StockCharts Blogs - Don't Ignore This Chart!

Getting out of the "Zone"

Autozone (AZO) is setting up rather bearishly in a bear flag formation.  Divergences on the MACD within the retail space are weak at best and AZO has been a relative underperformer with its MACD unable to climb above the centerline, one of the few stocks having that difficulty.  Watch the volume because if the bear flag breaks to the downside on increasing volume, the resulting losses measure substantially lower. 

- Tom Bowley, InvestedCentral.com

An Outside Reversal Day for SPY

The bears were given something to chew on with an outside reversal day for SPY. First, a reversal formed when Wednesday’s high was above Tuesday’s high and Wednesday’s close was below Tuesday’s close. Second, an outside day occurred because Wednesday’s high was above Tuesday’s high and Wednesday’s low was below Tuesday’s low. 

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Identifying the Cup with Handle Formation

The cup with handle formation is a powerful continuation pattern.  A prior uptrend must exist in order to rely on the cup with handle pattern.  Below are two examples of cup with handle patterns that show the cup formation and the powerful breakout moves.  In the case of ADSK, we've recently seen a retracement to the breakout area, which provides another entry point for the trader.  KOG was highlighted in our Chart of the Day section less than two weeks ago while still in the handle part of the pattern.  The breakout moves in both cases were explosive.  Check these two out:

For more information and education on cup with handle patterns, check out the Chart School right here at StockCharts.

Ticker Cloud leads to SDS Head and Shoulders

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SDS is the ProShares Ultra Short S&P 500 ETF.  It's a way to invest (gamble really) that the market is going to fall.  It showed up today on our Ticker Cloud page as one of today's most popular charts.  A close look at the chart shows why.

Prior to September of last year, SDS was in a pretty nice uptrend (something that's bad for the overall market obviously).  Then, as we know, the markets went nuts and so did SDS.  Since January however, the markets have gotten better organized with fewer huge jumps - just like SDS.

What's interesting is that if you mentally remove what I'm calling the "Land of Strange Behavior" from the chart, you are left with a pretty classic Head and Shoulders top pattern - the uptrend from last summer, followed by the left shoulder in January, the head in early March and the possible right shoulder at the start of April.

Today's gap down hints at a possible break below the neckline.

Obviously, selectively ignoring parts of a chart is "cheating" when it comes to pure technical analysis.  But with this chart, I'm more interested in the psychology of the bears and right now, what this chart is saying is that the bears are nervous.

Regardless, SDS will be very interesting to watch over the next couple of hours/days.  And be sure to check out the cloud from time to time to see what others are charting.

Vroom! Autozone Jumps the Gap (AZO)

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After gapping down during December and January, AutoZone gapped up significantly in mid February and zoomed upwards today hitting a high of 157 at one point.  So why is the Chaikin Money Flow not zooming upwards as well?  The CMF gave a big "sell" signal today because the stock closed well below the mid-point of today's candle and thus the CMF considers most of today's huge volume spike to be "selling" volume.  Will this become another case of "all gaps must be filled?"

After the Head and Shoulders (NDN)

NDN has been falling after completing a classic Head & Shoulders chart pattern back in January.   Today was the first set of positive technical signals for the stock in quite a while - a bullish MACD crossover, a rising RSI line and a bullish Parabolic SAR signal.  While all of these signals can be premature, when combined with three up days after what looks like an exhaustion sell off, the odds of a turnaround taking hold increase.

While I have no idea what will happen with this particular stock in the coming days, this is a good example of the kind of technical setup that all technical traders search for.  Each trader's setup will be different, but most will contain elements of technical indicator crossovers, support and resistance analysis, chart pattern identification and volume study.