You Must Master These Two Things To Trade Successfully

Trading is difficult, emotional and can be quite lonely.  We have seen volatility ($VIX) shoot higher, rising from an 11.61 close on October 3rd to a high of 28.84 on October 11th.  Since then, we've remained above the key 16-17 support level that typically holds during bear markets.  I don't believe we're in a bear market, I'm just pointing out that the last two bear markets saw VIX declines down to 16-17, no further.  Bear markets require a certain level of fear to thrive in.  So far, the VIX is cooperating.  A VIX break below 16 would be a bullish development.

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STOCK INDEXES STABILIZE BUT STILL LOSE MORE GROUND — DROP IN RETAILERS AND HOME IMPROVEMENT STOCKS MAKE CONUMER CYCLICALS MARKET’S WEAKEST SECTOR

DESPITE LATE REBOUND, STOCK INDEXES LOSE GROUND... Despite a rebound on Thursday and Friday, all major U.S. stock indexes lost ground this week. But very little changed onn their respective chart patterns. Chart 1 shows an upside reversal on Thursday keeping the Dow Industrials above its 200-day average. But it remains well below its early November peak and its 50-day...

Taking the Temperature of the Stock Market

The Momentum Factor iShares (MTUM) and the Minimum Volatility iShares (USMV) represent opposing sides of the market. High flying stocks can be found in the momentum ETF, while the more boring issues dominate the minimum volatility ETF. Using these two ETFs, chartists can quickly take the temperature of the stock market and adjust their strategy. The risk appetite is strong when momentum stocks outperform (risk on). Conversely, the risk appetite is weak when low volatility stocks outperform momentum stocks (risk off). The chart below shows MTUM in the top window and USMV in the second window. There are around 124 stocks in MTUM with the technology sector accounting for 41.3% of the ETF. Also note that the top ten stocks account for 43.6%, which makes this a top-heavy ETF. In contrast to MTUM, there are over 200 stocks in UMSV with technology accounting for 20%. However, healthcare (15.
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Week Ahead: Nifty has multiple overhead resistances to deal with in this short week

The Indian Equity Markets spent the entire week on expected lines. The previous week was expected to be turbulent, and the zone of 10600-10750 was set to pose stiff resistance to the Markets and on these analyzed lines, the NIFTY continued to remain volatile all throughout the week. The benchmark Index finally ended the week posting a modest gain of 97 points (+0.92%).
NIFTY faced stiff resistance in the 10600-10750 zones and failed to decisively extend the pullback. 
This 150-point zone of 10600-10750 will continue to remain critically important to watch in the coming week. Also, the 50-Week Moving Average which is presently at 10723 is expected to remain important for the Markets. NIFTY has been facing resistance at the 50-Week MA level since last five weeks, and for NIFTY to make any decisive continuation of a pullback, moving past this level would be important. Coming week is likely
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You Really CAN Make Money in a Rough Market Environment

The quarter beginning 10-1-18 has been challenging for a lot of traders. The NASDAQ has lost almost 10% while the S&P has lost 6%, both well off the quarter's low. Volatility has reigned with the VIX at elevated levels for most of the quarter. It has been challenging for us at EarningsBeats as well, though you might not know it from our results even though, of the 29 trade alerts we issued to our members since October 1, 18 stocks came off with losses. But on a risk adjusted basis - assuming an equal amount of money invested in all 29 stocks - so far we've seen a net gain of over 2.5%, which easily outperformed both the NASDAQ and S&P. How was this possible? It was possible because the average loss on those stocks that stopped out was 3.1% while the average gain on the winners was
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DP Weekly Wrap: Does SPY Have Bullish Reverse H&S? Gold Sentiment Is Looking Contrarian

A lot of people are seeing a reverse head and shoulders pattern developing, and it is really not hard to spot. From Friday's close, it will take a rally of a little less than 3% for price to reach the neckline. Add another 4.5% and new, all-time highs will be made. Some indicators favoring a positive resolution are: (1) contracting volume across the head and right shoulder; (2) the OBV reverse divergence; and (3) the PMO is confirming by bottoming above the signal line. Some negative factors are: (1) the bull market trend line has been broken; (2) the formation is too close to the all-time high to represent a trend reversal; and (3) any formation is less likely to resolve favorably in a bear market.

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NEW! Introducing "Chart View" For Market And Industry Summary Pages

The more charts, the better. That's my motto, especially this week. I'm happy to announce that our Market Summary and Industry Summary pages have recently received a major upgrade – "Chart View" is here!  We've expanded the functionality of these two important pages, making them even more useful resources to help you track and analyze the current markets.

Market Summary Page

On our new-and-improved Market Summary page, you'll now see two tabs at the top – one for the original "Table View" and a new tab for "Chart View." This new view brings larger price charts to the page, allowing for more detailed study of these market indexes and important ETFs and how they're trading.  By default, the first index in each table will be selected and charted. To change the selection, click on each row in the tables tsee the chart for that index or ETF. You
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Money Managers Report Lowest Exposure Since Early 2016

One of the sentiment indicators that I update MarketWatchers LIVE viewers on each Friday is the National Association of Active Investment Managers (NAAIM) exposure reading. A few things you should know about these guys. NAAIM’s membership ranges from small regional firms to large national firms, including hedge fund managers, mutual fund companies and a variety of other firms that provide professional services. Many of them are technicians. They will sometimes be "right" in their exposure in the very short term, but in the intermediate term, price reversals nearly always occur.

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11/16 MWL Recap: "What’s Hot, What’s Not" with Mary Ellen McGonagle – DP Sentiment Update

Welcome to the recap of today's MarketWatchers LIVE show, your antidote for the CNBC/FBN lunchtime talking heads. Listen and watch a show devoted to technical analysis of the stock market with live market updates and symbols that are hot. The show runs throughout the day on StockCharts TV or you can find the latest episode 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, email is marketwatchers@stockcharts.com and come "like" our MarketWatchers LIVE Facebook page. Don't forget to sign up for notifications at the end of this blog entry by filling in your email address.  < p class"entry-more-link">Continue reading Continue reading "11/16 MWL Recap: "What’s Hot, What’s Not" with Mary Ellen McGonagle – DP Sentiment Update"

The Reason Short-Term Rallies are Failing is Because Weekly Charts Look Even More Negative

Editor's Note: This article was originally published in John Murphy's Market Message on Wednesday, November 14th at 1:39pm ET.
The weekly bars in Chart 2 show the last upleg of the S&P 500 uptrend that began in early 2016. And it shows that uptrend weakening. It shows the October price drop falling below its 40-week moving average (red line) by the widest margin in more than two years, and a rising trendline drawn under its 2016-2018 lows. This week's attempt to regain those two previous support lines is failing. The two weekly indicators in Chart 2 also paint a negative picture that suggests that the nearly three-year uptrend is in danger. The 14-week RSI line (top box) has fallen below 50 by the widest margin since early 2016. In addition, its third quarter peak fell well short of its early 2018 peak which formed a major negative divergence (purple arrow).
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Experimenting with breadth on Relative Rotation Graphs

Various breadth indicators are used to analyze the underlying strength or weakness of a broad market index like the S&P 500 index or NYSE. Over the years a number of different breadth indicators have been developed and/or used in their work by well known technical analysts.

A few names that spring to mind here in the Stockcharts community are Tom McLellanCarl Swenlin and Greg Morris. "Market breadth" groups a number of indicators that derive data from the underlying market that they cover. Things like the A/D Line, the advance-decline line where the number of advancing issues are compared to the number of declining issues. Or New Highs versus New Lows. Or Up/Down volume where the total volume of advancing stocks is compared to the total volume of declining stocks. And many more. < p class"entry-more-link">Continue reading "Experimenting with breadth on Relative Rotation Graphs" »

ETF Guru Retires: Leaves Us with Six Key Lessons

This is a salute to Ben Johnson, the departing editor of Morningstar’s ETF Investor publication. Over the years, I’ve come to look forward to his pithy observations about the ETF marketplace. To use his own words in describing his replacement, Alex Bryan, he wrote “He’s bright, articulate and capable of distilling concepts that are lofty and sometimes near unintelligible into insights that are readily consumable.”  Those are words which are spot-on in describing Ben Johnson himself. In other words, I’ve made money based on his insights — thank you very much!  In waiving us goodbye, he leaves by sharing a handful of lessons that individual investors would be well-served to abide by. Here are his essential takeaways, followed by a few comments of my own.

Lesson #1:

“Investing is an inherently personal affair. We’re each running our own race.”
My many sermons on this topic are well Continue reading "ETF Guru Retires: Leaves Us with Six Key Lessons"

This Is Not Just Icing On The Cake

Through this wide ranging volatile period, it has been harder to find great trades. When the market pulls back, the skittishness of the investing community soars. I have had two different stocks in nice set ups plunge with 20% drops in a day. The earnings reports are literally implosion documents if they miss the consensus view. Apple is a case in point. Small position size helps. At the same time some stocks have been smooth and steady. I like the look of CME, but today I want to highlight ICE as it is just starting to break out. Starting at the top, the SCTR has surged to new 52 week highs and it has just recently moved into the top 25%. The relative strength chart in the shaded area chart shows ICE performing in line with the $SPX until recently. All of the sudden, the stock has soared in relative performance.
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Weekly Market Review & Outlook (with video) – Digesting the Breakdowns

Performance Overview. Ranging after Breakdown. Other Bearish Developments. Volatility Heats Up. Momentum versus Low Volatility. Staples and Utes Hold Up. Healthcare and REITs Outperform. Big Bounces within even Bigger Downtrends. Notes from the Art's Charts ChartList. ...  Ranging after Breakdown The S&P 500 was thrown off trend with a sharp decline in October.

History Supports Bullish Move But Earnings Last Night Could Dampen Bulls’ Victory Thursday

Reminder

I post a blog article every morning that the stock market is open in a format similar to today's article.  If you haven't already subscribed (for FREE) and would like to, simply scroll to the bottom of this article and type your email address into the space provided and click on the green "Subscribe" button.  From this point forward, my blog article will be sent to the email address provided immediately upon being published.  Thanks for your readership and support!  :-)

Also, your comments - good or bad - are always welcome.  My email is tomb@stockcharts.com. < p class"entry-more-link">Continue reading "History Supports Bullish Move But Earnings Last Night Could Dampen Bulls' Victory Thursday" »

11/15 MWL Recap: Julius de Kempenaer "Experimenting with Breadth on RRG" – Are You Buying This?

Welcome to the recap of today's MarketWatchers LIVE show, your antidote for the CNBC/FBN lunchtime talking heads. Listen and watch a show devoted to technical analysis of the stock market with live market updates and symbols that are hot. The show runs throughout the day on StockCharts TV or you can find the latest episode 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, email is marketwatchers@stockcharts.com and come "like" our MarketWatchers LIVE Facebook page. Don't forget to sign up for notifications at the end of this blog entry by filling in your email address.  < p class"entry-more-link">Continue reading Continue reading "11/15 MWL Recap: Julius de Kempenaer "Experimenting with Breadth on RRG" – Are You Buying This?"

Gold Finally Had A Day In The Sun $GDX $GLD

Gold finally had a day in the sun. It feels almost remarkable. Much like when rainy days envelope a city for weeks, and then, the first day of sunshine feels so much better.  I love to trade around gold on the long side, which has been infrequent lately! But the charts say to wake up and smell the golden coffee, as it could be time to wake up in your portfolio. Yeah, really, I know, that does sound unbelievable. Come for a chart tour and see if you agree. First of all, let's build a road map. When do you want to own gold stocks? Clearly, not all the time! Let's look at some indicators and try to find a strong setup.  For commodities markets in general, when commodities are above the 50 day moving average that's a good place to start. On the charts below let's use
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30% Gain From Here Over Next Year Possible? This Chart Says YES

Market Recap for Wednesday, November 14, 2018

In a rare twist, communication services (XLC, +0.49%) was the only sector to gain ground yesterday.  The group has underperformed the S&P 500 badly since its July relative high with Facebook's (FB) quarterly earnings report on July 25th after the close the primary culprit.  But, at least temporarily, the sector received a boost - an oversold bounce.  Here's a 4 month chart to show just how bad it's been for the XLC:

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Small cap stocks are leading the market lower.

There are many indexes available to monitor and analyze the stock market. The S&P500, together with Daddy "Dow" being among the more popular ones.

But the S&P 500, although covering 500 stocks, is only looking at one segment of the total market. Only large-cap stocks. A broader perspective can be gained from looking at the S&P 1500 composite index for example. Still not covering the entire US stock market, which nowadays counts around 4000, more or less actively traded, listed companies, but a pretty good gauge. < p class"entry-more-link">Continue reading "Small cap stocks are leading the market lower." »

Double the Gain of the Morningstar Bucket Portfolio – part 4

Lazy Portfolios such as Morningstar’s generally ignore asset classes other than stocks, bonds, and REITs. Alternative assets, when combined with a Momentum Rule, give you diversification benefits that produce massive improvements in gains.

 


This is Part 4. Parts 1, 2, and 3 appeared on Nov. 6, 8, and 13, 2018.

We’ve seen earlier in this column that a Lazy Portfolio promoted by Morningstar Inc. — known as the Bucket Portfolio — greatly improves its annualized return to 12.4% instead of 8.7%, with the addition of a single step. That tweak would have given you double the gain after 4½ years and 4.6 times the gain after 45 years in simulations. The enhancement is called the Momentum Rule. This is the statistical principle that asset classes with the greatest gains in the past 3 to 12 months tend to continue going up in the
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