The Best Strategy Becomes the Worst, and the Worst the Best


This post is by Brian Livingston from StockCharts.com - Blogs


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Investing strategies have short-term momentum (the past 3 to 12 months predict the next month) but long-term reversion (the past 3 years deceive you). • Institutions that hire outside money managers routinely fire any analyst who underperforms a benchmark for 3 years. Some fire analysts after just 1 or 2 years. You’ll be shocked to see how much you could earn if you did exactly the opposite.


Figure 1. Don’t fall into the trap of thinking that the past 3 years’ worth of performance predicts good returns in the following 3 years.

• Part 3 of a series. Parts 1 and 2 appeared on Apr. 9 and 11, 2019. •

We saw in the previous two parts of this series that:

  1. The stocks that individual investors sell tend to do much better than the stocks the investors buy as replacements.
  2. The outside money managers that financial institutions fire after

    Continue reading “The Best Strategy Becomes the Worst, and the Worst the Best”

Rotation To Defense Isn’t A Bad Thing


This post is by Tom Bowley from StockCharts.com - Blogs


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Market Recap for Monday, April 15, 2019

Defensive groups took their turn leading the stock market, but on a down day that is generally to be expected.  Consumer staples (XLP, +0.59%) and healthcare (XLV, +0.40%) were the two leading groups, while financials (XLF, -0.63%) backed off from its Friday strength.  More banks ($DJUSBK, -0.90%) reported their quarterly results, but market participants were unable to gather enough bullish momentum to take the DJUSBK higher to clear overhead price hurdles.  Perhaps more encouraging earnings reports from this industry this morning will provide that impetus.  Specialty finance ($DJUSSP, +0.74%) easily led financials once again, however, and remain one of the hottest industry groups heading into earnings season:

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Graphite India – Showing Good Potential Among Non-Index Stocks


This post is by Milan Vaishnav from StockCharts.com - Blogs


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Graphite India Limited – GRAPHITE.IN

The stock looks at confirming its bottom in the 395-415 zone. After marking a low near 395, the stock formed a base in the 395-415 zone. Following a sideways move over past couple of weeks, a breakout is likely. The RSI, which is a lead indicator, has already marked a fresh high with a bullish divergence. It can be seen breaking out of a pattern formation and move higher. The volumes increased heavily when the stock marked its lows and this often marks a potential bottom.

The Daily MACD is in continuing buy mode while PPO is positive. The weekly MACD is seen sharply moving towards a positive crossover. While remaining oversold on weekly Stochastic, it is seen improving its relative performance against the broader CNX500 Index as indicated by the RS Line. The stock has penetrated its 50-DMA which is 450. The Bollinger Continue reading “Graphite India – Showing Good Potential Among Non-Index Stocks”

4/15 MWL: Monday Setups – Earnings Spotlight – DecisionPoint Sentiment Update


This post is by Erin Swenlin from StockCharts.com - Blogs


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Welcome to the recap of today’s MarketWatchers LIVE show, your antidote for the CNBC/FBN lunchtime talking heads.

Here is a link to today’s show.

Our show is devoted to technical analysis of the stock market with live market updates and analysis of hot symbols. The show runs throughout the day on StockCharts TV; you can also find the latest episodes on the YouTube StockCharts channel here.

Information abounds in our Monday-through-Friday 12:00p – 1:30p shows, but the MWL Blog will give you summary slides and time stamps for viewing later. Be sure and check out the MarketWatchers LIVE ChartList for the 10 in 10 charts. 

Your comments, questions and suggestions are welcome. Our Twitter handle is @mktwatcherslive, our email is marketwatchers@stockcharts.com and we also have a MarketWatchers LIVE Facebook page that you can like and follow. Don’t forget to sign up for notifications at the Continue reading “4/15 MWL: Monday Setups – Earnings Spotlight – DecisionPoint Sentiment Update”

Banks And Brokers Weekly Roundup


This post is by Greg Schnell from StockCharts.com - Blogs


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JPM kicked into high gear Friday with some great numbers. It continues to be the best chart in the US bank space.

Goldman Sachs and Morgan Stanley also had nice moves. We'll see if they hold up as they release their earnings today.

Morgan Stanley is the same way.

However, Wells Fargo saw a lack of love.

The important thing to watch this week is the follow-through. Can the KBE and KRE charts make higher highs and close the week at them? This will be a major inflection point on those charts should they break out here.

The broker dealers have a breakout all set up. Can they follow through?

The Industrial Commodities didn't have a great week. Oil was the only good space in commodities. Marijuana stocks continue to let go.

I covered the commodities in depth on the Market Roundup video. I also highlighted the bank stocks and pointed out the different

Continue reading “Banks And Brokers Weekly Roundup”

RISK


This post is by Greg Morris from StockCharts.com - Blogs


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Dictionary.com says:  Risk is the exposure to the chance of injury or loss; a hazard or dangerous chance.  American Heritage Dictionary says: Risk is the possibility of suffering harm or loss; danger.  These are just two of the many entries and these were just for the noun.  Risk in the world of investments and finance is more succinct.  Risk is the uncertainty of outcome; however, risk can be quantified whereas uncertainty cannot.  Many use risk as a quantitative measure and uncertainty for measuring the non-quantitative type.  This article will attempt to give an overview of risk, keeping to generalities, and identifying a few of the problems associated with trying to measure it.  Moreover, without any equations.

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Finding, Tracking and Analyzing Growth Stocks


This post is by Arthur Hill from StockCharts.com - Blogs


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Learning about and tracking growth stocks in unique industry groups is an ongoing process that can help traders and investors outperform the broader market. This article will provide links to some of the resources from the On Trend episode focusing on growth stocks (Finding, Tracking and Analyzing Growth Stocks). This episode will air on Tuesday and details are shown below. Chartists interested…

All-Time Highs Approaching Plus 10 Trade Setups


This post is by Tom Bowley from StockCharts.com - Blogs


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Market Recap for Friday, April 12, 2019

Who thought at our December low that the S&P 500 would rally well over 20% to above 2900 and within 1% of our all-time high in less than four months?  Not this guy.  The stock market can do anything, but if this is a bear market rally, it’s unlike any we’ve ever seen.  Friday was the latest celebration of this Wall Street party as the Dow Jones rallied over 1% to lead our major indices higher once again.  The S&P 500 gained 0.66%, while the more aggressive NASDAQ and Russell 2000 lagged on a relative basis, climbing 0.46% and 0.36%, respectively.

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Three Breaks And You’re Out For NFLX?


This post is by Julius de Kempenaer from StockCharts.com - Blogs


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Since the start of the month, NFLX is lagging the S&P 500 index by more than 5%.

This is following the, relative, weakness that entered this stock after s strong start of 2019 where NFLX ran from $ 230 to $ 370 but then started to move sideways while facing heavy overhead resistance around $ 380.

From January to March the subsequent highs were still higher than their predecessors, albeit only marginally.

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Special Note: When VIX Defies Its Inverse Relationship With NIFTY…


This post is by Milan Vaishnav from StockCharts.com - Blogs


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The Volatility Index, more commonly known as the VIX, is a measurement of market's expected volatility in the future. Analysts and investors alike look at this tool to measure sentiment while making investment decisions. The VIX reflects the psychology of market participants' fear and greed and is often referred to as "Fear Gauge" or "Fear Index."

The correlation between Indian VIX and the benchmark NIFTY50 is typically negative. We would always find VIX at low levels when the index is at its high point and VIX at high levels when the markets are trying to find a bottom.

The chart shown above is the weekly chart of the NIFTY50 Index plotted along with the VIX. The last section of the charts shows noticeable correlation between the NIFTY and VIX.

It is evident that, for the majority of the last decade, NIFTY has typically seen a strong negative correlation with VIX, which is quite normal. Continue reading “Special Note: When VIX Defies Its Inverse Relationship With NIFTY…”

Week Ahead: Truncated Short Week To See Capped Upsides; Charts Offer Important Signals To Read


This post is by Milan Vaishnav from StockCharts.com - Blogs


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This was the second week in a row when the Indian equity markets did not make any significant directional move. The week that went by remained particularly volatile as the markets oscillated back and forth on each side in a defined range while it continued to resist to the lower trend line of the rising channel that it has breached on the downside in late 2018. While heading nowhere, the benchmark index NIFTY50 ended with net weekly loss of 22.50 points (-0.19%).

The coming week is a very short 3-day week. Wednesday and Friday are trading holidays on account of Mahavir Jayanti and Good Friday respectively. Looking beyond the coming truncated week, the markets are ringing some serious warning bells which deserve a special scrutiny. 

The Volatility Index – VIX, which is also referred to as the “fear gauge” or “fear index” typically has strong negative correlation

Continue reading “Week Ahead: Truncated Short Week To See Capped Upsides; Charts Offer Important Signals To Read”

Here Are The Industry Groups Flying Into Earnings Season


This post is by Tom Bowley from StockCharts.com - Blogs


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Analysts routinely visit management teams of public companies to see how their quarters are progressing.  Based on the knowledge they gain, they return to their offices and their firms issue recommendations to buy or sell.  It’s the reason that we do what we do.  By analyzing price action, we begin to get a feel for which areas of the market we’re likely to see a rapidly improving earnings environment.  To that end, I’d suggest taking a look at the following groups based on their recent relative outperformance:

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An Aggressive Projection for the Dow


This post is by David Keller from StockCharts.com - Blogs


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Have you ever played devil’s advocate in a group discussion? That's the situation where everyone comes to one conclusion, so you take the opposite side just to provide an alternative hypothesis and argue its merits.

We often avoid this sort of “outside the box” thinking because of confirmation bias. Once we’ve decided we’re bearish, we assign greater importance to any new bearish evidence because it supports our predetermined thesis.

One way to combat this is to play devil’s advocate with your own process. Once you’ve drawn a conclusion, force yourself to take the opposite side of the argument. What would need to happen to make your thesis completely incorrect?

To be clear, I’m overall bearish on US equities here. I’m not “the world is ending” bearish, but I’m more in the “I just can’t see much further upside from here” camp. I wouldn’t be surprised if we end the year

Continue reading “An Aggressive Projection for the Dow”

4/12 MWL: What’s Hot, What’s Not – Technically Wrong


This post is by Erin Swenlin from StockCharts.com - Blogs


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Welcome to the recap of today’s MarketWatchers LIVE show, your antidote for the CNBC/FBN lunchtime talking heads.

Here is a link to today’s show.

Our show is devoted to technical analysis of the stock market with live market updates and analysis of hot symbols. The show runs throughout the day on StockCharts TV; you can also find the latest episodes on the YouTube StockCharts channel here.

Information abounds in our Monday-through-Friday 12:00p – 1:30p shows, but the MWL Blog will give you summary slides and time stamps for viewing later. Be sure and check out the MarketWatchers LIVE ChartList for the 10 in 10 charts. 

Your comments, questions and suggestions are welcome. Our Twitter handle is @mktwatcherslive, our email is marketwatchers@stockcharts.com and we also have a MarketWatchers LIVE Facebook page that you can like and follow. Don’t forget to sign up for notifications at the Continue reading “4/12 MWL: What’s Hot, What’s Not – Technically Wrong”

DP WEEKLY WRAP: Nasdaq and NYSE Bullish Percent Lagging Behind


This post is by Carl Swenlin from StockCharts.com - Blogs


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One of the market indicators available on StockCharts.com is the Bullish Percent Index (BPI), which calculates the percentage of stocks in a given index that are on point and figure BUY signals. On the chart below we can see the BPI for the S&P 500, the Nasdaq Composite, and NYSE composite. All three BPIs were at their highest levels in early-2018, but note the BPI negative divergences at the September 2018 price top. It is a clear case of fewer stocks supporting the price advance, with predictable results.

Currently, all three indexes are approaching record price highs. The S&P 500 BPI is near its 2018 high, confirming the price move, but there is a severe shortage of participating stocks in the BPIs for the Nasdaq and NYSE, which are respectively 25% and 23% below their early-2018 levels. Again, we have a clear case of fewer stocks supporting the price

Continue reading “DP WEEKLY WRAP: Nasdaq and NYSE Bullish Percent Lagging Behind”

Global Stocks Join Global A/D Line Above Key Trend Lines


This post is by Eric Anderson from StockCharts.com - Blogs


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Editor's Note: This article was originally published in Martin Pring's Market Roundup on Tuesday, April 9th at 1:08pm ET.


Global stocks, represented in the form of the MSCI World Stock ETF (ACWI), peaked in January of last year and gradually worked their way lower into late December. However, a remarkable turnaround has enabled the price of this ETF to complete a 6-month inverse head-and-shoulders and crash through its bear market trend line. In addition, Chart 1 shows that my Global A/D line has completed a 12-month consolidation pattern and broken out decisively on the upside. This broadly-based advance suggests supports the idea that the that the ACWI breakout is for real. Even though several measures of market momentum are currently overstretched on the upside, I am going to assume that’s the case – that is, unless the price experiences a daily close under the previous minor low and two breakout

Continue reading “Global Stocks Join Global A/D Line Above Key Trend Lines”

Trading Stocks Before They Report Earnings – Tips to Improve Your Success Rate


This post is by Mary Ellen McGonagle from StockCharts.com - Blogs


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Earnings surprises can move a stock substantially, leading to either huge gains or big losses in your portfolio. Today, I’ll be reviewing how you can trade during earnings season to your benefit.  There is no single absolute way to do this; rather, as you’ll see, it will depend on your willingness to put the work in before a company reports.

For those of you more averse to the inherent risk of buying into the release of earnings, I’ll be reviewing profitable ways to trade a stock after it reports in my next ChartWatchers article (2 weeks from now!).

Before we review some basic tips for successfully navigating earnings season, it’s important to assess the technical and psychological health of the broader markets, as this will determine your course of action. For those of you who watch my weekly MEM Edge show (which airs live Monday mornings on StockCharts

Continue reading “Trading Stocks Before They Report Earnings – Tips to Improve Your Success Rate”

EARNINGS: 2018 Q4 Finalized; S&P 500 Still Overvalued


This post is by Carl Swenlin from StockCharts.com - Blogs


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S&P 500 earnings for 2018 Q4 have been finalized, and with a P/E of 21.4, the market is above the normal value range and very overvalued. The following chart shows us the normal value range of the S&P 500 Index. It shows us where the S&P 500 would have to be in order to have an overvalued P/E of 20 (red line), a fairly valued P/E of 15 (blue line), or an undervalued P/E of 10 (green line). There are three hash marks on the right side of the chart to show where the range bands are projected be at the end of 2019 Q4. If earnings estimates hold and price doesn’t change significantly, the market could be back in the normal range by year end, but it will still be overvalued.

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When Tails Remain On One Side Of A Relative Rotation Graph, What Does That Mean?


This post is by Julius de Kempenaer from StockCharts.com - Blogs


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Relative Rotation Graphs are a great tool to visualize sector rotation as well as other asset rotations in various universes.

When you use RRGs regularly and have monitored multiple rotational patterns, you may have noticed that the rotations do not always travel through all four quadrants in sequential order.

Understanding what happens in these situations will help you better understand and read Relative Rotation Graphs.

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BANKS LEAD FINANCIALS AND THE MARKET HIGHER — FINANCIAL SPDR HITS NEW 2019 HIGH


This post is by John Murphy from StockCharts.com - Blogs


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BANKS LEAD FINANCIALS HIGHER … Strong earnings from a couple of banks this morning have helped push that group sharply higher; and they’re leading the financial sector and the market higher. Chart 1 shows the
Financial Sector SPDR (XLF) gapping up to the highest level of the year (after regaining their 200-day average last week). The solid gray line is a