THE HALLOWEEN INDICATOR
by Chart School - October 29th, 2010 2:04 pm
THE HALLOWEEN INDICATOR
Courtesy of The Pragmatic Capitalist
The following is courtesy of Chart of the day. This is the beginning of a very strong seasonal period:
The stock market is now entering what has historically been the strongest half of the year. Today’s chart illustrates that investing in the S&P
500 from the last trading day in October (therefore referred to as the Halloween indicator) through the end of April accounted for the vast majority of S&P 500 gains since 1950. While there are some noteworthy periods during which the Halloween indicator didn’t produce (e.g. during the oil embargo of 1973-74, the dot-com bust of 2000-01, and the financial meltdown of 2007-2009), the overall out performance is compelling.Notes:
- Where’s the Dow headed? The answer may surprise you. Find out right now with the exclusive & Barron’s recommended charts of Chart of the Day Plus.

Gold Mania
by Chart School - October 22nd, 2010 3:08 pm
Gold Mania
Courtesy of Allan
Allan’s “Trend Following Trading Model,” is based on his trend-following trading system for buying and selling stocks and ETFs. Most trades last for weeks to months. Allan’s offering PSW readers a special 25% discount. Click here. For more details, read this introductory article.
Something wicked this way comes
by Chart School - October 15th, 2010 11:25 am
Something wicked this way comes
Courtesy of Allan
Another omen that something wicked this way comes.
Allan’s “Trend Following Trading Model,” is based on his trend-following trading system for buying and selling stocks and ETFs. Most trades last for weeks to months. Allan’s offering PSW readers a special 25% discount. Click here. For more details, read this introductory article.
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If signing up for Randy’s free webinar on options strategies (from Schwab), they require responses of $250K or more assets to invest and 36 or more trades per year.
The Good, The Bad & The Ugly….U.S. Dollar
by Chart School - October 14th, 2010 8:27 pm
The Good, The Bad & The Ugly….U.S. Dollar
Courtesy of Chris Kimble
I have received numerous emails recently, asking questions along this line….We have done very well of late, what could change the recent upward price action/trend? (Good, Bad & the Ugly soundtrack)
A good friend often reminds me a “blizzard starts with a single snowflake that fits on the end of your finger!” Right now positive snowflakes are all over the place…trends are moving higher and breakouts are taking place in key stock index’s!
The key to whether the quality upside move of late will continue, will most likely be determined by what the U.S. Dollar does at line (1).
Will the rising support line hold or not? This support line DOES NOT justify selling International positions (EEM, EWZ, TUR, GXG, THD) or Commodity positions (SLV, GDX, GDXJ, SLV,OIH), yet it should raise awareness that stops should be in place to protect quality gains in every holding you have!!!
Danger Zone? Nasdaq 100
by Chart School - October 14th, 2010 7:43 pm
Danger Zone? Nasdaq 100
Are we entering a “Danger Zone” right now?
The phrase “Highway to the Danger Zone“ (theme song here) became popular due to the movie “Top Gun,” starring Tom Cruise.
I share information with several types of investors…long-term (retirement/401k plans) that don’t move monies often, (which “harvested” at the April highs). Medium term investors, that feel comfortable moving monies once a month/6 weeks and shorter-term investors that are open to adjustments frequently, yet are NOT day traders. I am not interested in day trading!!!
This post would be for the shorter-term audience, that are aggressive and open to “attempting to score on defense!”
The NDX 100 is at the top of its trading range and the VXN has created a falling wedge. During this trading channel, when the NDX is at the top of the range, wedges have formed, followed by lower prices in the NDX.
For any medium-term investors that are long the NDX, stay long and keep the 3% stop in play! For those aggressive short-term investors that are comfortable attempting to score on defense, take the inverse position here (Buy PSQ). Momentum and trends remain a positive so far. This is totally a “Power of the Pattern” play for short-term investors.
If this pattern really forces the NDX lower and changes it momentum, I will follow-up with more suggestions per scoring on defense.
The Trends Are Extended, Start Thinking Consolidation and Reversals, But Wait For It
by Chart School - October 14th, 2010 2:02 pm
The Trends Are Extended, Start Thinking Consolidation and Reversals, But Wait For It
Courtesy of JESSE’S CAFÉ AMÉRICAIN
The trends are extended on quite a few charts. The action in the US markets is being artificially inflated and supported by monetization and liquidity so it *could* continue on for some time, even until the November election. It is being fueled by the expectation of a large quantitative easing by the Fed shortly thereafter. That QE, when it arrives, is likely to be sold if it is not significant enough to meet expectations.
I am more cautious on short term positions here, and have had some short hedges on in the overnight, but deftly. It is important not to exhaust yourself expecting a trend change before it is ready to happen, and one cannot anticipate exogenous events by definition. Still, the time is ripe for one to have a significant effect should it occur.
The long term trends are all intact, but we have reached a position where we might be looking for intermediate tops and consolidations. The Fed is not infallible or omnipotent, but rather determined and capable within its limits. The combination of government and the monied interests is powerful and ruthless. Manage your money tightly and wait for the market to reveal its intentions if you are trading.
Divergences
by Chart School - October 6th, 2010 7:01 pm
Divergences
Courtesy of Allan
We are still trend followers, but it doesn’t hurt to look at what could be coming down the road and cause our models to reverse. We have been waiting a long time for a tradable SELL Signal and have endured a few false alarms, but this is one more sign that a change in direction is lurking in the shadows.
Bullish….Bearish… or Neither
by ilene - September 24th, 2010 1:29 pm
Chris, on being neitherish, i.e., how he views the markets. – Ilene
Bullish….Bearish… or Neither
Courtesy of Chris Kimble
Am I Bullish, Bearish or Neither?
Choice “C”…Niether!
I am of the opinion, being Bullish or Bearish are emotional states of mind. They are NOT STRATEGIES. I believe that we should invest in each asset on its own individual merits/patterns, not based upon some global macro prediction.
Did I suggest to buy the 500 index (see post) and become “BULLISH” on 8/29 because the economy was fine? NO! Bought the 500 Index due to these conditions…Bottom of channel support and a falling wedge and by the way, the fewest investors bullish since the March 2009 low. NOTHING MORE!
Did I harvest the S&P 500 position and become “BEARISH” yesterday (see post) , after an 8% gain in three weeks, because something is bad about the economy? NO! Harvested due to Fibonacci resistance at the top of a trading range. NOTHING MORE!
Did I buy Silver a month ago (see post) because something is wrong with the dollar or that inflation is going to go wild or….NOPE! I bought Silver on an upside breakout from a favorable pattern, an ascending triangle . NOTHING MORE!
Why own Emerging Markets or Brazil right now? Falling channel breakouts! (See Post) NOTHING MORE!
Why own High Yield mutual funds? A breakout of a flag pattern and above moving averages (see post) . NOTHING MORE!
Why BUY HOME BUILDERS XHB (see post) when so many people are BEARISH on this industry? Because of rising channel support plus a sizeable falling wedge after a 30% decline. NOTHING MORE! (Current gain of over 12%!)
Will we buy the 500 index and other global markets (see post) on an upside break of these long-term falling channels? YES!!!
My goal is to try to provide solutions, that will help investors “inflate portfolios, regardless of market direction by way of the Power of the Pattern!” I will leave the Bullish or Bearish elements of this business to people much smarter than myself.
Chris
J&J Needs To Fix It’s Problems Fast
by Chart School - September 24th, 2010 10:47 am
J&J Needs To Fix It’s Problems Fast
Courtesy of YCharts
The announced departure of a top Johnson & Johnson executive last week, Colleen Goggins, who oversaw consumer products, could signal that J&J is moving to put its regulatory problems behind it. That would be welcome news for investors who admire J&J’s business but have been troubled by a recent series of lapses.
J&J has suffered product recalls affecting three of its businesses – over-the-counter medicines, including those sold for children; contact lenses; and hip replacement implants. J&J is accustomed to appearing in Fortune magazine as one of the most admired corporations (#4 this year), but finds itself in the September 6 issue of Fortune as the subject of an investigative story about deterioration of its quality-control operation.
That followed months of coverage of the product problems and recalls in the New York Times and other papers.
So far, despite the problems J&J shares have been moving with other pharmaceutical stocks.
And the worst of the immediate financial impact seems to be the loss of about $600 million in sales after J&J was forced to temporarily shut down an over-the-counter drug manufacturing plant at Fort Washington, Pa. That’s only 1% of J&J’s annual revenue of roughly $60 billion.
The recalled over-the-counter products include forms of Motrin, Tylenol, Benadryl, Rolaids and St. Joseph Aspirin, all brands that have commanded a premium price and helped provide to J&J’s consumer business a lush profit margin (operating profits of about 17% of sales vs. about 31% for the pharma and device lines). Here are margins overall for J&J:
The impact from the contact lens and hip implant recalls is less clear; in coming years J&J could end up paying for thousands of patients to have new implants installed. But the bigger threat is that J&J ceases to receive the benefit of the doubt from consumers; why buy St. Joseph Aspirin or Tylenol instead of generic brands if the J&J reputation is tarnished? And, just as importantly, will it lose the trust of regulators?
The Food and Drug Administration not only regulates the Fort Washington plant, but also oversees J&J’s efforts to license new drugs and sell medical devices. It’s not a good idea to embarrass an agency that holds that much sway over your business.
Major Indexes Up Against the Wall
by ilene - September 18th, 2010 7:27 pm
Major Indexes Up Against the Wall: (SPY, DIA,IWM)
Courtesy of John Nyaradi at Wall Street Sector Selector
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Still locked in their long standing trading range, major indexes are now again (still) up against significant resistance levels, and of course, this situation will be resolved in one direction or other, as it always is.
This week’s technical developments favored the bearish side while the fundamental news was decidedly mixed with the macro picture and earnings blinking both positive and negative signs.
We have lots of news coming this week and so quite likely could see a resolution of this stalemate in the very near future.
Looking at My Screens
As always, the charts tell the story:
Chart courtesy of www.stockcharts.com
In the S&P 500 chart above, we can see the similarities among what has become a triple top formation with the first one in June, the second in August and now the third in September.
The first two were followed by significant declines to 1010 in June and 1040 in July. The index will find significant support at the 200 Day Moving Average at 1116 and the 50 Day Moving Average at 1093 and breaks below these points would likely yield a drop to significant support at 1040 and then 1010.…