Don't Ignore This Chart

November 2017

Don't Ignore This Chart

Rising Treasury Yields Signal Two Things

by Tom Bowley

There's a renewed selling effort in U.S. treasuries and that's sending yields soaring.  Bullish performance in small caps, transportation stocks (especially railroads), financials, industrials and consumer discretionary are painting a picture of a strengthening economy ahead and the selling of treasuries would certainly support that theory.  With the FOMC meeting less than two weeks away, it's apparent that the bond market is anticipating another rate hike at the conclusion of the meeting.  Traders are also pouring into financial stocks, particularly banks ($DJUSBK), as Read More 

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Delta Air Lines Reverses with Outside Reversal Day

by Arthur Hill

Airline stocks are moving higher again with solid gains across the board over the last two weeks. The PerfChart below shows the performance for the Airline ETF (JETS) and seven other airline stocks since mid November. All are up with Alaska Air (ALK), Southwest (LUV) and COPA Airlines (COPA) sporting the biggest gains.   The next chart shows Delta (DAL) with the 50-day EMA above the 200-day EMA over the last eight months. Even though the stock dipped below the 200-day EMA several times this year, this golden cross has been active since November 2016. Most Read More 

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Cybersecurity ETF (CIBR) Breaks Out To New Highs

by Greg Schnell

The cybersecurity ETF (CIBR) broke out to new highs late last week. The chart shows a couple of downtrends also breaking. In this vertical market where everything is up, a stock that consolidates sideways for any length of time looks pretty weak. The SCTR has a downtrend line that looks to be breaking. An SCTR above 50 would mark new 4-month highs.  The relative strength downtrend also broke so there might be more to this breakout. The move to new highs on the price chart after a consolidation sideways since March is very bullish.  The Read More 

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KLA-Tencor Traces out Two Continuation Patterns

by Arthur Hill

KLA-Tencor (KLAC), a semiconductor equipment and materials designer and manufacturer, is in a long-term uptrend with large and small bullish continuation patterns working. The chart shows 52-week highs in May and October so the long-term trend is clearly up. The green outline highlights a cup-with-handle forming from June to November. On the right side of this pattern, we can see a sharp advance from August to October and then a pullback in November (blue lines). This pullback looks like a falling flag, which is also a bullish continuation pattern. A break above the mid November high would Read More 

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BHP Pauses At Resistance

by Greg Schnell

BHP Billiton (BHP) is pausing at resistance after a 30% run from July to September. The stock has a definite primary up trend going. The SCTR in the top panel shows the trend is improving for relative strength.  The volume this week was very low with the market closed for 1.5 days but the rest of November has seen average volume. The MACD continues to be well above zero, but is currently sloping down slightly. The closing price for the week is very close to the highest closes in the third and fourth quarter. With a strong dividend of 3.89% shown in the full quote panel Read More 

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Timken Surges off Rising 200-day SMA

by Arthur Hill

Timken (TKR), a mid-cap industrial, looks like it is resuming its bigger uptrend with a surge off the 200-day SMA. The chart below shows the stock hitting 52-week highs in April and October. The October high formed after a channel breakout and 25% advance. Timken then corrected with a rather sharp decline and briefly broke the 200-day SMA last week. This break, however, did not last long as the stock surged back above 47 the last five days. Also notice that MACD turned up and moved above its signal line. The long-term trend is considered up because of the 52-week highs and the Read More 

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MGM Tries To Breakout Again

by Greg Schnell

The gambling stocks have performed well over the last few years. MGM has traded sideways while WYNN has continued to climb. The consolidation looks constructive as MGM tries to breakout again. The RSI in the top panel continues to bounce off the 40 level which is a bull-market trait. The MACD downtrend line appears to be breaking to the upside, so perhaps the stock will be able to make new highs soon. While WYNN continues higher, this pause over the last 6 months just might give a little better buy point for a breakout. Good trading Read More 

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TJX Companies Reverses with Big Spinning Top

by Arthur Hill

Retail stocks surged last week and discounter TJX Companies ($TJX) bounced off support with high volume. Technically, the big trend is still down because the 50-day EMA is below the 200-day EMA and TJX is below the 200-day EMA. These EMAs are not shown on the chart to keep it clean. Despite the overall downtrend, TJX looks promising from a bullish standpoint because it reversed at support on big volume. Notice how the stock formed a massive spinning top after last week's gap down. The spinning top shows indecision because the open and close are in the middle of a large high-low range Read More 

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Nike, Skechers Lead Rally In Footwear Stocks

by Tom Bowley

Skechers (SKX) rallied approximately 40% after its most recent quarterly earnings report and Nike (NKE) has gone from 2017 lows to nearly a 2017 high in the past five weeks, highlighting a significant rally in the Dow Jones U.S. Footwear Index ($DJUSFT).  The DJUSFT rallied 3.21% on Friday alone and is on the verge of a very significant breakout: The DJUSFT is heavily weighted toward NKE and you can see that in the chart above.  NKE's major price resistance level is 60 and a breakout with confirming volume would be extremely bullish for the entire industry group. Read More 

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Fox (FOXA) Pounces On Six Month Highs

by Greg Schnell

21st Century Fox (FOXA) has been creating the news the last few weeks with merger, acquisitions, and parts spinoffs all part of the discussion. It closed the week at six month highs and above an important 5-year support and resistance line.  With all of this smoke, there must be a little fire behind the scenes, but this resistance area is extremely important for the stock as it has been dead money for years. Last week it made new 52-week lows only to suddenly reverse to 6-month highs.  If there is real movement behind the scenes this could break the Read More 

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Western Digital Breaks Out of Continuation Pattern

by Arthur Hill

Western Digital (WDC) appears to be emerging from a consolidation pattern and this increases the chances of new highs in the coming weeks. The chart shows WDC hitting a new high in July and then falling with a rather sharp decline into early August. The stock immediately rebounded after this decline, but then traded sideways as a triangle formed. This triangle is basically a consolidation within an uptrend and a breakout means the bigger uptrend is continuing. Note that the 50-day EMA has been above the 200-day EMA for over a year now. WDC struggled to break the triangle trend line in late Read More 

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General Electric Short Circuits (GE)

by Greg Schnell

General Electric (GE) has been struggling recently and now the stock dipped to two years lows. For such a blue chip institutional stock, the price action faltering while the overall market is in a big bull trend is almost shocking. With the investor day, GE announced asset sales and a dividend cut. The investors short circuited and hammered the sell button. While all this is new, the real question is when will investors find the stock low enough that good value is showing up? The stock has been dead money for 20 years. For an institutional stock, this price action is horrific. It will Read More 

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Fortinet Bids to End Long Correction

by Arthur Hill

Stocks close to new highs are usually in uptrends and have a good chance of recording new highs in the near future. Fortinet looks poised for a new high as challenges a channel line after an upturn last week. First and foremost, Fortinet is in a long-term uptrend with the 50-day EMA above the 200-day EMA and a 52-week high this summer. The stock peaked in early July, but has been pretty much flat since June with the blue lines marking a correction. Corrections can sometimes overstay their welcome by extending longer than we expect. Nevertheless, I try to keep the bigger picture in mind and Read More 

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Want To Know When To Sell? Terex Is A Perfect Example

by Tom Bowley

In September, Terex Corp (TEX) saw big volume accompany a breakout of a bullish rectangular consolidation phase.  After weeks of trending higher, momentum began to slow and TEX printed a "death" candle - a shooting star on big volume to end the uptrend.  If there's one signal that screams at me to sell, it's the combination of a negative divergence and a reversing candle on volume.  Look at the chart below: TEX is a great chart to teach Technical Analysis.  There's a clear uptrend leading to a top in early August.  Then we see a continuation pattern and Read More 

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Proctor and Gamble (PG) Prints An Outside Reversal

by Greg Schnell

Procter and Gamble (PG) printed an outside reversal this week right near the lower Keltner channel line. While the chart of Proctor and Gamble is trending higher, it's always important to find a nice entry. This week fits the criteria with a couple of indicators drawing our attention. First of all, this is typically as weak as PG gets compared to its peers on the SCTR indicator. Secondly, the full stochastic dipped below 20 and looks set to rise here. Most of the signals off the full stochastic were profitable. On the price panel, the reversal was right near the lower Keltner Read More 

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Selling Allows PNC Financial To Unwind For Solid Reward To Risk Trade

by Tom Bowley

While it would be great for the stock market to rise every day without any selling whatsoever, that's just not practical.  As a trader, I await episodes of selling to set up much better reward to risk trades in stocks that remain in long-term uptrends.  Enter PNC Financial (PNC).  On October 13th, PNC reported revenues ($4.13 bil vs. $4.11 bil) and EPS ($2.16 vs. $2.13) that beat Wall Street consensus estimates and that's helped PNC lead the banking group higher.  But the selling the past few trading sessions has now set PNC up as a potential trade: Slowing Read More 

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Fiserve Shows Resilience with Move into Gap Zone

by Arthur Hill

Fiserv gapped down and fell on big volume last week, but the candlestick points to an accumulation day and the Accumulation Distribution Line hit a new high. First and foremost, the big trend is up because Fiserve hit a 52-week high with a move above 130 in late October. FISV then gapped down with an open around 124 and closed lower on the highest volume of the year. Despite the lower close, I think this was an accumulation day because the stock dipped below 121 during the day and closed near the high of the day. This candlestick looks like a massive hammer and the ability to close near Read More 

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ConocoPhillips (COP) Makes New Two Year Highs

by Greg Schnell

ConocoPhillips (COP) has been on a roll since July, but this week it broke out to new two-year highs. The oil stocks are well positioned to go on a roll. I detailed this in the Commodities Countdown Video Recording 2017-11-02. The COP chart above has a couple of textbook signatures. The MACD has moved back above the zero line. The Full Stochastics have moved above 80 which is excellent and the SCTR ranking has headed into the top quartile above 75. In early October, the 10 Week crossed above the 40 week moving average for a positive alignment and this looks set to Read More 

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Schlumberger Springs a Bear Trap with Big Volume

by Arthur Hill

Schlumberger (SLB) broke support with a surge in volume, but this support break did not hold as the stock surged with strong volume the last two weeks. The decline below 62 looks like a selling climax because of high volume and the gap down. The surge in volume flushes out of the sellers and paves the way for a bounce. SLB got its bounce with a two week surge that exceeded the 50-day EMA today. Notice that volume was above average five of the last nine days. I am not counting today's volume because the day is incomplete. Despite early signs of a bottom, the overall trend remains down with Read More 

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IBM Fails To Hold Moving Average Support, Now Looks To This Key Level

by Tom Bowley

IBM has been a very interesting stock to watch, but not to own.  After 23 consecutive quarters of declining revenues, traders finally found something to be excited about in IBM's latest quarterly earnings report.  Five years ago, IBM traded near 165.  At Friday's close, it was approaching 150.  Big Blue has been an even bigger disappointment.  In its earnings report on October 17th, however, IBM beat its revenue estimates by nearly a half billion dollars and its EPS edged out estimates by two pennies.  That was enough to light a fire under its stock price as Read More 

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S&P 500 in nose bleed area? ... Not from this perspective!

by Julius de Kempenaer

The Relative Rotation Graph above plots a number of world equity markets against the FTSE all-world index and shows their relative rotation around this benchmark. With all the chatter going around on the S&P 50o index camping in the nose-bleed area this gives a refreshing angle to look at the current state of world-affairs (at a stock market level that is ..). The markets on the right, inside the weakening quadrant, are Hong Kong ($HSI), Emerging Markets ($MSEMF), and China ($FTX). If you click on the chart and open the live version you can scroll back through Read More 

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Ford Stalls before Making Next Move

by Arthur Hill

Ford (F) consolidated after a big advance and this consolidation looks like a bullish continuation pattern. First, industry group strength and the long-term uptrend are in Ford’s favor. Ford is part of the red-hot Global Auto ETF (CARZ), which is up over 20% from its April low and trading near a 52-week high. Long-term, Ford broke a big resistance zone in September and the 50-day EMA moved above the 200-day EMA in October. After a 19% -trend-reversing advance, the stock was entitled to a rest and this is exactly how a consolidation works. The trading range digests the gains, alleviates Read More