#-ad_banner-#​Although inflation is low and the U.S. dollar is high, gold seems to be waking up. It’s hard not to notice that the yellow metal has already made quite a few changes for the better on the charts. And it appears gold mining stocks are coming along for the ride. First, let’s take a look at the long-term chart of gold futures. Using a log scale chart, we see they decisively moved above the major trendline drawn from the 2012 high, as well as the top of the trend channel drawn from the 2014 high.  When… Read More

#-ad_banner-#​Although inflation is low and the U.S. dollar is high, gold seems to be waking up. It’s hard not to notice that the yellow metal has already made quite a few changes for the better on the charts. And it appears gold mining stocks are coming along for the ride. First, let’s take a look at the long-term chart of gold futures. Using a log scale chart, we see they decisively moved above the major trendline drawn from the 2012 high, as well as the top of the trend channel drawn from the 2014 high.  When we see breakouts through two different measures of trend, we should pay attention. Not only that, but gold futures are now above major moving averages, including the 50-day and 200-day.  On the chart above, I used the 40-week moving average as a substitute for the 200-day. This month, prices moved to their highest spread above the moving average since 2012, which was arguably before the bear market really began. Gold mining stocks have also broken through long-term trendlines, and I think the smaller companies offer the most bang for your buck. To cut down on single stock risk, though, the… Read More

JPMorgan Chase (NYSE: JPM) Chairman and CEO Jamie Dimon made news last week when it was announced he was personally buying $26 million worth of company stock as prices were hitting two-year lows. As The Wall Street Journal put it, his purchase was intended to “boost confidence in [the] banking industry” and “stem the tide of negative sentiment overwhelming bank stocks this year.” #-ad_banner-#​JPM jumped in after-hours trading on Feb. 11 following the news and hasn’t looked back, gaining more than 10% in the past three trading days. The question is whether Dimon’s bold move was enough to turn the… Read More

JPMorgan Chase (NYSE: JPM) Chairman and CEO Jamie Dimon made news last week when it was announced he was personally buying $26 million worth of company stock as prices were hitting two-year lows. As The Wall Street Journal put it, his purchase was intended to “boost confidence in [the] banking industry” and “stem the tide of negative sentiment overwhelming bank stocks this year.” #-ad_banner-#​JPM jumped in after-hours trading on Feb. 11 following the news and hasn’t looked back, gaining more than 10% in the past three trading days. The question is whether Dimon’s bold move was enough to turn the tide in the sector or even just in JPM.  The short answer is no. As we can see on the chart, it’s been all downhill for JPMorgan this year, starting with a breakaway gap to the downside on the first trading day of the year. This is a powerful event that signals a stock rapidly changing its condition from uncertain to undeniably bearish.  JPM then fell as much as 18% through last week’s low, and even after the three-day rally, it remains solidly below its major moving averages.  Had this rally not occurred, there would be no doubt… Read More

While a strong stock can rise on its own merits, it is easier when it is part of a rising sector. Conversely, when an entire sector is falling, even stocks that are not quite so weak can be taken down with it. #-ad_banner-# The latter is the case for the computer services sector and VeriSign (Nasdaq: VRSN) in particular. This domain name registry and Internet security stock has already fallen more than 20% from its December high, but given weakness in the sector, there is likely more pain ahead. Selling a stock that has already dipped… Read More

While a strong stock can rise on its own merits, it is easier when it is part of a rising sector. Conversely, when an entire sector is falling, even stocks that are not quite so weak can be taken down with it. #-ad_banner-# The latter is the case for the computer services sector and VeriSign (Nasdaq: VRSN) in particular. This domain name registry and Internet security stock has already fallen more than 20% from its December high, but given weakness in the sector, there is likely more pain ahead. Selling a stock that has already dipped into official bear market territory may seem risky. However, in addition to its falling sector, VeriSign’s chart offers ample evidence for another double-digit drop. It does not hurt that the broader market is struggling either. Let’s start with the big picture. Amazingly, we can draw a trendline on a log-scaled monthly chart that connects the start of the bull markets in 2002 and 2009 with major lows in 2011, 2012 and 2014. That line is currently in the $64 area, roughly 10 points below recent trading.  On its own, that would be an enticing downside target. But let’s… Read More

As the old Wall Street saw goes, “There’s always a bull market somewhere.”  These days, with the stock market faltering, you might think that can only mean inverse ETFs. But even in bearish times, there are still stocks that can and do move higher. After all, even during the Crash of 1987, several dozen stocks on the New York Stock Exchange gained ground. #-ad_banner-# That’s why it always pays to keep an eye out for stocks with healthy charts, even in a sick market. One that I like right now is for-profit hospital operator HCA Holdings (NYSE: HCA). Read More

As the old Wall Street saw goes, “There’s always a bull market somewhere.”  These days, with the stock market faltering, you might think that can only mean inverse ETFs. But even in bearish times, there are still stocks that can and do move higher. After all, even during the Crash of 1987, several dozen stocks on the New York Stock Exchange gained ground. #-ad_banner-# That’s why it always pays to keep an eye out for stocks with healthy charts, even in a sick market. One that I like right now is for-profit hospital operator HCA Holdings (NYSE: HCA).    It was a rough first few weeks of the year for the broader market until, on Jan. 20, it suddenly reversed to the upside. The Dow Jones Industrial Average was down as much as 565 points intraday, but closed just 249 points lower. The media reported the net loss but the charts told a different story — one of an oversold market with extreme fear staging an intraday comeback. HCA’s price action that day was not quite as dramatic, but it still ended with a nice intraday turnaround. It also formed a weekly reversal pattern right at a nice… Read More

With the gaming industry so dependent on China for a chunk of its fortunes, it seems odd that Las Vegas Sands (NYSE: LVS) is poised to rally over the next few months. The Chinese stock market fell to a 13-month low this week, reflecting weakness in the country’s economy. But positive traffic data in Macau gave casino stocks a boost, and it seems some analysts are starting to see improvements stateside as well.  But as a chartist, I’m more excited about the improved technical conditions and still excessively bearish sentiment, which could make for the beginnings of a… Read More

With the gaming industry so dependent on China for a chunk of its fortunes, it seems odd that Las Vegas Sands (NYSE: LVS) is poised to rally over the next few months. The Chinese stock market fell to a 13-month low this week, reflecting weakness in the country’s economy. But positive traffic data in Macau gave casino stocks a boost, and it seems some analysts are starting to see improvements stateside as well.  But as a chartist, I’m more excited about the improved technical conditions and still excessively bearish sentiment, which could make for the beginnings of a bullish case for LVS. We’ll start with the bigger picture. The weekly chart shows a steep drop during the 2008 financial crisis, followed by a steady recovery through early 2014.  A set of Fibonacci retracement lines applied to the bull run helped define support for the 2014-2015 pullback. And now the stock has once again dropped to the key 61.8% retracement level of the rally. On their own, Fibonacci support and resistance levels are often questionable. However, the current retracement coincides with traditional chart support at a series of lows in 2010 through 2012. That makes the $34.50… Read More

Twitter (NYSE: TWTR) is ubiquitous in the online lives of millions, yet its stock has been the bane of many a portfolio.  After a strong performance following its initial public offering in 2013, it’s been a tough slog. The stock fell from a peak near $75 to an all-time low of $15.48 on Thursday.  While there have been false reversals along the way, this week’s reversal seems like it just might have a chance of making traders quick double-digit profits. The latest leg lower, which began in October, started to accelerate in the new year along with the… Read More

Twitter (NYSE: TWTR) is ubiquitous in the online lives of millions, yet its stock has been the bane of many a portfolio.  After a strong performance following its initial public offering in 2013, it’s been a tough slog. The stock fell from a peak near $75 to an all-time low of $15.48 on Thursday.  While there have been false reversals along the way, this week’s reversal seems like it just might have a chance of making traders quick double-digit profits. The latest leg lower, which began in October, started to accelerate in the new year along with the broader market’s sell-off. But on Jan. 20, Twitter scored a rather substantial, albeit imperfect, reversal to the upside. I say “imperfect” because the stock closed in the middle of the day’s range. Still, it set a lower low and closed with a net gain on the day with big volume. So we have to respect the sudden bullish change of heart. The broader market also staged an intraday reversal that day, although it closed with a significant loss.  Rumors that News Corporation (NYSE: NWS) was taking a stake in the company can take some of the credit for… Read More

It can be difficult to wrap our heads around the reasons why a diverse market index is bullish or bearish. Often times, the index is nothing more than a mathematical derivation from a disparate set of inputs. Think about an industry group such as “specialty retail,” for example. It is more of a bin for the unclassifiable than anything else. That is the feeling I get in the real estate investment trust (REIT) sector. After all, there is not much similarity among hospitals, storage facilities and apartment buildings beyond the common denominator that real estate is… Read More

It can be difficult to wrap our heads around the reasons why a diverse market index is bullish or bearish. Often times, the index is nothing more than a mathematical derivation from a disparate set of inputs. Think about an industry group such as “specialty retail,” for example. It is more of a bin for the unclassifiable than anything else. That is the feeling I get in the real estate investment trust (REIT) sector. After all, there is not much similarity among hospitals, storage facilities and apartment buildings beyond the common denominator that real estate is involved. From a technical point of view, however, a bottom-up analysis suggests the sector as a whole is in trouble. Basically, if enough component REIT stocks look ready to fall then the index must follow suit. At first glance, the iShares US Real Estate (NYSE: IYR) looks as if it is clinging to a short-term trendline breakout. The problem is that no matter how the chart is presented, the long-term picture shows a trendline breakdown. It does not make a difference beyond nuance if we use a linearly or logarithmically… Read More

Health care was the leading sector for several years, but when the market stumbled this past summer it was not able to recover. Currently, many areas within the sector show long-term breakdowns on the charts and are on the verge of ending corrective bounces. Health care products maker Abbott Laboratories (NYSE: ABT) is a good example, and thanks to the market’s sell-off to open the year, it has already broken down again. We’ll start with the big picture by looking at the weekly chart, which shows a 25% drop from mid-July to late September. To call that… Read More

Health care was the leading sector for several years, but when the market stumbled this past summer it was not able to recover. Currently, many areas within the sector show long-term breakdowns on the charts and are on the verge of ending corrective bounces. Health care products maker Abbott Laboratories (NYSE: ABT) is a good example, and thanks to the market’s sell-off to open the year, it has already broken down again. We’ll start with the big picture by looking at the weekly chart, which shows a 25% drop from mid-July to late September. To call that a mere correction would be wrong; although calling it a bear market for reaching the 20% loss threshold would be just as wrong. To me, this was a serious break that ended a four-year bull market.  After such a move, we’d expect the stock to lick its wounds for a while, but Abbott had the good fortune of a broader market that came roaring out of its own decline. However, the S&P 500 was down “only” 12% over the same span, which is far more palatable in what at the time could still be considered a healthy… Read More

The warning given by any financial advisor is that past performance does not guarantee future success. However, performance can come in cycles where stocks that did the worst in one year rocket to the top of the charts in the next year. #-ad_banner-# In what could be one of those “worst to first” comeback stories, aluminum producer Alcoa (NYSE: AA) is poised for a nice recovery in 2016. After peaking at $17.75 in November 2014, the stock began a year-long slide to a low of $7.81 this November.  As an industrial metals stock, it was caught… Read More

The warning given by any financial advisor is that past performance does not guarantee future success. However, performance can come in cycles where stocks that did the worst in one year rocket to the top of the charts in the next year. #-ad_banner-# In what could be one of those “worst to first” comeback stories, aluminum producer Alcoa (NYSE: AA) is poised for a nice recovery in 2016. After peaking at $17.75 in November 2014, the stock began a year-long slide to a low of $7.81 this November.  As an industrial metals stock, it was caught in a sector-wide bear market. Indeed, most commodities declined significantly over that span as some pundits declared the world to be in a deflationary spiral. But Alcoa has done this before and recovered. In 2011, shares peaked at roughly the same high and slid to roughly the same low, although they stayed down for two years. The result was a giant trading range, which suggests the next move will attempt to follow previous rallies.  Several technical indicators already point to a tradable recovery on the horizon.  In trading ranges, my favorite momentum indicator is stochastics. The monthly version… Read More

Stronger-than-expected earnings sent shares of Microsoft (Nasdaq: MSFT) soaring in October, scoring a very significant upside breakout on the charts. Since the August lows, when the market as a whole tumbled, this stock is up nearly 40%, putting it in an elite group of large caps that enjoyed big runs in 2015. Sentiment was rather hot, especially after the October jump, but the blue-chip stock has only added about 3 points to its total since then. Indeed, most of the big-cap leaders have not done much since that time. Most sectors are now in decline, leaving leaders without… Read More

Stronger-than-expected earnings sent shares of Microsoft (Nasdaq: MSFT) soaring in October, scoring a very significant upside breakout on the charts. Since the August lows, when the market as a whole tumbled, this stock is up nearly 40%, putting it in an elite group of large caps that enjoyed big runs in 2015. Sentiment was rather hot, especially after the October jump, but the blue-chip stock has only added about 3 points to its total since then. Indeed, most of the big-cap leaders have not done much since that time. Most sectors are now in decline, leaving leaders without any followers — a condition that cannot last forever. As a result, I am watching for signs that the leaders are starting to roll over — and I see those signs in Microsoft. #-ad_banner-# I will say this is quite a contrary point of view as sentiment is still positive, though not extremely so. Pundits are still calling Microsoft a good buy, and even trader consensus on social media is very much in its camp. To understand my bearish case, let’s start with the big picture. The weekly chart shows current levels are only about 8% away from… Read More