Don't Ignore This Chart

Fresh All-Time High For ORCL After Latest Earnings

Oracle Corp (ORCL) needed a solid earnings report last night after the closing bell to reach all-time highs and it delivered exactly that.  ORCL posted both top line and bottom line (.63 vs .57) results that exceeded Wall Street consensus estimates and this morning's open cleared price resistance to soar into "blue sky" territory.  Prior highs were reached at the end of 2014.  Check out today's gains:

ORCL's momentum clearly began 4-5 weeks ago as we saw the MACD make a bullish centerline crossover.  That was accompanied by a break of its two year downtrend.  Last night's big earnings report and today's breakout is simply the culmination of what the market began expecting as we moved into 2017.  Key price support now resides at 44.50-45.00 on any pullback.

Happy trading!

Tom

A High and Tight Pennant Takes Shape for Paychex

Flags and pennants are continuation patterns, which means their bias depends on the direction of the prior move. A flag or pennant after a surge is a bullish continuation pattern that represents a rest within the uptrend. An upside break signals an end to this consolidation and a resumption of the bigger uptrend. These are short-term patterns for more aggressive traders. The chart below shows Paychex with a classic high-and-tight pennant. Notice that the stock hit 52-week highs in December and March, and the 50-day EMA is above the 200-day EMA. The surge from ~57.5 to ~63 (~9%) created a short-term overbought situation and the stock worked this off with a trading range. PAYX recently broke pennant resistance and it looks like the uptrend is set to continue. A break below the pennant low would call for a re-evaluation. 

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

Plan your Trade and Trade your Plan
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Gaming ETF (BJK) Looks To Win - Industry Group Quick Link Tip

Gaming ETF (BJK) has been consolidating for a while. Today, while the market was under pressure, BJK pushed higher and looks set to hit new highs. It has had one close slightly higher than todays levels back in December 2016. While it has been underperforming over the last four months, todays rally in the face of broader weakness was very bullish.

Continue reading "Gaming ETF (BJK) Looks To Win - Industry Group Quick Link Tip" »

AT&T Forms a Classic Bullish Continuation Pattern

The cup-with-handle is a bullish continuation pattern that forms as part of a bigger uptrend. There are three parts to this pattern. First, a cup forms as prices correct and rebound to form a "V" or "U" shape. Second, prices hit resistance at the prior high and rim resistance begins to form. Third, prices consolidate just below rim resistance and a handle takes shape. A break above rim resistance confirms the pattern and signals a continuation of the bigger uptrend. Classic measuring techniques suggest that the subsequent advance should equal the height of the pattern. This implies a 20% advance from the breakout area. 

Continue reading "AT&T Forms a Classic Bullish Continuation Pattern" »

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.

Continue reading "Careful With The Transports Here (IYT) - Data Adjustment Tip" »

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. 

Continue reading "Intel Struggles as Bearish Patterns Take Shape" »

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