Don't Ignore This Chart!

The Squeeze is on for Emcore Group $EMKR

The Bollinger Bands are narrowing for Emcore (EMKR) as the stock moves into a tight consolidation. The indicator window confirms as BandWidth dipped to its lowest level in over six months. This volatility contraction could give way to a volatility expansion. A move above 5.05 would trigger an upside breakout, while a move below 4.6 would break support. Careful here: low price equals high risk. You can learn more about Bollinger Bands in our ChartSchool

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Sector MarketCarpet in RSI Mode Reveals Most Oversold Stocks

Stocks took a beating over the last few weeks, and some more than others. The Sector MarketCarpet below reflects the absolute value for RSI on February 3rd. Stocks with low RSI values have dark red squares, while stocks with relatively high values have green squares. Most of the green can be found in the utilities sector. The red is a bit scattered with some of the lowest levels found in the consumer discretionary sector. RSI is great indicators for finding oversold stocks and stocks that are bucking the trend. Click here to learn more about MarketCarpets.

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UPS Makes Oversold with Improving RSI Scan



After a sharp decline the last three days, the stock market was oversold and ripe for a bounce. Looking through the predefined scans page, chartists can find a great scan for this situation, such as the "oversold with an improving RSI" scan. While not every stock has a great setup, this is a good first filter. The chart below shows UPS firming at the 50% retracement and RSI moving back above 30.

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Gold and Treasuries Take Top Honors in 2014 (video)



The stock market finished strong in 2013, but has not been able to gain much traction in 2014. Instead, money has moved into the Gold SPDR (GLD) and the 20+ YR T-Bond ETF (TLT). The intermarket PerfChart shows TLT and GLD with 4+ percent gains year-to-date. Meanwhile, the S&P 500 SPDR (SPY) is down around 1% and the Russell 2000 ETF (IWM) is up around 1%. How's that for split.

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Market Summary Shows Strength in Commodity ETFs



As its name suggests, the Market Summary provides an excellent overview of the financial markets in one page. There are nine tables representing nine different groups. A quick scroll through Thursday's tables reveals some buying interest in several commodity-related ETFs: Copper (CU), Natural Gas (UNG), Sugar (SGG), Coffee (JO), Agriculture (DBA) and Livestock (COW).

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Only Two of the Nine Sector SPDRs are up Year-to-date



Stocks are off to a rough start in 2014 with seven of the nine sectors SPDRs under water. The Energy SPDR (XLE), Materials SPDR (XLB) and Consumer Staples SPDR (XLP) are leading the way lower. On the flipside, the HealthCare SPDR (XLV) and the Finance SPDR (XLF) show gains and relative strength.

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Retail SPDR Lags as SCTR Breaks Down



The S&P 500 hit a new high in late December, but the Retail SPDR (XRT) fell short of its prior high and could be forming a lower high, which is the first step to a downtrend. The June trend line and December low mark key support in the 84-84.5 area. The indicator window confirms the deterioration in XRT as the StockCharts Technical Rank (SCTR) broke below 60 for the first time since January 2013.

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Nasdaq AD Line Confirms Underlying Strength

The Nasdaq AD Line extended its year long uptrend with a surge and new high in December. The chart below shows the AD Line with a series of rising peaks and rising troughs (higher highs and higher lows). Also note that this new high in the AD Line confirms the new high in the Nasdaq Composite, which means market internals are running bullish.

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Yield Curve Steepens as 10-Year Surges



The yield curve is steepening as the 10-YR Treasury Yield ($TNX) surges more than the 2-YR Treasury Yield and the 3-Month Treasury Yield. A steepening yield curve confirms loose monetary policy and this could help banks, which make money by borrowing short and lending long.

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Pre-defined Technical Alerts Page Lights Up Green

Stocks opened higher on Monday with several ETFs hitting new highs and new all time highs. Chartists can follow these milestones on the Predefined Technical Alerts page. In addition to several major stock indices, note that XLY, XLV, XLI and XLF recorded new highs on Monday. Also note that oil dipped below 95.

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LinkedIn Firms at Key Level as Aroon Indicators Converge



LinkedIn (LNKD) was hit with a high volume decline on Wednesday, but managed to firm near a support zone on Thursday. Support stems from the mid August and early October lows. The indicator window shows the Aroon indicators converging below 30. This convergence suggests little directional movement over the last few weeks. The first to break above 50 will provide the next direction clue.

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Gold Miners BPI Forms Bullish Divergence as GDX Bounces



The Gold Miners ETF (GDX) got a nice bounce the last seven days with a break above the late August trend line. Even though the big trend remains down, the short-term trend is now up with this small breakout. Longer-term, a potential double bottom is taking shape with the August highs marking key resistance. The indicator window shows the Gold Miners Bullish Percent Index ($BPGDM) holding above its prior low and forming a bullish divergence.

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Nasdaq 100 High-Low Percent Surges as New Highs Expand



Despite a few negative dips, Nasdaq 100 High-Low Percent ($NDXHLP) has been mostly positive throughout 2013. The red arrows show the brief, and shallow, dips into positive territory. Last week's dip did not last long as High-Low Percent surged to 15% this week. A downtrend is pretty much impossible until Net New Highs exceed -5%. Note that StockCharts calculates High-Low Percent for several indices and the nine sector SPDRs.

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S&P 500 Volatility Index Surges above August High

The volatility premium rose sharply as the VIX surged 50% and hit a three month high. The chart below shows the VIX rising from the 13 area to 19.41 in less than three weeks. While the VIX exceeded its August high, the S&P 500 has yet to break its corresponding low and has yet to price in as much fear.

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Chuy’s Makes the MACD Scan with a Bullish Cross



Chuy’s Holdings (CHUY) is showing some promise with a bounce off support and bullish MACD cross. Notice that broken resistance turned into support in the 34 area and held from June to September. With the move above 37 this week, MACD moved above its signal line and momentum is turning up.

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A September Surprise in Inter-market Correlations (video)

The PerfChart below shows six inter-market related ETFs. Notice that stocks are up with the Russell 2000 ETF (IWM) leading the way (blue). Bonds are also up for the month and this is strange because stocks and bonds are usually negatively correlated. On the other side, notice that gold, oil and the Dollar are down, which means they are positively correlated. This is also unusual because the Dollar is usually negatively correlated with commodities.

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Autozone Breaks Out of Bollinger Band Contraction (video)



Autozone (AZO) surged off support and broke above the upper Bollinger Band with big volume on Wednesday. I found this stock because it made the predefined scans list (intraday). This move affirms support and opens the door for a continuation of the bigger uptrend.

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Two Year Yield Gets Hit Hard on Fed Taper Change



The Treasury market was thrown for a loop this week as the Fed unexpectedly decided not the taper. The chart below shows the 2-Year Treasury Yield ($UST2Y) bearing the brunt of this “adjustment”. Notice how the yield advanced as tapering talk took hold from April to August. After stalling in the .50% range for two weeks, the yield plunged below .35% as short-term yields bore the brunt of the re-pricing.

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Six Sector SPDRs Record Multi-year Highs

The screenshot below comes from the Predefined Technical Alerts Summary. There is a lot of strength in the stock market with the Russell 2000 and Nasdaq hitting multi-year highs. Also note that six sector SPDRs also recorded multi-year highs.

S&P 1500 AD Line Breaks Short-Term Resistance

The video and chart below shows the AD Line for the S&P 1500 breaking above its mid August highs with a surge the last few days. This move appears to have ended the short-term downtrend that began in early August.


 
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In Honor of Joe Granville; Volume May Lead Price for BAC

Bank of America (BAC) hit a 52-week high in late July and then corrected with a falling flag or channel the last five weeks. Despite this correction, the indicator window shows On Balance Volume (OBV) remaining strong and hitting a new high last week. This suggests that BAC is still under accumulation and prices could breakout. Joe Granville, creator of OBV and a pioneer in technical analysis, passed away on Monday. He was 90.

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Bullish P&F Signals Outnumber Bearish Signals

Chartists can get an idea of the overall market trend by comparing the number of bullish P&F signals with bearish P&F signals. StockCharts provides this data every day on the predefined scans page. Notice that there are 87 Triple Top Breakouts on the NYSE and only 40 Triple Bottom Breakdowns. The same is true for the Nasdaq. Click on the number to see the stocks meeting the particular scan criteria.
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S&P 1500 AD Line Holds Short-term Support

The S&P 1500 AD Line ($SUPADP), which is a key breadth indicator, has yet to break support and remains in bull mode. Notice how the AD Line established lows from mid July to early August. These lows mark a support zone that chartists should watch for clues on market direction. A break below support would signal an increase in selling pressure and argue for a correction. You can read more about StockCharts breadth data in our ChartSchool.

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Only One Bullish Percent Index is Below 50%

StockCharts calculates the Bullish Percent Index for over a dozen groups, including several major indices, the main sectors and a few industry groups. A list can be found on the end-of-day market summary page. Notice that all BPIs are at or above 50%, which favors the bulls. The Gold Miners BPI ($BPGDM) is the only one below 50%.

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Elder Bars Turns Green as ARIA Breaks Flag Resistance

Chartists looking for stocks on the move can turn to our pre-defined scans page and the Elder bar scans. Stocks with an Elder bar turning green are turning up. Those with an Elder bar turning red are turning down. The chart below shows Ariad Pharma with a big green Elder bar as the stock breaks flag resistance.

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