Don't Ignore This Chart

Heavy Construction Tests Support, Here's A Potential Winner

The Dow Jones U.S. Heavy Construction Index ($DJUSHV) is currently testing its rising 20 week EMA and is near key support in its four month sideways consolidation range from 440-480.  Friday's close was 447 and the weekly RSI is now at 43, typically a solid level on the RSI where we see price reversals occur.  If the DJUSHV does, in fact, begin to recover and head back towards 480, one stock poised to recover could be Granite Construction (GVA), which is currently testing major support.  Take a look:

While there's no guarantee of a rebound in the DJUSHV or in GVA shares, there are reasons why we could see a reversal in both in the near-term and the reward to risk in trading GVA would seem to be solid at the current time and price.

Happy trading!

Tom

Lowes (LOW) Opens The Window To Fresh Highs - Checking Industry Group Strength Tip

Last week, Lowes (LOW) gapped up and touched a fresh high above the 2016 highs. This week it has consolidated in a range but is holding up nicely as the markets wobbled. The 50 Million shares of volume for the week was the highest positive week candle in 3 years. On the price, notice the two year sideways consolidation between $60-$80.

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Microsoft Stalls within Uptrend as Stochastic Oscillator Starts to Turn

It always piques my interest when a stock bucks the broader market. Note that SPY and QQQ closed lower the last two days and Microsoft (MSFT) closed higher. Even though it is only for two days, this little morsel of relative strength could foreshadow a bullish resolution to the current consolidation. First and foremost, note that Microsoft is clearly in a long-term uptrend. The price chart sports a serious of higher highs and higher lows with a 52-week high in late January. MSFT stalled over the last five weeks with a triangle consolidation taking shape. A breakout looked imminent when the stock surged last Wednesday, but the breakout attempt at 65 did not materialize as the stock fell back the very next day (blue oval). This reinforces resistance at 65 and a close above this level is needed for a breakout. 

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Careful With The Transports Here (IYT) - Data Adjustment Tip

The Transports (IYT) made a subtle break in the Post - Election uptrend today. A couple of things show up here. 

  • The SPX Relative Strength is at 4-month lows today. 
  • The price has not made much progress since the December 8th high in the energy stocks. The 171 level looks like pretty good resistance as this chart is unable to stay above it.
  • The trendline break today with a close on the lows does not look good here.

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Intel Struggles as Bearish Patterns Take Shape

Intel is not keeping pace with the broader market and chartists should watch the bearish wedge for signs of further weakness. There are two patterns at work on the price chart. First, INTC formed a rising wedge after a sharp decline and this looks like a short-term bearish continuation pattern. A break below last week's low would signal a continuation lower and target a move to support in the 33 area. Should this occur, chartists can then consider the possibility of a double top over the last eight months. A break below the October-November lows would confirm the double top and fully reverse the long-term uptrend. 

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JNJ Jumps To An All Time High

JNJ pushed above and closed at a new all time high so far this week. WIth the market under some selling pressure on Thursday, JNJ still closed above previous All Time Highs.

If the market was to start taking on a defensive posture, this stock in the Healthcare area could work well in that environment. Healthcare is one of the defensive sectors. The volume has been strong the last two weeks and will probably push to a stronger volume than the last 4 weeks with Friday's action.

Lately Healthcare, Utilities and Consumer Staples have been some of the top performing sectors.

With the Weekly MACD turning up and volume starting to kick in, this stock looks well supported here.Enjoy the weekend.

Good trading,
Greg Schnell, CMT, MFTA

 

This Part Of Europe Just Made A Major Long-Term Breakout

The London Financial Times Index ($FTSE) had sideways consolidated for 17 years after topping back in 2000.  That consolidation period has ended in a big way in 2017 and this index appears poised for a very significant rise.  Despite how you might feel about Brexit, the market has casted its vote rather bullishly and I'm looking for the breakout to result in a lengthy uptrend - perhaps for several years.  Here's the chart:

So long as monthly closes continue to hold the rising 20 month EMA, currently at 6785, I'd view the long side as the only side to be on with respect to the FTSE.

Happy trading!

Tom

EuroTop 100 Index Ends Consolidations and Resumes Uptrend $EUR

The EuroTop 100 ($EUR) has further room to run after breaking out of a bullish continuation pattern. The price chart shows the index basing from March until November and then breaking above a major resistance zone in early December. After a 13.1% advance in nine weeks, the index paused with a five week consolidation (blue box). The breakout over the last few weeks signals an end to the consolidation and a resumption of the bigger uptrend. A similar 13% advance from the consolidation lows would extend to the 3150 area. 

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TJX Companies Looks Poised to Extend Uptrend $TJX

TJX Companies (TJX), which operates TJ Maxx and Marshalls, recently broke out of a corrective pattern and this argues for a continuation of the bigger uptrend. It has been a rough year for most retail stocks with the Retail SPDR (XRT) down around 1% year-to-date. In contrast, TJX is up around 4.5% year-to-date and showing relative strength within its group. On the price chart, I think the long-term trend is up because the stock ultimately held support in the 72-74 area and the 10-week EMA is above the 40-week EMA (PPO(10,40,5) is positive). 

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