Don't Ignore This Chart

Auto Parts Getting Its Engine Revving; Approaching MAJOR Breakout

I have to admit I love breakouts of long-term basing patterns and the Dow Jones U.S. Auto Parts Index ($DJUSAP) is currently in the midst of the mother of all basing patterns.  Dating back to 2014, we've seen a number of price resistance tests that all finished the same way - with failure.  I don't know if we get through this time, but if we do, you might want to consider an auto parts stock or two in your portfolio.  Here's a visual look at the long-term consolidation:

The lows have been creeping higher for the past several years, but the highs have been stymied in the 340-342 area.  There was one intraday move to 345 in July.  Otherwise, 342 has been a brick wall.  Look for a solid breakout on above average volume for confirmation to enter the space.

A few stocks that look technically solid, recently reported better than expected quarterly revenues and earnings, and should benefit by a breakout in the industry group would be Dana Corp (DAN), BorgWarner (BWA), Lear Corp (LEA) and WABCO Holdings (WBC).

Happy trading!

Tom

Ebay Reverses Near Key Retracement

EBAY shows signs that the correction is ending and the bigger uptrend is resuming. First, the long-term trend is up because the stock hit a 52-week high in July. The stock then corrected with a move back to a support zone around 34-34.5. Notice that broken resistance and the June lows mark support here. Also notice that the decline retraced 61.8% of the prior advance with a falling channel (blue lines). Both the pattern and the retracement amount are typical for corrections within a bigger uptrend. The stock surged the last two days and looks poised to break the upper trend line. 

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

Plan your Trade and Trade your Plan
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Valero (VLO) Pumps New Highs

Valero (VLO) is moving up on the back of the gasoline issues around the Houston flooding, but the chart was already at the top of the range before Monday. Monday it broke out to new highs and on Tuesday retreated off those highs once again. The chart has some very interesting technicals.

The Yield is very healthy at 4% so that keeps you interested. The SCTR is mid-range which is not my favorite. I want to see it become a top performer above 75. The RS broke out to new 5-month highs but is retreating slightly today which you can see in the zoom box on the right. Price is pinching between an upside breakout and the 200 Daily MA. We are going to see some price action soon, one way or the other. The reason is the momentum has a trend of rising lows and lower highs. The price pattern looks constructive to me, but usually will when the last data point is tucked in the top right corner. If it was at the bottom of the range, it might feel a little more bearish. 

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Target Reverses at Resistance with Big Engulfing Pattern

The Retail SPDR (XRT) is one of the worst performing industry group ETFs and Target (TGT) is one of the downside leaders. Even though the stock is up sharply since early July, it is down over 20% year-to-date and seriously lagging the broader market in 2017. Note that SPY is up around 10% year-to-date. Target is in a long-term downtrend because it is well below the falling 200-day SMA and it hit a 52-week low in June. More recently, the stock hit resistance in the 57-58 area four times since May and formed a large bearish engulfing pattern last week. This marks a clear reversal at resistance and I would use this to signal a continuation of the long-term downtrend. MACD is also weakening. 

Follow me on Twitter @arthurhill  - Keep up with my 140 character commentaries.

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

Plan your Trade and Trade your Plan
*****************************************

 

Autodesk (ADSK) Sends Buy Signal Technically, Fundamentally, And Seasonally

It's rare when stocks line up bullishly from a technical perspective, in addition to both fundamental and seasonal perspectives as well.  But that's exactly what I see when looking at Autodesk (ADSK).  Let's start with fundamentals.  ADSK just reported its latest quarterly earnings and they beat both top and bottom line estimates.  Revenues were reported at $502 million, topping the consensus estimate of $495 million.  EPS came in at (.11), much better than Wall Street's expectations of (.15).

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Amazon To Cut Prices At Whole Foods, Prints Hammer On Support

It was another round of selling for Whole Food Markets' (WFM) competitors as Amazon.com (AMZN) made headlines by announcing that prices would be cut at WFM stores.  That spooked the likes of Costco (COST), Wal-Mart (WMT) and Target (TGT) as all three saw drops on very heavy volume.  Meanwhile, AMZN's own price slump may have ended on Thursday as a bullish hammer printed at price support.  Check it out:

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Dow and DuPont Lead XLB, and Threaten to Take Over the Sector

The sector SPDRs are weighted by market-cap and this means the biggest stocks carry the most weight. The Materials SPDR (XLB), for example, is dominated by Dow Chemical (11.86%) and DuPont (12%). These two behemoths are poised to merge and the combined company will clearly dominate XLB going forward. Chartists interested in XLB had best keep an eye on these two stocks for directional clues. 

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Gilead (GILD) Changes Character

Gilead (GILD) was in the Biotech spotlight for many years. The rally in Biotech's that started in 2016 has largely missed Gilead. Recently, the Gilead chart changed character and started to improve.  This might just make a nice entry. The SCTR has moved above 50 after being below 25 for an entire year. Something is changing that the stock is now starting to perform similar to its peer group average. The current SCTR is 57%. Gilead is back above the 40 week moving average  for the first time since early 2016. The 10 week moving average has now crossed above, suggesting an improving trend. 

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Newmont Holds Breakout Zone with a Bounce

Newmont Mining (NEM) is one of the bigger gold players and its performance is tied to the price of gold, which is challenging resistance. Note that the Gold SPDR (GLD) has yet to break above its April-June highs, but Newmont is starting to outperform bullion with a break above these highs. On the price chart, NEM broke resistance with a sharp surge and then fell back to the breakout zone with a falling flag. This pullback to the breakout zone is known as a throwback and such moves can offer a second chance to partake in a move. Falling flags are also bullish continuation patterns and the stock is attempting another breakout today. 

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