisively all week (see Chart 1).  The external trigger was the rise in rates (see Chart 2).   I had discussed the risk of  rising bond yields in a earlier post on January, 11.   The stock market conveniently reversed after reaching the upside Dow target range that I identified two weeks ago (see Chart Read More 

Trend Check with Tushar Chande

Risk of Reversal Rises with Parabolic Move

by Tushar Chande

The powerful January rally has turned "parabolic" across all key indexes, increasing the risk of a market reversal.  The sheer flow of investment dollars into stocks has driven the acceleration in prices, but this flow is also nearing an extreme (see BAML), increasing the risk of a reversal.  Eventually this rocket will run out of fuel and the so-called parabolic rise will lead to a correction.   Chart 1: The strong move in January has the look of an accelerating parabolic advance.  Note how the stochRSI in the lower panel has not dropped below 0.20 since early Read More 

Trend Check with Tushar Chande

5 Lessons from Trend Analysis of Vanguard ETFs (And How to Profit From Them)

by Tushar Chande

Vanguard allows us to take a keen look at a very well diversified portfolio of ETFs.  Analyzing their trend strength offers insight in to market action, and offers guidance into constructing profitable portfolios for our own purposes. Chart 1: This trend strength distribution analysis of the universe of Vanguard ETFs shows that fully 60% (mostly equity related ETFs) are trending higher strongly.  Bond and bond-related ETFs are at the right hand edge, trending lower strongly.   1. Market Trend Strength is broad and deep Read More 

Trend Check with Tushar Chande

Strongest Semiconductor Stocks (Plus: Will this Market Ever Pullback?)

by Tushar Chande

Topics: Semiconductor stocks breakout; ESIO bottoms; KSS and TCF breakout; is the Dow within hailing distance of a pullback?  The semiconductors which were hit hard in November during the rotation into Financials have rallied to new highs. I will show the strongest stocks propelling this rally.   Chart 1: The $SOX index broke out to new highs, after enduring a significant sell-off during the rotation in to Financials in November.  It's bounce has largely followed my analysis (see here and here).   $SOX Makes New Read More 

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