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Energy names have been heating up recently and over the last one month period they are the second best S&P sector performer with the XLE higher by 1.9% (trailing only technology with the XLK advancing 2.6%). Over the last 6 months the XLE is the top performer with a 21.1% jump. Monday it attracted plenty of headlines with crude's 3% drop. Technicians like myself care only about price action and one would be wise to closely monitor the way some top names are behaving. PXD is well above a 169.56 double bottom trigger taken out on 8/8. Below we look at how we profiled lesser know best of breed play CPE. In our Tuesday 4/26 Game Plan we looked at CPE. Stocks that can be bought at the round numbers are CPE. CPE is an energy play higher by 24% YTD and 17% over the last one year period. Earnings have been mixed but the gains have far outpaced the losses with advances of 7.2 and 18.1% on 3/4 and 8/6. It fell 2.4 and 4.6% on 11/5 and 5/7 (the 5/7/15 was followed by the next session GAINING 6.2%). It REPORTS on 5/4 after the close.CPE recorded a huge breakout above 9.68 cup with handle trigger on 4/20 on the biggest daily volume in more than a year up 12.1% and CLOSED that day ay 10. Last Friday was the only finish above the 10 figure besides the 10.01 CLOSE on 11/24/15 since September '14. Enter here just above round figure.
Many times it has been said if you turn a chart upside down you can get a good perspective. Perhaps no better is this seen with the bullish inverse head and shoulders pattern. It is the direct opposite of the bearish head and shoulders pattern, yet the measured moves are calculated in the same fashion. Take the depth of the head and add that number to the breakout above the neckline for your projected move. Below are three recent examples, two of which have not been taken out and one which CLOSED just pennies through its neckline. In our Thursday 8/18 Game Plan we looked at ALK. Stocks that can be bought as they take out bullish inverse head and shoulders patterns are ALK. ALK is a best in breed airline play down 16% YTD and 15% over the last one year period and sports a dividend yield of 1.7%. Earnings have been decent with gains of 1.9, 8.1 and 1.7% on 7/21, 1/21 and 10/22 and a loss of 2.7% on 4/21. The stock is higher 4 of the last 7 weeks and all seven have CLOSED within or at highs for the weekly range. Enter with a buy stop above inverse head and shoulders pattern at 68.15 which carries a measured move to 82.
Markets once again traded in a narrow fashion and the month of August is now 2/3rds over. The Nasdaq and S&P 500 rose by a similar .2% and heading into Friday the Nasdaq is marginally higher by .2% looking at a possible 8th consecutive weekly advance. It is attempting to have a third straight week with very tight CLOSES and at all time highs this must be construed as bullish. Even tauter would be the performance from the S&P 500 which if the week ended today would have finished the last 3 weeks all within just 5 handles. Energy continues to impress as the XLE looks like it wants to CLOSE above the round 70 figure for the first time in over one year. One of the better looking energy charts out there is MUR and below is the chart precisely how we profiled it in our Tuesday Game Plan this week. Thursday it burst above its 50 day SMA and the round 30 number and the next stop to be aware of is the double bottom trigger of 33.45. Was surprised to see the strength in the ETF given the action in its top component XOM which is looking to spend its fourth week CLOSING below its 50 day SMA. It has been above that line since almost the beginning of the year. The XLE was easily the best actor Thursday higher by 1.9% with the second best performer the XLU up 1.2%. The XLU is looking to CLOSE above the very round 50 number for the twelfth consecutive week.
What Readers Say
Amazing work in this piece. Truly inspirational! You gotta keep this up. Good luck next week.
On Monday I played 3 of your alerts: JACK = $110, AVD = $600, and SPW = $700. Today I played 2 more of your alerts: ALL = $300 and WYN = $280. THANK YOU!
I know Doug from the Carlin days in 1999. He’s the hardest working technical trader out there and shows no bias in his analysis. A must read in any market.
Some great setups in @chartsmarter’s service tonight. Do yourself a favor and take it for a test drive. You will be glad you did.