StockTwits All Stars Charts To Watch for 2013
- January 7th, 2013
Some of the best technicians on StockTwits have offered up charts they will be watching most closely in the year ahead. Take a look…
$JPM is a bellweather money center bank that has bumped up against this 45 area 11 times over the last 6 years. If it finally manages to break out through this level, hold and run higher it will have bullish implications for the financial sector and for the broader market as well.
The MSCI EAFE Index measures the performance of developed markets outside of US and Canada ($EFA). On the other side, we are looking at the S&P Latin American 40 ($ILF). We’re seeing a 4-5 year bottoming process that is typical of what is necessary to turn such a strong trend around. Momentum turned up a long time ago (RSI). Also notice the 40-week moving average now turning higher in favor of EAFE over Latin America. Here is a 10+ year weekly chart looking at what I consider to be a huge base and potential bottom:
The $USDJPY has completed a massive 28-month head and shoulders bottom. This bottom projects prices, likely in 2013, to 100.24.
It’s a good time to step back for perspective with a very long-term chart of the Dow Jones Industrial Average going back 70 years. The chart shows the blue-chip index has been battling resistance at the top of its long-term rising channel in recent years after the subprime meltdown. Zooming in a bit closer, the action of late reflects the Dow completing a rising wedge pattern. About two-thirds of the time, this technical formation resolves itself to the downside, so some caution is warranted here. In any case, once this pattern resolves itself, I doubt the markets will remain boring. The manner and direction in which this rising wedge ends should have important implications for portfolio positioning in 2013.
The Russell ($RUT) has quietly taken the lead from the $AAPL beleaguered Nasdaq and is currently leading the market. Patterns on indices often don’t work as cleanly as they do on stocks but we like this ascending triangle on the Russell 2000 weekly chart. The break-out through the top horizontal line represents an all-time high. Bottom line: as long as the lower trend-line holds (currently at 775) we are in a bullish formation in the current leading index of the market.
The 1,000 level on the S&P 400 Mid Cap Index is critical. Going back to 2011, this area has been resistance. That its beginning to breakout above this area could be a very good sign for the overall market. Keep watch.
I approach the markets from a comparative cycle perspective. The following chart is of the US dollar index – contrasted with the last time the dollar made a secular low in the mid 1990′s. I find it interesting and compelling that despite the historic monetary influences, both here and abroad – the US dollar index continues to closely follow the arc of its last secular low. A surging US dollar would have broad implications to the commodity, currency and equity markets next year.
Markets often repeat different periods in history because traders essentially do not change the way they trade. Today, trading robots have algorithms that ensure they do the same thing. :)
Reports of the retail investor’s death have been greatly exaggerated. They’re not dead, but instead have just been driven into a zombie-like stupor from the carnage of 2008 and the Bernie Madoff’s of this world, and they are getting ready to “wake up” and get back in the game. Charles Schwab ($SCHW) has been making higher lows since late 2011 has broken out from descending resistance.
Whole Foods ($WFM) has been in a tremendous uptrend since early 2009, seeing more than a tenfold gain off its lows to the highs in 2012 and now the stock is looking vulnerable. Looking at the longer term chart, the stock is not a stranger to a large sell off, suffering a 90% drop off its 2006 highs to the 2008 low. The inset chart shows that while $WFM was up on the year, the stock appears to be under distribution over the last three months. With the 50 day moving average (green) declining and the 200 DMA (black) now turning sideways, it looks as though WFM could be at the beginning of a decline which could see the stock completely erase the gains of 2012.
I have a short bias on the stock and only getting the price back above 95.50 would change my mind that the stock remains risky to own. I am not questioning the fundamentals of the company, as far as I know the business of selling overpriced groceries is still strong. What does come into question is the chart pattern.
Much talk these days about the end of the great bull market in US Treasuries. Simply, you will know the bull has ened when the 10 Year Yield breaks the upper channel in this unprecedented 27 year trend.
Zooming the lens in a bit on a bond chart, the $TLT is sporting a potential head and shoulders top on the weekly. A break down below the neckline at 117 would be bearish bonds and bullish yields.
I think the worst is over for the Coal names and this may finally be the turnaround for $WLT.
The JCJ Index is the CBOE’s S&P500 Implied Correlation Index, using options data to determine correlation; both a measure of risk and a measure of risk appetite. When there is growing fear in the market, correlations head towards 1 (100%), and when this happens, diversification benefits erode as there is nowhere to hide from fire sales. This is why correlation is a great sentiment tool for gauging risk appetite. Just as you would a stock or index, look for up trends (anxiety), down trends (positive sentiment), and ranges (the wait and see).
David uses 2000 as an analog for what we might see from the financials ($XLF) in 2013. Click through on the chart for extensive notes. A good one to follow over the course of the year to see if and how this correlation might unfold.
The Median Line of the Bullish Andrew’s Pitchfork has been driving this up to the the 23.6% Fibonacci retracement level of from the 2000 crash. Above that there is a lot of room higher to resistance (83ish) and the next Fibonacci level (101)
18. @Fibline: The Homebuilders Have Not Finished Their Run
Often, investors sell too soon. If you are holding $XHB, don’t be so quick to take full profits. The trend is strong and outlook for the year ahead is solid. Plenty of support below, nice volume “footprint” and a hig probability that Price will reach Upper Median Line Parallel.
In the first week of 2013, $XLF broke out above 16.61 after climbing from the October 2011 low of 10.68. This 16.61 level has held so far and it is the critical level to watch. The measured move off the most recent rally (6/4/12 to 10/15/12) would be $3.19 putting the financial sector ETF near 20 dollars.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
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