Art's Charts

Divided Market Keeps Indicator Summary in Check

With a couple of upgrades, the indicator summary moved from -2 to +1 this week. The total has been waffling around the zero level for a few weeks now, which reflects a divided the market. The average Nasdaq stock is relatively weak, but the average NYSE stock is relatively strong. The Nasdaq AD Line hit a new low this month, but the NYSE AD Line is challenging its Oct-Nov highs. Nasdaq Net New Highs are weak and largely negative, but NYSE Net New Highs are strong and largely positive. The three defensive sectors are relatively strong with breaks above their October highs, but the four offensive sectors are relatively weak because they have yet to break these highs.

SPY Maintains Short-Term Uptrend as UUP Breaks Out

Stocks continued their short-term uptrends with further strength on Tuesday and then fell sharply on Wednesday. This decline was not enough to reverse the short-term uptrend. With a modest bounce on Thursday, the major index ETFs established short-term support levels to watch going forward. On the S&P 500 ETF (SPY) chart, the ETF bounced in the 124.5-125 area. The Raff Regression Channel and trough mark support here. With the move to 126, the ETF has now retraced 61.80% of Wednesday’s decline. This is the first area to watch for a potential lower high that could foreshadow a short-term trend reversal. A break below 124.5 would fully reverse the short-term uptrend. RSI held support in the 40-50 zone on Wednesday to keep momentum bullish. A break below this zone would turn RSI bearish.

Market Remains Mixed as Nasdaq Shows Relative Weakness

Even though the indicator summary remains unchanged this week, there was some strengthening under the hood this week. Notably the NYSE Net New Highs Line continues to rise and shows no signs of weakness. The AD Volume Lines bounced this week and are on the verge of trend changing breakouts. Further strength above the early December highs would do the trick. The NYSE AD Line is also showing potential here with a higher low. Even though the indicator total is -2, eight of the nine sector Bullish Percent Indices are above 50%. It is quite unusual to see such strength here, but an indicator total of -2. Relative weakness in the Nasdaq is to blame as the Cumulative Net New Highs Line continues to fall, the AD Line remains exceptionally weak and the Nasdaq underperforms the NY Composite.

SPY holds Breakout as Euro Bounce Helps Gold

First, note that Art’s Charts will not be published next Monday through Thursday. It is a fine time for family and Christmas. Commentary will resume on Friday, December 30th. Merry Christmas and Happy Holidays from all of us at Stockcharts.com. Now to the charts! The good ole Santa Claus rally continues as the S&P 500 ETF (SPY) tacked on another .89% on Thursday. Overall, the ETF reversed its prior downtrend near the 61.80% and broke channel resistance with a gap/surge on Tuesday. This breakout held as the ETF extended its rally above 125. Broken resistance turns first support in the 122-123 zone. This level is reinforced after the extension. A decline below 122 would negate the breakout and put the bears back in control. RSI broke above 60 to confirm the trend reversal on Tuesday. Momentum support is set at 40.

SPY Holds the Breakout and QQQ Tests Support

An earnings miss from Oracle hit the Nasdaq 100 ETF (QQQ) hard, but the broader market held up pretty well as the S&P 500 ETF (SPY) finished the day with a slight gain. On the 60-minute chart, SPY broke resistance with Tuesday’s surge and broken resistance turned into support on Wednesday. I am leaving the support zone in the 122-123 area. A move below 122 would signal a breakout failure and put the bears back in the short-term driver’s seat. RSI broke above 60 to turn momentum bullish on Tuesday. Support is now set at 40.

Charts of Interest: AET, ATVI, HST, MET, NYB, PBCT, PGR, T

ATVI Forms Harami at Support.
NYB Edges High on Expanding Volume.
T Breaks Flag Resistance after Failed Deal.
Plus AET, HST, MET, PBCT and PGR.

SPY Breaks Channel Resistance as TLT Plunges

The European Central Bank (ECB) is opening the monetary floodgates today. While they may not call it quantitative easing (QE) by name, the ECB is essentially giving money to European banks so they can stimulate the economy with increased lending. Seems I’ve heard this one before. The US version on this program prompted banks to shore up their balance sheets. Perhaps lending eventually expanded, but the balance sheet will likely be the bank’s first priority. In any case, Santa Claus arrived on Wall Street to spark a big broad rally. All sectors were up 2% or more. On the 60-minute chart, the S&P 500 ETF (SPY) broke above channel resistance with a 3% surge on Tuesday. This breakout puts SPY at an interesting juncture. First, the ETF surged from 116 to 126. Second, the correction formed a falling price channel on the 60-minute chart and a falling flag on the daily chart. Third, the ETF found support in the 50-61.80% retracement zone and RSI formed a small bullish divergence over the last few days. Fourth, the gap and breakout signal a continuation of the prior advance. Based on traditional technical analysis, the upside target is around 130. The length of the prior advance (126 – 116 = 10) is added to the channel low (120 + 10 = 130). A strong breakout should hold. Therefore, I am marking initial support in the 122-123 area. A move back below 122 would negate the breakout and argue for a reassessment.

GLD Holds it Bounce as TLT Becomes Way Overbought

Now that everyone has officially given up on the Santa Claus rally and stocks are oversold, perhaps we will get that rally. The S&P 500 ETF (SPY) remains in a falling price channel that is defined by the Raff Regression Channel. Key resistance is set at 123. Within the channel, SPY broke rising flag support early Monday and declined to the bottom of the 50-61.80% retracement zone. Despite this decline, RSI held above 30 and has a bullish divergence working. This is a spot for bottom pickers because there are no signs of buying pressure or firmness yet. The Fibonacci Retracements Tool and oversold conditions are the only two indicators pointing to a bounce. With the bigger trend down and buyers on the sidelines, I would expect resistance in the 122-123 area.

Charts of Interest: AMZN, AN, APOL, CCL, D, DE, FISV, MXIM

AMZN Forms Big Hammer at Support.
CCL Traces out Big Bearish Engulfing.
DE Declines Six Days Straight.
Plus $AN, $APOL, D, DE, FSIV, MXIM

No commentary - Charts Updated - Back Tuesday

I am taking a day off of the commentary today, but the charts have been updated and posted below. Art's Charts will return in full on Tuesday.