StockCharts Blogs - Don't Ignore This Chart!

Wells Fargo shows relative weakness

Even though the S&P 500 is up sharply over the last four weeks, Wells Fargo (WFC) is just flat and shows relative weakness. After a surge the first few days of November, WFC traded flat with a small triangle. Watch this neutral pattern for clues on the future. An upside breakout would be bullish, but a downside break would be bearish.


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Healthcare showing relative strength

The Healthcare SPDR (XLV) broke above its October high two weeks ago and continued above 30 this week. Even though stocks were weak across the board on Thursday, healthcare managed to show relative strength with a smaller loss. Eight of the nine sectors were down in early trading Friday, but healthcare was sporting a small gain and again showing relative strength.


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An island reversal in MDY

With a gap up on Monday and a gap down on Thursday morning, the S&P 400 MidCap ETF (MDY) has an island reversal working on the 30-minute chart. There were no trades around 127.6, which creates a floating island around 128. Even though this gap is negative, MDY landed right at support from last week’s low. Further weakness would reverse the short-term uptrend.

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Regions Financial Bounces off 200-day SMA

Regions Financial (RF) is showing signs of life with a high-volume bounce off the 200-day simple moving average and a key retracement. Notice that the Sep-Nov decline retraced a Fibonacci 62% of the Jul-Sep advance. The stock firmed around 4.75 in early November and surged over the last three days. 

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DIA enters retracement zone

With the advance above 100, the Dow Diamonds (DIA) entered the 50-62% retracement zone. Such retracements can be measured using the Fibonacci Retracements Tool on Sharpcharts. These zones can mark resistance areas and price action merits a close watch.



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Scanning the Aroon oscillator in the market carpet

Friday’s mailbag answered questions on the Aroon oscillator, which is a trend identification indicator. Basically, a strong uptrend exists when the oscillator is above +50 and a strong downtrend exists when the oscillator is below -50. Even with the market gains of the last few weeks, I was surprised to see so many negative readings in the Aroon oscillator. The sector averages are negative for finance, energy, consumer discretionary and materials sectors. 

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PerfChart for 10 Currency ETFs

Year-to-date, the WT Brazilian Real Fund (BZF) and the CS Australian Dollar Trust (FXA) are by far the top performing currency ETFs. Of these 10 currency ETFs, only the DB Dollar Bullish ETF (UUP) is in negative territory. Even the CS Japanese Yen Trust (FXY) climbed back into positive territory in September.


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Nasdaq AD Line Is Lagging

With the surge over the last 1-2 weeks, the NY Composite and the Nasdaq are both trading back near their October highs. However, the Nasdaq AD Line remains well below its October high and shows some relative weakness. The NYSE AD Line is also below its October highs, but still looks strong as it surged back above 12000 last week.


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A Bull Flag for Cisco

Cisco (CSCO) led the market higher with a big move above 24 last week. While the S&P 500 continued higher the last three days, Cisco stalled with a falling flag taking shape. Bullish flags slope down and form after a sharp advance. A break above 24 would signal a continuation of last week’s advance.

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Yield curve widens

The difference between the 10-Year Treasury Yield ($TNX) and the 3-month Treasury Yield ($IRX) widened significantly since early October. Short-term rates fell ($IRX), while long-term rates rose ($TNX). As a result, the yield curve is the steepest it’s been in months.

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