Don't Ignore This Chart

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!


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. 

Continue reading "EuroTop 100 Index Ends Consolidations and Resumes Uptrend $EUR" »

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). 

Continue reading "TJX Companies Looks Poised to Extend Uptrend $TJX" »

Weekly Candle Argues For Further Weakness Ahead For Oclaro

Oclaro Inc (OCLR) is printing several warning signals as it appears to be topping after a stellar advance.  OCLR has nearly quadrupled since the beginning of 2016, but it's difficult to ignore the heavy volume reversal last week - especially when you consider that a negative divergence has been in place on the weekly chart since highs printed in November.

That bearish engulfing candle was accompanied by over 60 million shares, suggesting a near- to intermediate-term top is in place.  To the downside, the October low near 7.00 and the rising 50 week SMA at 7.19 - a likely target given the negative divergence - could be the target now for the bears.

Happy trading!


The Transports ETF (IYT) Struggles To Hold A Breakout

The Transportation ETF (IYT) is struggling to hold the recent breakout.

The new three-month lows in Relative Strength in purple suggest being very careful with the Transportation stocks here after failing to hold the breakout above December highs. In this roaring bull market, Transports have traded sideways since Commodities spiked on December 8th.

For newcomers to, Intermarket Analysis through charts is one of the bigger advantages for looking at the stock market differently than Price Earnings ratios. I spent a considerable amount of time on the Commodities Countdown weekly video article 2017-02-23 laying out some of the interesting Intermarket signals that have shown up in the last two weeks. You can read more about these signals on the Commodities Countdown blog titled Commodities: The Moment Of Truth Has Arrived.

If you would like to learn more about Intermarket Analysis, members have access to 'Members Content' from Martin Pring, John Murphy, Arthur Hill. Erin Heim also hosts a wide variety of Member's Access Content through Decision Point analysis methodology. Click here to take a one-month free trial

Have a great weekend!

Good trading,
Greg Schnell, CMT, MFTA. 


Eli Lilly Breaks 18 Month Downtrend

Eli Lilly (LLY) printed an exhaustion gap in November on massive volume, marking a significant bottom and over recent trading days broke a downtrend line that spanned 18 months of action.  Based on this combination and improving momentum, it certainly appears that LLY has seen its worst and has begun to experience much better technical action.  Check out the exhaustion gap on the daily chart:

The short-term picture has certainly improved, but more importantly it appears as if the longer-term downtrend on the weekly chart has broken.  Take a look....

The only downside at this point is that LLY is overbought in the very near-term.  So we can expect a little profit taking.  Outside of that, however, LLY appears poised to sustain a run to the upside.

Happy trading!



The Noose Tightness as T-Bond ETF Prepares for Next Move

The 20+ YR T-Bond ETF (TLT) is consolidating within a long-term downtrend and this favors a bearish resolution to the current pattern. TLT fell sharply from July to November and broke through its 40-week EMA. The ETF is currently consolidating below the falling EMA and a consolidation within a downtrend is a bearish continuation pattern. The blue trend lines mark a triangle formation and chartists can watch this pattern for a break. A weekly close below 118.5 would break triangle support and signal a continuation lower. Another leg down in TLT would imply another leg up in long-term Treasury yields. 

Continue reading "The Noose Tightness as T-Bond ETF Prepares for Next Move" »

Mondelez Takes Big Hit, But Remains in Bullish Triangle Pattern

Mondelez International (MDLZ) had a rough week, tumbling over 5.5% after Kraft Heinz (KHC) made a bid for Unilever (UL).  That suggested to many investors that the likelihood of a MDLZ acquisition was significantly reduced and the stock was priced lower accordingly.  The technical pattern on MDLZ remains quite bullish, however, so I'd argue that last week's weakness is opening a door for entry.  There are two bullish possibilities here so let's look at the chart:

While last week's losses were obvious, the overall uptrend here is just as obvious.  Weekly RSI in the 40-50 range has generally been a solid entry point into MDLZ and we closed at 46 last week.  Furthermore, MDLZ is currently approaching its key trendline support within a bullish ascending triangle pattern.  I'd respect this trendline because failure to hold it could send MDLZ down to its early 2016 reaction low (black dotted line above).  A trip there could establish a test of price support within a bullish rectangular consolidation pattern.  Either way, MDLZ looks bullish to me in the longer-term.  It's just a question of whether the short-term produces additional weakness.  Last week, MDLZ printed a low of 41.30.  That level down to 40.00 would represent solid short-term entry with a closing stop beneath 40.00.

Happy trading!