This is cool. Check it out:
(Click Chart to Embiggen)
For more information on PPO and Elder Impulse bars, search in Stockcharts.com
Source:
The Biggest Chart of the Dow We’ve Ever Created (Stockcharts.com)
Tags: $DJIA $DIA
Expert technical analysis of financial markets by JC Parets
by JC
This is cool. Check it out:
(Click Chart to Embiggen)
For more information on PPO and Elder Impulse bars, search in Stockcharts.com
Source:
The Biggest Chart of the Dow We’ve Ever Created (Stockcharts.com)
Tags: $DJIA $DIA
by JC
In bull markets, sectors tend to rotate. Like throwing a Perfect Game in baseball these days – everyone gets a turn (It didn’t used to be that way). But in stock markets, this is normal. When equities as a group corrected this Spring, who were the relative leaders? Defense: Utilities, Staples, and healthcare. And now that S&Ps and Dow Industrials are at or near multi-year highs? We see Technology, Energy and the Industrial names leading the way.
Take a look at this relative performance chart that I put together of each of the S&P SPDR Sectors over the past month. Each of the 9 lines show the relative performance vs the S&P500. Who did the worst? You guessed it – Staples, Healthcare, Utilities: (Click Chart to Embiggen)
This is normal and what we should expect to see in a bull market. Rotation is key.
But we do need to see this trend continue in order for equities as a group to keep heading higher. And some of these names also need to start making new 52-week highs, which they haven’t yet. The good folks over at Bespoke Investment Group did a nice job yesterday showing the lack of new highs in the individual names while the index itself is already doing so. This chart shows exactly why the old cliché, “It’s a market of stocks and not a stock market”, is anything but:
We do indeed need to see the trend of decreasing new highs come to an end and confirm the multi-year highs that we’re seeing in some of the major averages. That’s probably the only thing out there that I can think of that the bears have left. Every other argument has been proven wrong by Mr. Market, who could care less about Europe and your precious fiscal cliffs. And that lack of volume thing we’ve been forced to listen to for 3 years? My friend Ryan Detrick does a nice job of dismissing that.
I’m up in the Adirondack mountains for the weekend enjoying some of the most beautiful weather and scenery that I’ve ever seen. So I’m in a great mood hanging out with friends and family and want to keep this positive. Things look good out there, the $VIX is at 5 year lows, the bears are more confused than ever, and the averages are making new highs in the face of “bad news”. But we want to see some more participation from the large population of stocks that haven’t been confirming these new highs. If the indexes manage to rollover before net new highs confirm, and we begin to see some relative strength from defensive areas again, caution in equities would be advised.
But as of right now? Risk assets are in charge.
Source:
Wanted: More New Highs (Bespoke)
Tags: $XLP $XLV $XLU $XLE $XLI $XLB $XLK $XLF $XLY $SPY $DJIA
by JC
This thing was a monster off the October lows. Deere & Co rallied over 50% in just 4 months. This sort of action needs to correct, or consolidate somehow before it can keep rocking. This is especially the case when the long-term 200 day moving average still has a downward slope.
The low for this correction came in early June at a standard 61.8% Fibonacci retracement from the previous up move. Very normal and healthy. Meanwhile, this gave the 200-day moving average enough time to flatten out and begin to move higher. The price action has been constructive as well. Higher lows for 2 1/2 months running.
I was over at Bloomberg on Tuesday afternoon talking technicals in this particular name. The other guys interviewed weren’t big fans of the stock. I think the important thing here is to accept the positive correlation that Deere has with Equities. You have to like the market if you want to be involved. And we still like stocks here. Check out the video:
I think based on all of the information that we have, we still need to give the bulls the benefit of the doubt. If the uptrend line from the October lows starts to break, then we’ll have to reevaluate our positive stance. But a breakout above 83 would get me even more excited about Deere. Here’s the chart:
Source:
John Deere 3Q Earnings Out Tomorrow (Bloomberg)
Tags: $DE $SPY
by JC
Let’s check in on what Louise Yamada thinks about this market. As a young technician, I’ve always looked up to and respected the opinions of my predecessors. And she’s one of the best that ever did it:
Source:
Bloomberg Radio – Bloomberg (8/15/12)
Tags: $SPY $TRAN $IYT $DJIA $XLP $USO $CL_F $BNO $CORN
by JC
It’s been a while since we talked about Silver. And I don’t hear anyone else talking about it. So that tells me that maybe we should look a little closer and see what’s going on.
I think the recent action has been constructive and is looking US Steel-ish. A few weeks ago I went on Bloomberg TV and said that I liked the US Steel even though others hated it. Both of these have some similar characteristics: Good risk reward, both somewhat forgotten about, positive momentum divergences, and flattening long-term moving averages.
Let’s take a look (I know I’m sorry about all these lines and colors, but I think they’re all relevant):
First of all, there is longer-term support right around this 25.60-25.70 level in $SLV. This support held in December and rallied hard earlier this year. We went on record loving precious metals back then and we like it here at this price once again.
Also, when $SLV made new lows at the end of June, the Relative Strength Index was already putting in higher lows (just like $X was doing 2 weeks ago). This bullish divergence gives us a heads up not too fully trust that new low – especially when it comes at key support levels.
Trendlines have been broken. From the highs in late February you can draw an aggressive trendline, or a more conservative trendline from the next lower high – no matter, both have now been broken.
The moving averages have flattened out. This is one of the reasons that I liked $X. The breakout attempts earlier in the year ran into declining 200 day moving averages that just weren’t ready. This consolidation (in both $X & $SLV) allowed the smoothing mechanisms to flatten out, making it much easier to break out from. The 50 day moving average in $SLV has helped as well, now flat.
So this is why I like the recent action in Silver. But the most important thing is the risk/reward (always). We’re a buck and half above key support, with a ton of upside (at least mid-to high 30s). That’s the sort of proposition that we’re constantly looking for.
What do you guys think?
Tags: $SLV $SI_F $X
by JC
The most hated stock market rally I’ve ever seen continues to defy gravity. I’m not going to list all of the factors that the non-believers will bring up to justify their lack of participation. But one thing that stands out as an excuse is the lack of broad stock participation. I’m hearing and reading throughout the media that the cyclicals aren’t cooperating and this is just a defensive rally.
Well I’m not sure if we’re watching the same stock market, but I see Energy dramatically outperforming everyone else this past month while retailers ($RTH) are just pennies away from all-time highs. But forget about that for a minute. Take a look at the recent breakout in S&P500 stocks trading above their 200-day moving average:
Typically the bulls are in charge when this percentage remains above the 50% mark. And after a brief breakdown in early June, the indicator consolidated nicely for a couple of months and just broke out to new highs last week. This signals to us that participation in this stock market advance is broadening. And that’s obviously a good thing.
So be careful where you get your information. This indicator tells me that the market is moving higher together and not just in some of the more defensive areas.
Tags: $RTH $XLE $SPY
by JC
Are we trying to make money here or do we just want conversation pieces? I get into a lot of discussions with people about the market and where I think it’s going. And for some reason they always come back with some sort of economic or political issue. Are we in running for office or we trying to profit from the marketplace? What the hell does Paul Ryan have to do with S&Ps this week? And this Fiscal Cliff nonsense – enough already.
The stock market doesn’t care about your economic issues and political beliefs, so leave it alone. The only thing that drives price is buyers and sellers. Period. End of story. (I went on a similar rant last week, so I’m sorry and I’ll leave it alone for now).
Back to price. Buyers and Sellers right? The question that often gets raised is, “So where are the buyers coming from?”. And my friend Ryan Detrick over at Schaeffer’s Investment Research has a couple of great charts showing exactly where some of these buyers are coming from. You see there is a little known secret about the stock market and how works. A lot of people don’t know this but the only way to unwind a short position is to go out and buy it. But don’t tell anyone ok?
So when Short Interest peaks and begins to roll over, the new trend brings in a whole fresh group of buyers into the market. Last time we saw this shift was last Fall, when it helped spark a 30% rally for the S&P500 in just 5 months (40% for the Russell2000). And this is why Detrick is one of my favorite technicians – he nails it here:
“…the overall trend in total short interest on all optionable equities (about 2,600) has peaked and is moving lower. Our theory is that increasing short interest can act as a headwind to any rallies, but once the shorts begin to cover, it can be very bullish…..check out the overall trend. It looks like short interest has peaked, and as long as it keeps moving lower, this is another bullish tailwind.”
And the longer-term chart shows the same thing. When the tide turns in short interest, look out. The shorts are covering and these trends typically stay for a while. Tough to be bearish in that sort of environment.
OK now you can get back to bitching about politics and the economy. Let us more ignorant folks worry about something as silly is price.
Source:
Short Interest Continues To Favor Higher Prices (Schaeffer’s)
Tags: $SPX $IWM $SPY
by JC
We’ve been giving the CRB Index a lot of grief throughout the year. The consistent under-performance since last August had just been too disappointing to ignore (see here). For nine consecutive months, the Commodities benchmark had under-performed the S&P500. But that trend began to reverse this summer. Since June, we’ve actually seen the opposite: Commodities are now leading the way. But there is still some work to be done.
There is some serious resistance that the CRB index has in front of it. The widely accepted benchmark for commodities has quite a battle on its hands. Take a look at the chart below. Nothing wrong with grabbing a crayon and drawing a straight line connecting the peaks. From the highs last May, resistance shows up right here. The more conservative trendline from the July highs also takes us right here to current prices.
Then we’ll move over and see what our favorite smoothing mechanism is up to. And it turns out that the popular 200-day moving average is, what do you know, right here at current prices. And finally, the 38.2% Fibonacci Retracement from last summer’s highs to this summer’s lows is also right here.
So let’s recap all of the resistance:
1- Aggressive trendline = supply
2- Conservative trendline = supply
3- 200 day moving average = supply
4- 38.2% Fibonacci Retracement = supply
*and we can get into some polarity stuff happening here as well but let’s just leave that alone for a minute. I think we’ve busted CRB’s chops enough today.
I think the point I’m trying to make is that there is a serious battle going on right here in Commodities. As bad as they looked for so long, they’re trying their hearts out to fix the situation. But this 300 and change level is trouble.
It’s SHOW ME time boys. Let’s see it.
Tags: $CRB $CR_F $DJP