This the daily chart for the Investment Brokerage Sector (National Brokers), which includes companies such as Ameritrade, the CME Group, Morgan Stanley, E-Trade Financial, Scwhab, Interactive Brokers and more, many of which are sitting precariously above very extended and well defined uptrend lines with solid negative divergences in place on just about all indicators and oscillators. Several of the names above will be added as short setups asap but I just wanted to get the chart out there as it is always best to align the trade of individual stocks with the chart of their particular sector. This is especially important when entering positions that are counter-trend trades to the prevailing trend of the broad market and one reason that we’ve have numerous short trade ideas recently hit profit targets for double-digit gains, such as the solars, despite one of the most resilient uptrends in the broad market in years.
General Market Analysis contains charts and commentary relating to all aspects of the financial markets including: US and Global stock and bond markets; gold & commodities; bonds & currencies; key market moving stocks; etc…
Today’s sell-off in US equities resulted in some solid technical breakdowns in some of the more volatile indices and sectors, such as the $RUT (Small Caps) and XLK (Technology) while the broadly diversified large cap indexes, such as the S&P 500 and Nasdaq 100 are still perched comfortably above their respective primary uptrend lines, albeit looking increasing vulnerable to a significant correction at this time. The S&P 400 Mid Cap Index, which falls between the more volatile, lower quality small caps and the more (relatively) stable large caps are very close to, but have not yet broken below its primary uptrend line/bearish rising wedge pattern. This pattern of the recent under performance of lower quality small cap stocks following the pronounced outperformance by small caps in the 2nd & 3rd quarter of this year is typical of the market action often observed in the final stages of an advance. (Discussed in detail in this post a couple of months ag0).
2013 has been a year plagued with false sell signals and bear traps and with all but the shortest-term trend indicators remaining on buy signal for now, today’s breakdown in the small caps and tech sector may very well prove to be just another false alarm. However, a preponderance of bearish developments such as extreme sentiment readings, record high margin interest, multi-year low short interest, multi-month bearish divergences and wedge patterns on just about every major index continues to build and will almost certainly manifest in the form of lower stock prices in the coming months. The chart below is a screenshot of four trend indicators for the S&P 500. My guess is that by the time the S&P 500 & Nasdaq 100 finally do fall below the primary uptrend lines shown on the charts above (and that can & most likely will happen much faster than most expect, as prices tend to fall much faster than they rise), that the short-term indicators will all be on solid sell signals with the intermediate-term trend very close to moving to a sell signal as well.
One final chart worth mentioning is the $NAAD (Nasdaq Advance-Decline Index), which finally triggered a sell signal today on a break below this very long uptrend line and large rising wedge pattern. As the chart illustrates, a sell signal is given following a break below the $NAAD uptrend line once negative divergence has been put in place (the MACD making a lower high while the $NAAD makes a higher high). Nothing is 100% and I believe that I’ve posted one false sell signal using the $NAAD earlier this year but that was in the early stages of a trendline break on a questionable trendline draw (very few touches), nor was I using the negative divergence as confirmation to the signal. Maybe this sell signal pans out, maybe not but this is an extremely well defined and long standing uptrend line with solid divergences in place. One possibility would be for the $NAAD to make one more thrust higher to backtest the wedge from below before a solid trend reversal in the $COMP takes hold. However, this is only the 5th confirmed sell signal in at least the last 4 years and the previous four signals were all followed by corrections that were roughly commensurate in scope and duration to the preceding advance in the $NAAD so both bulls and bears alike may want to keep an eye on this indicator.
The $RUT (Russell 2000 Small Cap Index), XLK (Technology Sector ETF) and XRT (Retail Index ETF) are just a few U.S. indices and sectors currently at key technical support levels. Any significant downside from current levels would trigger sell signals and likely bring prices down towards the first support or target levels on these charts. Links to these charts are available from the Live Chart Links page, which can be found under the Market Analysis tab on the menu bar at the top of the page.
Most, if not all of the charts on the Live Chart Links page are up to date including this AAPL (Apple Inc) daily chart. Thursday (Dec 5th) was an interesting trading day for AAPL. The stock just managed to break out to a new 52-week high as it took out the Dec 4th, 2012 high, but still fell shy of the Dec 3rd, 2012 high… interesting time symmetry. What I also find interesting is that AAPL was stopped cold at the 61.8% Fibonacci retracement of it’s previous bear market (when using prices adjusted for dividends). The 61.8% retracement level when using the unadjusted stock price lies about another 8 points or 1.4% above Thursday’s highs, another potential resistance level to watch should AAPL make another thrust higher.
Essentially, prices have been wedging higher while most indicators and oscillators diverge over the last several months. Since those bearish divergences began forming in mid-late August, AAPL has registered two separate clusters of overbought or very near overbought readings on the RSI (see red arrows on chart for the history of price action following such readings). The previous cluster of overbought readings which came with the second lower reading on Sept 9 was immediately followed by a 13% plunge in the stock. The second and most recent overbought cluster has just occurred with the sell “trigger” coming on Friday’s RSI cross back below the 70 level. Finally, keep an eye on the CMF (Chaikin Money Flow) which I’ve added to the top of the chart. Historically, the CMF has cross from positive to negative territory in the very early stages of significant corrections in Apple. Barring an immediate and sustained move higher in the stock, the CMF will likely move solidly into negative territory over the next several trading sessions.
This video cover the following components of TAN (Guggenheim Solar ETF) in the following order: TAN, GTAT, CSIQ, HSOL, JASO, YGE, SOL, FSLR, TSL, JKS, SCTY, & SPWR.
Since today’s earlier post mentioning the recent bearish price action in the European equity markets, I have updated the live charts with additional commentary and downside targets/support levels. Click to expand the first chart below & then click anywhere on the right side of each chart to advance to the next chart. Once opened, each chart can be zoomed further by using a mouse scroll wheel, touchpad, or by dragging the lower right-hand corner of each chart. These updated charts are also accessible via the Live Chart Links page.
I just wanted to highlight a few commodities that look interesting here, all of which were discussed under separate posts within the last month or so. The first chart below is KOL (Market Vectors Coal ETF). KOL is currently an Active Trade but may soon offer another objective entry or add-on to an existing position on a break above the previously highlighted resistance level, which also comes in around the 200 day ema. Any solid break above that level would likely be the catalyst for a move to the first target level around 22.00.
Copper is also poised for a potential breakout as any solid move above this downtrend line would likely thrust prices to the 3.40 level. Other than Copper futures contracts, one could use JJC (a copper index tracking ETF) as a proxy for trading a breakout in the metal. If so, the $22.00 area
TAN (Guggenheim Solar ETF) is now challenging the primary uptrend line following the recently breakdown below the minor uptrend line. A break below the primary uptrend line would trigger the next sell signal. Click on this thumbnail image to view the updated daily chart or click here to view the live, annotated daily chart of TAN.
This video discussed the charts of various social media related stocks (and ETF) discussed in the following order: SOCL, LNKD, SINA, FB, P, ZNGA, YELP, GRPN, YNDX, GOOG, & TWTR.
Most who follow Right Side of the Chart will have noticed that my general market analysis as well as new trade ideas have been on the light side lately. The primary reason for that is due to the fact that although I’ve been stating this for a while now, I continue to believe that the risk/reward in the market has been very poor lately. This has also been reflected in my recent preference to avoid trading/holding broad market tracking ETFs, such as the SPY, QQQ, etc.., instead focusing on specific individual trades with