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StockCharts Blogs - Don't Ignore This Chart! |
The Utilities SPDR (XLU) was relatively weak in January as it failed to partake in the broad market advance. More recently, the ETF surged in late January and again on Tuesday with moves that reinforce support in the 34-34.5 area. MACD flattened over the last two weeks and a move into positive territory would turn momentum bullish again.
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Electronic Art (ERTS) declined to the August low in mid January and then firmed the last two weeks. A bullish engulfing formed on Friday as the stock opened weak and closed strong. ERTS follow up on this pattern with a breakout on above average volume. The trend since November remains down and the November trendline marks the next hurdle.
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The Medical Devices iShares (IHI) has been moving higher since mid December and is now challenging its late summer high. Also notice that upside volume picked up over the last 4-5 weeks. While a breakout would be bullish, the ETF is getting overbought after a 13+ percent advance off its mid December low.
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The US Oil Fund (USO) started the year strong with a surge above 39, but cannot hold above this level as the ETF plunged over 1.5% on Thursday. USO was also turned back in the 39-40 area in November and December. In the indicator window, note that Spot Light Crude ($WTIC) has had trouble staying above $100 since mid November. Today’s decline in $WTIC is not yet reflected on the chart.
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Automatic Data Processing (ADP) may have an antiquated name, but the stock has outperformed Apple (AAPL) since mid September. On the chart below, ADP broke resistance from the October-November highs with a big move. Even though volume is light, the breakout is bullish as long as it holds.
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The Retail SPDR (XRT) is under pressure today after a miss from Best Buy (BBY) and a lackluster Retail Sales report. XRT broke trendline resistance in early December and then consolidated. This breakout is holding, but barely. Consolidation support is set at 52 and a break below this level would be bearish.
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After forming a rising wedge in October, the German DAX reversed in the key retracement zone and broke support with a sharp decline below 5700 the last few days. These are clearly bearish developments. Broken support in the 5800 area turns first resistance, which is confirmed by the trendline extending down from late October. Allowing for a little buffer, I would set key resistance at 6000.
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The Technology SPDR (XLK) is hitting resistance from the late October high with a Hanging Man last week and a Harami this week. Both candlesticks are bearish reversal patterns. The Hanging Man was confirmed with a gap down and long black candlestick, but the ETF quickly bounced back above 26. The current Harami shows more indecision at resistance. A move lower from here would confirm this short-term reversal pattern. Medium-term support remains in the 25 area.
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Traditional technical analysis teaches us that broken resistance turns support and broken support turns resistance. This concept is alive and well on the German DAX Index ($DAX) chart. Using the Auto Support-Resistance Tool on Sharpcharts, a horizontal line at 6400 goes from red to green to red again as this level moves from resistance to support to resistance.
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For the second time in three weeks, the Dow Industrials SPDR (DIA) moved above 121 and then gapped down. These two gaps indicate that DIA has stiff resistance in the 122 area. Key support is based on the prior trough at 116. Follow through below this level would reverse the October uptrend.
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