Don't Ignore This Chart!

HealthCare and Consumer Discretionary Sectors Duke it Out for Top Honors

The Consumer Discretionary SPDR (XLY) and the HealthCare SPDR (XLV) are the top performing sectors year-to-date. Both are up over 40% and easily outperforming the S&P 500 SPDR (SPY), which is up a mere 29%. The Industrials SPDR (XLI) will take third place and the Finance SPDR (XLF) will end up fourth. This means three of the four offensive sectors led as the market in 2013.

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Dow and Nasdaq Hit New Highs

Even though stocks were all over the place on Wednesday, the Dow recorded an all time high and the Nasdaq recorded a four year high. Not shabby at all. StockCharts users can keep abreast of these milestones on the Predefined Technical Alerts page.

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Dow Theory Affirms the Bull Market

According to Dow Theory, a bull signal is in force when both the Dow Industrials and Dow Transports move to new highs. Well, this happened today as both the Dow Industrials and Dow Transports forged fresh 52-week highs. The April lows become the first levels to watch for signs of a bearish signal.

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Silver:Gold Ratio Plunges to 52-week Low

The Silver:Gold Ratio broke down in February and exceeded its summer low in April with a sharp decline. The 52-week low shows that silver is much weaker than gold. This fits with weakness in copper because silver is more of an industrial metal than gold.  

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NYSE AD Line Hits New High

The NYSE AD Line ($NYAD) reflects broad market strength with a move above the September-October highs this week. In fact, the indicator is trading at a 52-week high. There are no signs of weakness here.

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Our Largest Ever S&P 500 Chart!

Let's do this again shall we?  To compliment our popular huge Dow Industrials chart, here's a similar one for the S&P 500 going all the way back to 1925.  Enjoy!

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(Again, you may need to click on it once or twice to see it full-sized.)

- Chip

The Biggest Chart of the Dow We've Ever Created

Here's a quarterly chart of the Dow going back to 1900.  It's 2500 pixels wide.  You probably need to click on it once or twice to get it to expand to that size on your screen.

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Members of our new PRO service can click here for a live version.

The PPO and the Elder Impulse bars give you a good sense of the Industrials' momentum during the last 100 years.  Enjoy!

- Chip

Weekly Percent Price Oscillator Falls, but Remains Positive for SPY

The Percent Price Oscillator (PPO) is a momentum oscillator that fluctuates above/below the zero line. While traders use divergences and direction for signals, investors can simply abide by the positive and negative crosses. The bulls have a trend edge when PPO is positive, while the bears have an edge when the PPO is negative.

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Apple Powers QQQ Higher with Strong Positive Correlation

As Apple goes, so goes the Nasdaq 100 ETF (QQQ). Wall Street used to say the same thing about GM during its heyday. Apple surged to a new 52-week high and powered QQQ higher on Monday. The indicator window shows the Correlation Coefficient trading above .90 since mid August. 

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New 52-week Highs List Show Outperformers

Looking for stocks that are still in favor? Just mosy over to the pre-defined scan page for a look at the stocks making fresh 52-week highs. There were over a dozen in the Nasdaq and over three dozen on the NYSE. Hot Topic (HOTT) hit a new high after advancing 10 of the last 12 days.

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Revisiting the 2000 S&P 500 Reversal

The 2000 market top evolved over a 12 month period as the S&P 500 traded between 1325 and 1550. The index broke this range at the end of 2000 and continued lower in early 2001. Notice that broken support turned into resistance and the throwback bounce retraced 50% of the prior decline. RSI confirmed the support break in late 2000 with a move below 40.

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Revisiting the 2007 S&P 500 Reversal

Although no two market tops are the same, we can get an idea of what a major reversal looks like by examining past reversals. The 2007 top evolved over a 9 month period. There were clear support breaks at 1425 and 1375. RSI broke its bull zone (40 to 80) at the end of December 2007. The ensuing throwback rally retraced 50% and met resistance near broken support.

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Finance Sector is the Big Drag

The advance since the March lows has been enough to power the Consumer Discretionary SPDR (XLY) past its 2007 high. The Industrials SPDR (XLI) and the Technology ETF (XLK) both met resistance at their 2007 highs over the last few months. The Finance SPDR (XLF) remains the big laggard as it trades some 35% below its 2007 highs. This key sector has been a major drag on the S&P 500 since early 2010.

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12 month Slope Indicator remains Positive for S&P 500

Taking a big step back to look at the big picture, the 12-month Slope indicator for the S&P 500 turned positive in September 2009 and remains positive. While this indicator does not pick exact tops or bottoms, it gives us a good idea of the long-term trend. Note the green and red arrows showing positive and negative crossovers.

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10-year Treasury Yield Backs off Long-term Resistance

The 10-year Treasury Yield ($TNX) remains in a long-term downtrend that is dominated by a falling channel. The upper trendline has been touched at least four times since the mid 90s. More recently, the 10-year Treasury Yield hit resistance around 48.50 at least three times since May 2008. A break above this level is needed to reverse the long-term downtrend in rates and uptrend in bonds.

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Dow Industrials Remains Well below 2007 High

The chart below shows the 23-day SMA for the Dow Industrials. There are around 23 trading days per month and this represents a rolling monthly average. It also smooths daily volatility.  The March 2009 low was around 10% below the March 2003 low and the July 2011 high was around 10% below the October 2007 high. 12000 marks the first support to watch for this moving average.

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Finance and Housing Moving Step-for-Step

The Home Construction iShares (ITB) and the Finance SPDR (XLF) have been moving together the entire year. The indicator window shows XLF in black and ITB in red. Not much difference between these two price patterns. In the main window, ITB is testing support from broken resistance and the 50-62% retracement zone.   

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All Four Dow Averages Hit New Highs

The Dow Industrials, Dow Transports, Dow Utilities and Dow Composite all broke above their March-April highs and recorded 52-week highs this week. From a Dow Theory stand point, the new highs in the Industrials and Transports are especially promising because they affirm the uptrend.

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Positive Relationship between the Nikkei and the US 10-year T-Note Yield

It may seem a rather strange relationship, but the Nikkei 225 ($NIKK) and the 10-year Treasury Yield ($TNX) have a positive relationship working. The chart below shows both rising and falling together since November 2009. Despite a setback over the last few days, both remain in uptrends overall. John Murphy elaborated on this positive correlation in his classic book on Intermarket Analysis in 2004

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China leads lower in 2010

Of the six equity indices shown below, the Shanghai Composite ($SSEC) is the weakest in 2010 with a 27.56% loss (year-to-date). The Nikkei 225 ($NIKK), French CAC 40 ($CAC) and London FTSE ($FTSE) are all down double digits. The S&P 500 is holding up relatively well with a 7.87% loss. In a big of a surprise, the German DAX ($DAX) is holding up the best with a 1.68% loss.

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SPX: now versus 1965 to 1980

From the historical charts at Stockcharts.com, we have cutouts of two large trading ranges. The S&P 500 was largely range bound from the mid 60s to the late 70s (~15 years) and from the late 90s until the present (~13 years). The current rally looks similar to the rally seen in 1975, which continued into 1976 and peaked below the 1973 high.

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Gold-Dollar relationship challenged

The nine year chart for the US Dollar Index ($USD) and Gold-Continuous Futures ($GOLD) shows a clear inverse relationship from 2002 until 2007. Gold advanced as the Dollar declined. This inverse relationship continued with the swings of 2008 and 2009 (Dollar down/gold up and visa versa). The potential conflict is the higher high in gold (1200) and the higher low in the Dollar (green arrows).

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$XME nears January high

Materials and Energy related ETFs have been lagging the broader market because many remain below their January highs. That may be changing. The chart below shows the Metals & Mining SPDR (XME) surging towards its January high with a move over the last two days.

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SPY goes for 10 of 10

With a move into positive territory today, the S&P 500 ETF (SPY) is trying to make it 10 up days in a row. The ETF is also trying to make it 19 up days out of the last 24 days. Truly a remarkable run. Resistance from the January high is nigh.

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Berkshire's "Flight to Safety" Breakouts (BRK/B)

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Continuing to look for "leading" technical signals that pointed to the market's recent crash.  It's always interesting to see how the country's "best" investor did.  Warren Buffet's Berkshire Hathaway had a couple of interesting jumps in its stock price during the period in question.  Comparing the percentage performance of BRK/B to $SPX, we can see two big jumps in 2007 (chart above) and one jump in 2008 (chart below).  Of course, not all jumps in BRK/B are signs of an impending crash - but these charts show that they shouldn't be ignored either.

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