Don't Ignore This Chart

Gold and Bonds are Moving in Tandem

The Gold SPDR (GLD) and the 20+ YR T-Bond ETF (TLT) are both having good years with GLD up around 10% year-to-date and TLT up around 7%. As the chart below shows, these two are positively correlated over the past 12 months. The indicator window shows the 63-day Correlation Coefficient (TLT, GLD) in positive territory for the entire chart. 63 days is around three months or a quarter. Chartists looking for more sensitivity may try a 20-day Correlation Coefficient. This positive relationship is visible today with both up sharply in early trading. In addition to the greenback, chartists looking for clues on gold should also watch the bond market. 

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Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan
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Correlation between Stocks and Bonds Turns Positive

Stocks and bonds are both having a good year with the S&P 500 SPDR (SPY) up 11.91% year-to-date and the 20+ YR T-Bond ETF (TLT) rising 6.53% since January. The advance in SPY has been much steadier than the choppy advance in TLT, but both sport nice gains so far in 2017. This is a bit unusual because bonds are normally considered safe-havens that benefit in a risk-off environment. Stocks, in contrast, are risky assets that benefit in a risk-on environment. The indicator window shows the Correlation Coefficient (SPY,TLT) turning positive in June and staying positive most of the last two months. It is an unusual situation, but we should keep an open mind and stay bullish on the price charts until there is evidence of a trend change. SPY has key support in the 240-241 area and TLT has key support in the 122-123 area. 

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Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan
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Ferrari Flying But Does It Need A Pit Stop?

Fresh off yet another stellar quarterly earnings report, Ferrari's (RACE) stock price has hit the accelerator once again.  Its ascent truly has been remarkable as RACE has gone from 31 to 111 in 3.2 seconds.  Okay, the stock price hasn't really moved that fast, but sometimes it seems like it.  Instead, RACE has more than tripled in less than 18 months and that's impressive.  Let's take a look under the hood:

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Southern Co (SO) Looks Up

Southern Co (SO) is a utility company with a pretty intriguing chart this week. 

THe SCTR got very low and is starting to move above 30, which is one style of trade I like. The Relative strength is clearly out of favor, so that is a major drawback. The price action has oscillated above and below the $48.50 level for the last year and this week closed back above it. 

What I like most about the chartis the Full Stochastics on a weekly chart getting into oversold and now bouncing back up. Both other times on this chart, that was a fantastic buy signal. While the MACD has not crossed its signal line, the histogram improved quite a bit this week which suggests the trend might be changing.

After such a bullish run into other sectors of the market for so long, it might be time for these defensive sectors to play more of a roll. With a sparkling yield of 4.6 %, a little payback comes with the stock. 

Good trading and enjoy the weekend.
Greg Schnell, CMT, MFTA.

 

Here's A High Reward To Risk Biotech Play

First, please understand that any time you trade a small biotech company, there are considerable risks attached.  These types of stocks are certainly not for everyone.  One size does not fit all.  However, if you enjoy taking higher risk in an attempt to score high returns quickly, then take a look at Sarepta Therapeutics (SRPT):

SRPT broke out above price resistance near 37.00 and quickly surged to 44.00, but became very overbought with an RSI reading above 80.  The recent selling has served a couple of purposes - first to test price support and the rising 20 day EMA on light volume and second to relieve the overbought oscillators with both RSI and stochastic near 50 now.  Consider an aggressive trade with entry at the current price, a closing stop beneath the 36.00-36.50 area and a target of 44.00 to retest the recent high.

Happy trading!

Tom

FireEye Battles Consolidation Support

FireEye reported earnings on Tuesday and surged on Wednesday morning with a strong open. The stock is trading well below the open now, but I wanted to highlight the bigger patterns at work. First, the long-term trend is up because the stock is above the 200-day EMA and the 50-day EMA is above the 200-day EMA. The stock forged an island reversal with two gaps in March and broke a big resistance zone with another gap in May. After a 50+ percent advance from mid March to mid May, the stock moved into a trading range from mid May to now. 

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Chevron Leads Energy Sector with Breakout $CVX

Chevron appears to be ending its correction and resuming its bigger uptrend with a five-day surge and breakout. The stock surged to a 52-week high in December and then retraced 61.8% of the prior advance with a decline into April. The decline basically ended in April because the stock found support in the 103 area from April to July. Notice that the broken resistance zone turned into a support zone - and held. The retracement amount and return to broken support are normal for corrections. Price action is turning bullish again as the stock broke above the June high and the 50-day EMA moved back above the 200-day EMA. Also note that Chevron is leading the Energy SPDR because the price relative (CVX:XLE ratio) hit a new high. 

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Thanks for tuning in and have a great day!
--Arthur Hill CMT

Plan your Trade and Trade your Plan
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The Best Industry Within The Best Sector Awaits Its Next Breakout

You might find it surprising, but healthcare (XLV, +15.51%) has posted the best six month performance among all sectors - even technology (XLK, +14.10%).  All five industry groups within healthcare have gained 10% or more in the past six months with medical supplies ($DJUSMS, +23.32%) leading the pack.  The DJUSMS has been consolidating this summer, but just bounced off of price support and its 50 day SMA and appears poised for another upside run:

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Scott's Fertilizer $SMG Is Top Dressing The Chart

Scott's Fertilizer (SMG) has been hyped as a marijuana-related play for all those investors interested in the Cannabis trade. But even for non-cannabis focused investors, Scott's has some real nice seasonality that might make an excellent topdress to help green up your portfolio. Here is a link to the seasonality chart below. Notice the strong performance in the second half of the year.

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