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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

What Does a Trend Line Really Tell Us?

by Arthur Hill

We all know what a trend line is, but does a trend line actually dictate the trend? In other words, does a trend line break actually signal a trend reversal? Or, is a trend line break telling us something else? We cannot use a tool unless we fully understand it and this article will shed some light on the humble trend line. At the very least, I hope to stimulate the analysis process by challenging you to think hard about an indicator and its message.  At its most basic, a trend line is a line that connects a series of rising troughs or falling peaks. A rising Read More 

ChartWatchers

Who Do You Trust More? Active Money Managers or Individual Investors?

by Erin Swenlin

This week sentiment was mixed. Typically we see the American Association of Individual Investors (AAII) and National Association of Active Investment Managers (NAAIM) exposure index give the same message. However when I pulled up the charts to present during the sentiment segment of MarketWatchers LIVE, I saw the dissonance.  The AAII sentiment survey asks individual investors whether they are bulls or bears. It's a poll, so that has to be considered. It's easy to say "I'm bullish" and yet sell many of your positions. However, sentiment surveys are useful. Remember that sentiment Read More 

ChartWatchers

A Picture tells a Thousand Words

by John Hopkins

One of the benefits of technical analysis is being able to look at a chart to help determine if a stock is a viable trading candidate. In other words, what does a technician see in a chart that would lead to the conclusion that a specific stock is or isn't a high reward to risk trading candidate?  I have found chart reading to be particularly useful after a company reports quarterly earnings and have developed some specific signs/indicators I look for to help me determine if a stock is worth pursuing for a trade. First, does the stock rise or fall once earnings are released? This is Read More 

ChartWatchers

Are Australian Stocks Flat or Trending Higher? - Weak USD Boosts Australian ETF

by Arthur Hill

The Australia All Ords Index ($AORD) is trading well below its April-May highs and stuck in a long and tight consolidation. In contrast, the Australian iShares (EWA) hit a 52-week high in late July and remains close to this high. Which one are we to believe? Are Australian stocks lagging like $AORD or leading like EWA? Let's investigate.  The lower window shows the Australia iShares breaking out to new highs in July and outperforming $AORD over the past year. There are probably some different holdings or weightings between the two, but this does not Read More 

ChartWatchers

All Bond Categories Are Underperforming Gold In 2017

by John Murphy

During the week, I wrote about gold (and gold miners) achieving upside breakouts and outperforming stocks for the first time since 2011. Gold, however, is also doing better than bonds for the first time in six years. Not just some bond categories, but all of them. The chart below plots five bond ETFs relative to the price of gold (flat black line) since the start of the year. And all five categories are underperforming the metal. They include long and intermediate term Treasury bonds, investment grade and high yield corporate bonds, and Treasury inflation protected securities (TIPS). And Read More 

ChartWatchers

Trade Strength; Here Are The Best Industry Groups In The Aggressive Sectors

by Tom Bowley

One of my trading strategies is to trade the best stocks in the best industries at the best price.  Sounds easy enough, right?  But what does this mean exactly?  Well, first I take a top down approach and review every industry group within each aggressive sector - technology, industrials, financials and consumer discretionary.  Below are my favorites in each of these sectors and why. Technology If I simply looked at recent returns, computer hardware ($DJUSCR) and software ($DJUSSW) would top my list as they've both risen more than 5% over the past three months Read More 

ChartWatchers

Don't Fall Asleep, Energy Is Waking Up

by Greg Schnell

I get it. Energy has been the worst sector for the last 8 months. Everything is ugly. So is there absolutely no hope? There are some wonderful clues on the charts that this might start to heat up. Not just on Hurricane Harvey, but the charts were starting to get interesting in July. Now on September 1, they are very interesting! Natural Gas ($NATGAS) looks really good here to me. On a weekly chart it looks even better! The PPO turning up from just under zero gives lots of room to the upside. The RSI has held 40 which is associated with a bull market Read More 

ChartWatchers

Bearish Sentiment Suggests Market Will Move Higher

by Erin Swenlin

As I prepared for the MarketWatchers LIVE segment on sentiment today, I was surprised to see investors and money managers are getting very bearish. Put/Call ratios show a bearish bias as well. It is important to remember that sentiment is a "contrarian" indicator. It works a bit like the VIX which more of you may be familiar with. When the VIX begins showing climactically higher readings, that is bullish; while climactically lower readings are bearish.  Interestingly, the VIX is moving to lower and lower readings and in the chart below you Read More 

ChartWatchers

Patience, Patience, Patience

by John Hopkins

Q2 earnings season has come and gone and traders liked what they heard and saw. This is the primary reason the market has come to life, in spite of some things going on out there that might normally spook the market. For those of you out there who don't know what we do at EarningsBeats it's actually a simple - but powerful - concept. We scan for companies that beat earnings expectations, have strong looking charts and present high reward to risk trading opportunities. I wanted to point this out because an important part of the equation is to exercise patience after a strong earnings Read More 

ChartWatchers

Aerospace Has Been Strong, But It's Relative Strength Momentum Is Weakening

by Tom Bowley

Bull markets are fueled by sector and industry group rotation.  Throughout the bull market since 2009, we've seen each of the key aggressive sectors take their turn leading on a relative basis.  Within each sector, we also see relative leadership and weakness among industry groups.  For example, over the past month, aerospace stocks ($DJUSAS) have performed extremely well.  In fact, the DJUSAS is one of only two industry groups in the sector that have moved higher and its 4.17% gain over the past month easily beats defense stocks ($DJUSDN).  Take a look at the one Read More 

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