bullbearinvestor.com

Tuesday - May 31, 2005

Notable Charts 050531

ALKS AXS BNE CHIR KFT
KSS MDR PKS PLMD TECD

By Arthur B. Hill - Tue 31-May-05 at 07:30AM in Stocks
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Friday - May 27, 2005

Notable Charts 050527

CMGI DECK EP HAIN INFA JCOM
MXO NTIQ PCLN PSSI WMB

By Arthur B. Hill - Fri 27-May-05 at 06:39AM in Stocks
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Thursday - May 26, 2005

Notable Charts 050526

CAM CKFR GRP IRM JCOM LLL
PCLN SUPG TTC TTWO UIS WIND

By Arthur B. Hill - Thu 26-May-05 at 07:34AM in Stocks
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Wednesday - May 25, 2005

Notable Charts 050525

AIRT AVT CRB HON IIH
NDX ODFL PLUG RTH SML SONC

By Arthur B. Hill - Wed 25-May-05 at 08:11AM in Stocks
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Tuesday - May 24, 2005

Notable Charts 050524

AAI AXE BLS BSG CMCSA
COCO GE HMT MXO NOVL
NYB PPDI RDC TIVO TLAB

By Arthur B. Hill - Tue 24-May-05 at 07:46AM in Stocks
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Monday - May 23, 2005

Notable Charts 050523

AMD CECO DIA LQI MHP
PFGC PKG PLCE PPP STGS

By Arthur B. Hill - Mon 23-May-05 at 07:50AM in Stocks
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Friday - May 20, 2005

Notable Charts 050520

CBRL HAIN HRB KYPH MXO
RAD RMBS STGS TWX UCOMA

By Arthur B. Hill - Fri 20-May-05 at 02:37PM in Stocks
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Nasdaq Overbought, But Not Bearish

The current rally is the strongest of the year and is unlikely to disappear over night. This strength is confirmed by price movement as well as two momentum indicators. First, the 15-day Rate-of-Change moved to its highest level since 2-September. Second, 15-day RSI moved to its highest level of the year. Third, the Stochastic Oscillator moved to its highest level since mid November. All three are testament to the power behind the recent move.

Even though the Stochastic Oscillator has become overbought, the 2004 rally suggests further upside before all is said and done. Notice how the Stochastic Oscillator became overbought in September, October, November and December (four separate times). The Nasdaq became overbought and pretty much remained overbought as it kept rising. Moreover, the Stochastic Oscillator remained above 50 the entire time. As long as this indicator remains above 50, I would consider the trend firmly bullish and expect higher prices.

RSI also shows further room for gains. This indicator becomes overbought when it crosses above 70. It lagged the Stochastic Oscillator in 2004 and did not become overbought until November. Notice how RSI held the green trendline the entire rally and the red trendline the entire decline. I would look for a new trendline to emerge in the next few weeks and this will define the current uptrend.

By Arthur B. Hill - Fri 20-May-05 at 02:36PM in
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Thursday - May 19, 2005

Notable Charts

This is a list of notable charts. Click the “continue reading” link below to view the charts.

AIT broke triangle resistance and surged to a new high for 2005.

APOL recovered from the early May gap (exhaustion) and broke trendline resistance.

BMET firmed after the gap and held above the low in early May - look for a break above 40 to revive the bull.

FHR is part of a strong hotel group as the stock broke triangle resistance.

FNM broke triangle resistance with a surge in volume.

GE broke resistance on expanding volume and this is good for large caps.

LIN firmed immediately after the March gap and got a bounce off support with good volume Wednesday.

NYB yields 5.6% and is finding support. Despite the bearish descending triangle, upside volume is picking up at support.

ODFL declined to a support zone and upside volume is starting to pick up - watch resistance at 30.

ORB broke resistance on high volume. This is also a follow through to the two up gaps (21-Apr and 5-May)

SGMS broke falling wedge resistance with an advance on good volume.

SPW gapped up off support in early May and continued higher with expanding volume on Wed.

UTX and other defense stocks are leading. UTX broke its March high on expanding volume.

By Arthur B. Hill - Thu 19-May-05 at 08:35AM in Stocks
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Wednesday - May 18, 2005

Notable Charts

This is a list of notable charts. Click the “continue reading” link below to view the charts.

ABS consolidated and then moved above resistance with high volume.

CMGI failed to hold the March jump and is once again bouncing off support with a big move on good volume.

DLP found support at 25 for the four time and moved higher on expanding volume.

HANS remains in a clear uptrend, but there were four days of high volume selling pressure and this stock is way overextended.

INFA formed a long triangle and upside volume is looking fairly strong.

NSIT Mark Cuban's pick shows a classic retracement and rounding bottom - upside volume is low though.

PCLN has a large (bearish) rising wedge working since May-04 and recently gapped below support at 24.

SCUR got a high volume bounce in early April and then formed a falling flag - watch for a move aboe 10 to signal a continuaiton higher.

SLB returned to a support zone around 65 and firmed after a high volume decline last week.

TLAB surged above resistance in mid April and then formed a flag/pennant - watch for a move above 8.1 to signal a continuaiton higher

WSM found support near broken resistance and surged on pretty good volume yesterday.

By Arthur B. Hill - Wed 18-May-05 at 09:04AM in Stocks
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Tuesday - May 17, 2005

Notable Charts

This is a list of notable charts. Click the “continue reading” link below to view the charts.

ACGL broke resistance with a big move in Feb and then consolidated with a triangle in March and April. The stock broke resistance with a high volume move on Wed.

BBY continues to channel down since Nov-04 and a move to the August lows looks inevitable.

EP returned to broke resistance around 9.5-10 and retraced 62% of the prior advance. The stock is consolidating - watch 10.7 up and 9.8 down.

FDX broke double top support in mid April and then formed a rising flag. A move below 83 would be most bearish.

GE could hold the key to the S&P 500 as the stock consolidates between 35 and 36.7. Watch these levels for a directional signal.

GNTX has a double bottom working from Oct to May. Upside volume looks good and a break above 19 would be bullish.

IACI is finding buyers with above average gains on good volume for three of the last seven days. The stock broke resistance at 23 and should be bullish as long as 21 holds and Barry Diller stays.

MXO has an inverse head-and-shoulders working since Jul-03 with neckline resistance at 6.

ODSY continues to base and surged on good volume last week. Look for a move above 12.5 for a bullish trigger.

PGN first appeared on 25-Apr and has since gapped higher and move up on expanding volume

USIH has formed a base over the last few months and surged on good volume in early May. Watch for a break above the Dec high.

TSA advanced on high volume in March, formed a falling flag in April and ended with a nice gain on nice volume Monday.

By Arthur B. Hill - Tue 17-May-05 at 08:56AM in Stocks
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Monday - May 16, 2005

Fedex Leads Lower

Weakness in Fedex is not a good sign for the transport group, the market and the economy. As the movers and shakers of world-wide trade, freight companies form the backbone of the economy. This makes Fedex (FDX), UPS, Yellow (YELL) and JP Hunt (JBHT) leading economic indicators. These highly cyclical stocks advanced despite the rise in oil prices. Now that oil prices have started falling, these stocks have turned weak and started leading the market lower. These stocks should be happy that oil is falling and this blatant weakness is not a good sign.

Fedex (FDX) broke double top support with a high volume decline in mid April. Broken support turned into resistance around 90 as the stock consolidated the last few weeks. The pattern looks like a flag (gray oval) and a move below the April low opens the door to the mid 70s (green oval). As long as this stock remains below 90, the outlook for the group (transports), the market (SPX) and the economy is negative.

By Arthur B. Hill - Mon 16-May-05 at 03:21AM in Stocks
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Friday - May 13, 2005

A Weak Catalyst

There was a reversal day on 29-Apr when stocks recovered from early weakness and advanced on good volume. There was also some follow through in early May with SPX moving above 1165. However, the Nasdaq stalled at 1975 and the S&P 500 moved back below its breakout three days later. This was not much of a bullish catalyst and shows that the current bull market is tired.

This chart shows SPY in Mar-03, when the bull was young and raring to go. SPY reversed on 12-Mar, gapped up on 13-Mar and put together a string of eight straight advancing days (gray oval). Also notice that volume was above average all eight days. That is a catalyst raring to go and the early May advance just doesn’t compare. Mar-03 was the kind of catalyst that lifts all boats and leads to a broad market advance. The early May-05 bounce was not convincing and leads to a selective advance that is more typical of the latter stages of a bull run.

By Arthur B. Hill - Fri 13-May-05 at 01:52PM in Indices
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Thursday - May 12, 2005

Gold Break Down

Despite strength in the US Dollar Index, gold is holding up rather well. However, XAU is not so lucky and remains relatively weak. GLD broke the lower trendline of the symmetrical triangle, but is holding support just above 42 for now. Given strength in the US Dollar Index and relative weakness in XAU, the odds favor a break to the downside. In an effort to avoid the whipsaw, traders can turn bullish on a move above 44 and bearish on a move below 42.

By Arthur B. Hill - Thu 12-May-05 at 04:43PM in Gold
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US Dollar Breakout

The US Dollar Index held firm and broke above the May-04 trendline. In addition, there are two bullish patterns at work. First, the index broke symmetrical triangle resistance with a long white candlestick yesterday. Second, the pattern since early February looks like a cup-with-handle. This is a bullish pattern and a move above the February high would provide confirmation. Given the choice (Dollars, Euros or Yen), I think the currency markets prefer Dollars and the US economy at this point.

By Arthur B. Hill - Thu 12-May-05 at 04:42PM in US Dollar
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Wednesday - May 11, 2005

Oil and Energy Stocks

A slowing economy translates into less demand for oil and this could be weighing on oil and Energy stocks. Oil could correct to the upper 40s and still hold its uptrend. In addition, I really wouldn’t consider a correction in oil bearish for Energy stocks as long as WTIC holds above 44. However, Wall Street has another opinion and a move to 44 in WTIC would mean more weakness in the Energy sector.

The Oil Service HOLDRS (OIH) formed a bullish harami (red caret) and the Energy SPDR (XLE) formed a hammer for Energy SPDR (XLE) last week. Both followed through on these candlestick reversals and have positive divergences in key momentum oscillators. However, Tuesday’s weakness showed just how frail these two groups are. In addition, Tuesday’s downside volume was above average in a number of Energy stocks. For OIH, RSI moved back below 50 and remains with lower highs for a downtrend. This is an RSI sell signal and further weakness below 90 would negate the candlestick reversal that formed last week.

By Arthur B. Hill - Wed 11-May-05 at 04:34PM in Industries
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Tuesday - May 10, 2005

Cisco Finds Volume

Cisco (CSCO), the leader in Networking, firmed after the mid April gap and found support at 17. More importantly, the stock bounced on above average volume last week and filled the 14-April gap. As you might have guessed, MACD and RSI also formed positive divergences. MACD moved above its signal line and RSI above 50. This is still a bottom picking play, but there is movement throughout the group and this bodes well.

By Arthur B. Hill - Tue 10-May-05 at 04:06PM in Stocks
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Sector Rotations

In addition to low volume and hesitation on the breakouts, recent sector rotations reflect a low appetite for risk. Information Technology is underperforming and showing relative weakness, while HealthCare is outperforming and showing relative strength. This is not a bullish combination. Strength in HealthCare will benefit the S&P 500 somewhat, but weakness in Information Technology will offset this strength.

HealthCare remains the most favored sector and shows excellent relative strength. The index formed a higher low in March and moved to new highs in early May. Money is clearly moving out of cyclical groups and into non-cyclical groups like HealthCare and Consumer Staples.

By Arthur B. Hill - Tue 10-May-05 at 03:59PM in Indices
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Friday - May 06, 2005

S&P 500 - Overall Trend

Despite the trendline break and move below the January low, the trend carries an upward bias. There was a higher low at 1060 and a higher high at 1229. The advance has certainly slowed as the index has traded on either side of 1140 since Jan-04. However, the last signal was a breakout at 1140 (Nov-04) and this level has turned into support (Apr-05). After a run from 1060 to 1229, some sort of pullback (correction) is normal and I would not become overtly bearish as long as the April lows holds (1136).

By Arthur B. Hill - Fri 06-May-05 at 04:54PM in Indices
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Large Lead

The S&P 500 can do it, but the Nasdaq and the Small-caps cannot do it. Led by Finance, the S&P 500 broke above its late April high and resistance at 1165. However, the Nasdaq and Small-caps stalled at corresponding resistance levels. This amounts to a non-confirmation. The generals (large-caps) are charging ahead, but the troops (small-caps and Nasdaq) are staying behind. It is hard to be fully bullish with these indices lagging.

By Arthur B. Hill - Fri 06-May-05 at 12:16PM in Indices
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Thursday - May 05, 2005

NDX Intraday

On the 30 minute chart, the current swing is up as the index closes in on a resistance zone around 1460. Broken support, the 7-Mar trendline (blue) and the upper channel trendline (magenta) confirm this resistance zone. Some consolidation or a pullback may occur should the index extend its gains above 1460. As far as the up swing, I will be watching the lower channel trendline for signs of trouble (1430) and Tuesday’s low (1421) to turn bearish.

By Arthur B. Hill - Thu 05-May-05 at 12:14PM in Indices
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SPX and NDX Breadth

SPX breadth is stronger than Nasdaq 100 breadth. On Wednesday, the 10-day SMA for AD Volume Net% finished at +12% for SPX and +10% for the Nasdaq 100. Participation over the last 10 days is broader in the S&P 500 than the Nasdaq 100. The indicator broke the red trendline extending down from November and moved above its April high.

For the Nasdaq 100, the 10-day SMA for AD Volume Net% reached a prior resistance area around +10% (red line). The indicator reversed in early February, early March and early April. Here we are in early May. I consider the indicator bullish as long as it holds in positive territory. A move below zero would be negative.

Note: AD Volume Net% = ((Volume Advancing Issues – Volume of Declining Issues) / Volume of Total Issues).

By Arthur B. Hill - Thu 05-May-05 at 12:12PM in Breadth
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Wednesday - May 04, 2005

SPX Intraday

On the 30 minute chart, SPX pierced resistance at 1165, but failed to hold above and consolidated over the last two days. The index is still bound by the trading range (1167-1135) and I am watching the swings within this range for directional clues. Notice that the current upswing started with a failed support break and a falling wedge breakout above 1153 (29-Apr). The current pattern is just the opposite. The index failed to hold above resistance and formed a rising wedge. As such, a move below the lower trendline and prior low (1155) would turn the swing bearish.

By Arthur B. Hill - Wed 04-May-05 at 09:30AM in Indices
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Mystery Bulls

It is really hard to find anyone who is bullish on bonds. However, the iShares ~20-year T-Bond Fund (TLT) keeps on rising and these “closet” bulls keep on buying. TLT bottomed in late March and advanced the entire month of April. This advance coincides with declining long-term interest rates and flies in the face of recent Fed action to raise rates.

Two things are certain. First, the majority of pundits are bearish and this makes the bullish case for bonds a contrarian dream. Second, the Fed follows the bond market and continued strength in bonds indicates that Fed tightening is likely to end soon. As long as TLT holds the lower channel trendline and 21-Apr reaction low, the bulls are in firm control.

By Arthur B. Hill - Wed 04-May-05 at 09:29AM in Bonds
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Tuesday - May 03, 2005

Notable Charts

Todays list of notable charts includes: SW Airlines (LUV), Marvel Tech (MVL), Progress Energy (PGN) and Alltel (AT).

By Arthur B. Hill - Tue 03-May-05 at 08:11AM in
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Monday - May 02, 2005

Finance Leads the Way

The Finance and Utilities sectors are showing strength along with bonds. In fact, the Utility SPDR (XLU) closed at a 3 1/2 year high and remains the strongest sector in the market. The Finance SPDR (XLF) had its moments of weakness on Friday, but closed strong and remains in a short-term uptrend. Even thought the pattern could evolve into a rising flag, this should not be a concern as long as the flag rises and Friday’s low holds. Strength in the Finance sector bodes well for the broader market and also hints at lower interest rates, despite what the Fed says.

By Arthur B. Hill - Mon 02-May-05 at 08:42AM in Industries
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The Semi Key

For techs, the key lies with the Semiconductor HOLDRS (SMH) and the trading range remains in place. The stock pierced the lower end with a move below 30.30, but recovered with the rest of the market and formed a hammer doji combo on the day. This fits with the indecision of the trading range. The 19-Apr gap is still holding and a move above 31.6 would be bullish. At this point, a move below the mid April low (29.9) would fill the gap and signal a continuation lower.

By Arthur B. Hill - Mon 02-May-05 at 02:41AM in Industries
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