February 19, 2009Support for the Dow? ($INDU) By Chip Anderson
Support / Resistance
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Today the Dow Jones Industrials closed below its 6 year low just under 7500. What's the next important support level? What's the one below that? (and, gulp, the one below that?) Here you go. Let's hope those green lines on the right side of this chart stay green.
Posted by Chip Anderson at 4:52 PM in Support / Resistance | Permalink | Comments (1)
February 18, 2009Bottom Feeding: Time for Asia Time? (TYM) By Chip Anderson
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Trying to catch a "falling knife" like Asia Time (TYM) is extremely risky in any market. Doing it in today's market is pure folly. And yet... TYM is the only stock on any of the major markets to have its RSI rise back above 30 after staying below 30 for several days. Today's big rebound (on good volume) continued yesterday's bounce (on relatively light volume) and made the RSI movement possible. Strong resistance at 0.50 appears to limit the upside however. While extremely risky, this is still a technically interesting stock to watch over the next couple of days.
Posted by Chip Anderson at 6:57 PM | Permalink | Comments (1)
February 17, 2009Bollinger Band "Topo Map" ($INDU) By Chip Anderson
Moving Averages
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Based on the statistical concept of Standard Deviations, Bollinger Bands graphically illustrate how "far away" prices are from their "average" value. Traditionally, 2.0 standard deviations are used to determine where the upper and lower bands should appear. In the chart above, I've layered 6 different Bollinger Bands on top of each other going from 2.0 deviations to 3.0 deviations forming two "bands of Bands." The "deeper" prices go into either band, the more likely things will "snap back" towards the dashed average line. That's good news since the Dow plunged deep into the lower band today.
Posted by Chip Anderson at 6:45 PM in Moving Averages | Permalink | Comments (1)
February 13, 2009Long-Term Log Scale Chart Provides Context ($INDU) By Chip Anderson
Historical
How bad is it? How big was the Internet bubble? How does the current decline compare to the 1987 crash? It's all here in black and white (and red and blue). On a log scale chart like this, movements of the same percentage appear to have the same height regardless of the point values.
The key take away here is that when the Internet bubble burst in 2002, the market went back to the "normal" rate of climb that it established after the crash in 1987. The current economic crisis destroyed that trendline in mid-2008 and is therefore much more serious.
Posted by Chip Anderson at 10:00 AM in Historical | Permalink | Comments (0)
February 12, 2009After the Head and Shoulders (NDN) By Chip Anderson
Chart Pattern
NDN has been falling after completing a classic Head & Shoulders chart pattern back in January. Today was the first set of positive technical signals for the stock in quite a while - a bullish MACD crossover, a rising RSI line and a bullish Parabolic SAR signal. While all of these signals can be premature, when combined with three up days after what looks like an exhaustion sell off, the odds of a turnaround taking hold increase.
While I have no idea what will happen with this particular stock in the coming days, this is a good example of the kind of technical setup that all technical traders search for. Each trader's setup will be different, but most will contain elements of technical indicator crossovers, support and resistance analysis, chart pattern identification and volume study.
Posted by Chip Anderson at 2:46 PM in Chart Pattern | Permalink | Comments (0)
February 10, 2009McClellan Summation Index Struggling to Stay Positive By Chip Anderson
Market Indicators
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The McClellan Summation Index is a great market indicator that recently set some all-time record lows back at the end of last year. Since then, it has bounced back into positive territory, but over the past couple of days a new decline has begun. While not unexpected, that is disappointing since "according to the McClellans, the beginning of a new bull market is signaled if the NYSE-based Summation index first moves below the -1200 level and then quickly rises above +2500."
Posted by Chip Anderson at 4:29 PM in Market Indicators | Permalink | Comments (0)
February 09, 2009Anatomy of a Doji (STAA) By Chip Anderson
Candlestick Patterns
STAA put in a huge Doji on its daily chart today. Technically, a doji is a candlestick where the open and the close are the same. The huge upper shadow and relatively small lower candle makes STAA's Doji especially striking. It is very close to being a "Gravestone Doji" - a doji with a big upper shadow and no lower shadow.
Doji's often signal a reversal. We can see the reason for that by looking at the 10-min intraday chart for STAA:
STAA gapped up on the open and then quickly rose to its high for the day (2.74). It then spent the rest of the day slumping back to its opening price. By 3:30, it had moved below the open to the low of the day - 2.00. A late day buy order brought prices back up the opening level - 2.04.
As we can see on the intraday chart, the quick move up followed by a lack of follow thru had two consequences - 1.) it probably depressed the STAA bulls and 2.) it created the big doji on the daily chart. Which is why dojis often indicate reversals.
Posted by Chip Anderson at 9:10 PM in Candlestick Patterns | Permalink | Comments (0)
February 06, 2009DROOY - Bullish CMF Signal Confirmed by Long-Term Crossover By Chip Anderson
Moving Averages
Durban Roodeport Deep (DROOY) is a major gold mining company in South Africa. Their stock jumped in late November generating a "buy" signal from the standard 20-day Chaiken Money Flow (CMF) in early December. The longer term moving averages for DROOY crossed today providing a major technical "buy" signal for the stock.
Posted by Chip Anderson at 3:11 PM in Moving Averages | Permalink | Comments (0)
February 05, 2009Sirius XM Radio's (SIRI) Runaway Gap Up By Chip Anderson
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SIRI gapped up on the open and moved higher from there today on strong volume. Very nice turnaround play with resistance at 0.225. When a stock that is already in an uptrend gaps up like this, it is called a "Runaway Gap."
Posted by Chip Anderson at 4:49 PM | Permalink | Comments (1)
February 04, 2009Hitachi's (HIT) RSI Rebound By Chip Anderson
Momentum
Hitachi's RSI indicator moved back above 30 today after sinking down around 20 two days ago. This big jump indicates that an important rebound is underway and has a good chance of continuing at least until the RSI crosses 50 again. The price action shows what may be a selling climax follow by a strong 2-day rally. This is worth watching closely.
Posted by Chip Anderson at 5:05 PM in Momentum | Permalink | Comments (0)
February 03, 2009NetFlix (NFLX) has a Powerful MA Crossover By Chip Anderson
Moving Averages
The 50-day Simple Moving Average for NetFlix moved above the 200-day Simple Moving Average today in a very convincing manner confirming the stock's gains over the past couple of days. No other heavily traded Nasdaq stock has a similarly bullish signal right now.
Posted by Chip Anderson at 10:28 PM in Moving Averages | Permalink | Comments (1)
February 02, 2009Quadruple Bottom P&F Breakdown for Target (TGT) By Chip Anderson
P&F
Target Corp's Point and Figure chart broke below the bottom of the Quadruple Bottom Pattern that it had put in over the past 5 weeks. See the 4 "O's" in the boxes at 32? Those "O's" formed the bottom of the pattern. Today's decline to 30.20 filled in the 31 and 30 boxes, signaling the breakdown.
Posted by Chip Anderson at 8:26 PM in P&F | Permalink | Comments (0)
January 30, 2009Dark Cloud Cover for ODFL By Chip Anderson
Candlestick Patterns
The Dark Cloud Cover candlestick pattern occurs when a stock that is in an uptrend has a tall hollow candle that is followed by a tall filled candle that extends below the mid-point of the first candle.
A Dark Cloud Cover pattern signals short-term weakness for the stock. The idea is that investors who were excited by Thursday's big rise are now disheartened by today's lack of follow through - thus making another rally unlikely in the near term.
Posted by Chip Anderson at 11:48 PM in Candlestick Patterns | Permalink | Comments (0)
January 29, 2009Nasdaq Bullish Percent Index will Signal the Return of the Bulls By Chip Anderson
Market Indicators
(Click on the chart for a live version)
The Nasdaq Bullish Percent Index represents the percentage of Nasdaq stocks that have Bullish signals on their P&F charts. Typically, readings oscillate around 50. Readings above 60 are rare and indicate a strong rally is underway. Readings below 20 are also rare and usually indicate market weakness.
$BPCOMQ's strong move above 60 in early 2003 signaled the end of the last bear market. Expect a similar move to herald the end of the current recession.
Posted by Chip Anderson at 10:42 PM in Market Indicators | Permalink | Comments (0) | 
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