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Chart Watchers Weekly
- 21 January 2000
StockCharts.com's Weekly Summary of Market
Trends, Signals and Changes
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Hello Fellow Chart Watchers!
The returning sense of bullishness at http://stockcharts.com
was squashed last week as the DJIA, the S&P and the NYSE
Composite headed lower. The Nasdaq continued to soar and
set records but probably the most interesting development
was the strength of the Russell 2000 which was up over 5%
for the week.
The other big news last week was energy prices - up 8.6%!
The Goldman-Sachs Energy Commodity index is now at a
3 year high. Can inflation fears be far behind?
This "inflated" issue of Chart Watchers Weekly includes:
- Our weekly market performance summary and analysis
- News of some powerful new scans that have just been added
to the site
- Arthur Hill's exclusive assessment of last week's action
- Sector summary
- And bad news for our "Chart of the Week" - the Dow
Transports
Read on for all the details...
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MAJOR MARKET PERFORMANCE SUMMARY
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Stock Market Performance Summary:
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>> http://stockcharts.com/charts/performance/USMarkets.html
Weekly Performance (since 14 January) -
>>Press the F1 key to see this one-week chart<<
Russell: +5.20% Up almost 6% for the year
AMEX: +4.89% Last down day was 12-Jan
Nasdaq: +4.21% Ditto
S&P 500: -1.62% Down 2% for the year so far
NYSE: -1.57% Down 1.6% for the year
DJIA: -4.02% Down everyday last week
Monthly Performance (since 21 December) -
>>Press the F2 key to see this one-month chart<<
Russell:+12.22% In record territory!
AMEX: +9.30% Set an all-time record this week
Nasdaq: +8.29% Another record high! +80% since last January
NYSE: +1.06% Sideways for the past 9 months
DJIA: +0.46% Re-testing Oct. uptrend line
S&P 500: +0.55% Negative for all of Jan. so far
Stock Market Signals:
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>> http://stockcharts.com/charts/indices/USMarkets.html
(Note: Click on any of the small thumbnail charts
to see the more in-depth analysis charts with our
trendlines on them.)
Strange divergences indeed - The S&P 500 is lagging both
the S&P 400 mid-cap and the S&P 600 small cap indices. The
latter two recorded new highs this week while the former
failed to break above resistance at 1470.
The Nasdaq, Russell 2000 and DJUA were all strong on Friday.
The S&P 500, DJIA, DJTA and NYSE Composite were weak on
Friday.
The Russell 2000 and Nasdaq Composite closed at new all-time
highs. The Russell 2000 benefited from strength in biotech
stocks and the Nasdaq from strength in tech stocks.
The Nasdaq traded record volume on Thursday and then again
on Friday. However, NYSE volume was well short of its
previous records. Hard to compare weekly volume due to the
4 day week, but the 4 day total was a record 4 day total
for the Nasdaq.
The DJUA advanced over 2% on Friday to close above resistance
at 310. Led by a sharp move in Enron (ENE), the DJUA is up
over 16% in the past month.
Spooked by higher oil prices, the DJTA broke key support at
2800 and appears to be headed lower.
After setting a new record last Friday, the DJIA succumbed
to selling pressure and declined every day this week. Much
of Fridays loss can be attributed to the sharp drop in
Procter & Gamble (PG), which fell 9 7/8 on investor
apprehension over the possible deal with Warner Lambert
(WLA).
The CRB Index declined on Friday ending its string of 8
consecutive advancing days. For the week though, the CRB
Index rose to its highest level since Jul-98.
Higher interest rates affected the banks and brokers this
week.
Led by Enron again, the Natural Gas Index is up over 13% in
the last 6 days. Not to be outdone though, the Biotech
index is up over 20% in the last 6 days.
>> http://stockcharts.com/charts/performance/Industry1.html
Market Breadth:
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>> http://stockcharts.com/charts/indices/USInternals.html
As you might suspect with the Russell 2000 doing so well,
all of the market breadth indicators improved last week.
What's amazing is that they are _all_ moving higher in
unison right now. The Advance-Decline Lines, the Net New
Highs, the Summation Indices; from a breadth perspective
everything is improving now.
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SECTOR SUMMARY
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The joy-ride for the Basic Industry sector appears to be
over. The sector fell over 7% this week and is now back
in negative territory for the past month. Most of the
other S&P Sector SPDRs were also negative for the week;
only the Technology sector was up significantly (+3.62%).
>> http://stockcharts.com/charts/performance/SPSectors.html
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COLUMNIST NEWS
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- Rex explains how he uses the VIX indicator to gauge
trader sentiment. He also discusses how to use the
CCI indicator in tandem with the Russell 2000.
- Arthur Hill discusses his new favorite indicator -
the Price Oscillator. What is it? Where'd it come
from? Why is it better than the MACD?
- Scott McCormick presents a sane way to invest
aggressively in today's markets.
- Paulo Prazeres see signs of consolidation for the
Nasdaq but feels the Dow has higher to go.
- And, of course, CNBC technical analyst John Murphy
has more interesting charts and observations for us.
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ARTHUR HILL'S STOCKWATCH SUMMARY
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Nasdaq Composite: The trend for the Nasdaq Composite remains
bullish, but bullish momentum continues to slow and a large
negative divergence could be forming in the Percentage Price
Oscillator (PPO).
Russell 2000: The trend for the Russell 2000 remains bullish
and the index broke above overhead resistance at 505. The
index is up over 5% in the last 2 weeks and momentum is strong.
DJIA: The DJIA had a rough week and fell all four days last
week. The trend remains bullish, but selling pressure appears
to be on the increase. The Percentage Price Oscillator (PPO)
has formed a negative divergence and Chaikin Money Flow is
below -.10.
S&P 500: The S&P 500 continues to trade within a trading
range marked by 1470 and 1400. A lower high formed and there
is a large negative divergence in the Percentage Price
Oscillator (PPO). The short-term trend remains bullish,
but the lean is neutral at best.
AT&T has pulled back from its resistance breakout and could
find support in the low fifties.
Lucent was hammered 2 weeks ago, but remains above its
long-term trendline and appears to be finding some support
between 50 and 55.
AOL retraced about 2/3 of its September to December advance
and appears to be finding support around 60.
Wal-Mart looks a bit toppy and closed below support on
Friday. The Percentage Price Oscillator (PPO) has weakened
considerably over the last few weeks and Chaikin Money Flow
is negative.
BTW, check out the new article on the PPO and tell us what
you think of the new SWW charts and commentary format. This
is your chance to shape the future of these commentaries.
Tell us what you like, don't like and any suggestions for
additions or deletions.
- Arthur Hill
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Book of the Month:
"Reminiscences of a Stock Operator"
by Edwin Lefevre
http://store.yahoo.com/stockcharts/reofstopedle.html
If there is only one book a trader should read, this is
the book. Jack Schwager, author of The Market Wizards and
The New Market Wizards, interviewed over 30 top traders
and asked which book(s) they would recommend for aspiring
traders. Schwager notes that the book mentioned most often
was by far "Reminiscences of a Stock Operator." Written
over seventy years ago, the lessons formed from the trading
of Jesse Livermore are just as valid today as they were
then. Many of the insights revealed in this book have since
become Wall Street axioms:
- Prices are never too high to begin buying, nor too low to
begin selling.
- Always sell what shows a loss and keep what shows a profit.
- Never fight the tape.
New traders will learn from the valuable insights into trading
and the markets. For experienced traders, this is the type of
book that can be read over and over again. The lessons gleaned
are timeless and cannot be ingrained enough. - Arthur Hill
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TOOL TIP
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Check out our new Bollinger Band scans!
>> http://stockcharts.com/charts/scans
You asked for it and we delivered. You can now see
a list of stocks that have just moved above their
upper Bollinger Band or below their lower Bollinger
Band.
Bollinger Bands are plotted 2 standard deviations
above and below a 20-day average for a given stock.
The bands tend to define a "typical" range within
which prices can be expected to stay. Stocks that
move above or below that range are experiencing
"unusual" price movements and may present interesting
trading opportunities.
Now anyone can see a list of these "interesting"
stocks anytime at StockCharts.com.
Let us know if you have ideas for additional stock
scans that you'd like to see.
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Take care,
Chip
http://stockcharts.com
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