Monthly Archives: July 2014

Patterns (con’t) – Wal-Mart, Google, Exxon Mobil

Continuing our look at particular charts and patterns in the context of today’s sell-off.

Goggle (GOOGL) broke through an uptrend line drawn off the lows since May, and returned to its 50 day moving average, just above the 62%retracement level of this year’s range.

56. GOOGL chart

In March, shares of Exxon Mobil (XOM) took out the neckline of a cup and handle formation, and over the next several months moved up to the target projection price of the pattern. The stock price fell over 4% today, taking the stock below its 50 day moving average and the 2013 high.

56. XOM chart

The action in Wal-Mart (WMT) took it below a long term trend line on the weekly chart, and may be confirming the bearish divergence we have been following in the MacD and the decline in money flow.

56. WMTchart

Broad Based Damage and Individual Charts

The damage today was broad based and volume strong. I’ll be looking at the index charts on multiple time frames in detail tomorrow and over the weekend. In the meantime, here are some particular stocks trading in clearly defined technical patterns and how they are reacting.

Action in Microsoft (MSFT) formed a bearish eveningstar pattern on its daily chart. I wrote about another technical issue with this stock last week.

56. MSFT chart

Shares of Berkshire Hathaway (BRK/B) dropped to the lower end of a three month horizontal consolidation channel.

56. BRK chart

A bearish head and shoulders pattern formed on the Netflix (NFLX) daily charts and the stock price broke below its 50 day moving average.

56. NFLX chart

To be continued…

DOW Triangle and S&P Channel Breakdowns

The S&P 500 index broke above the neckline of an inverse head and shoulders pattern in May, and then advanced higher, to the area of the pattern target price projection. It reached that goal in June and has since moved in a narrow range horizontal channel consolidation. It broke through channel support today and its 50 day moving average. The MacD and RSI have been in bearish divergence for the last few weeks, and Chaikin money flow crossed below its 21 period signal line at the beginning of the month.

56. S&P chart

The DJIA took out the support line of the rising triangle it had been trading in earlier in the week and today has dropped below its 50 day moving average.

56. DOW Tri chart

I’ve been monitoring these patterns and the broader market indices in the “Market Overview” section of the site, and I will update them on multiple timeframes over the weekend.

Check on Europe iShares

Several of the Europe iShares were positioned to test important support levels. At this point in today’s session the Germany and France funds have broken through those levels and their 200 day moving averages. The Spain and Italy funds are holding key support.


Does Trading Affirm Who You Are or Compensate For Who You Aren’t?

I posted this link yesterday and think it is important enough to re-post just in case you missed it. It speaks to what motivates us to trade and whether it is affirming a positive or negative aspect of our character.

“Trading doesn’t build character, it reveals character”, is a play on the famous Marv Levy quote about football.


I’ve read a lot of articles on the psychology of trading, but this short piece by Brett Steenbarger on TraderFeed really gets to the heart of what motivates traders and what it reveals about their character.

Weekly Index Chart Check and $UUP, $EUO, $TLT, $TBT

The trend on the weekly index charts is higher. They continue to hold above their 10 week (50 day) moving averages, the Russell just barely, and the 10 week averages are above the 40 week (200 day) averages. There are some caution signs on this timeframe, however, like the DOW testing the lower end of the rising triangle pattern it has been trading in for several months, the small doji star on the S&P 500 chart, and the more serious gravestone doji on the Russell at key moving average support.

55. Index weekly chartchart

There are more issues on the daily charts as well, in particular the NASDQ chart. The price action this month is a smaller iteration of the pattern seen on the Russell since the beginning of the year. A horizontal channel defined by two highs and two lows, and a recent trend line break. Similarly, just as a gravestone doji formed on the Russell weekly chart, a doji formed on the NASDAQ daily chart. These charts need some immediate damage control next week to avert further technical deteriorations.

55. RUT daily chart

Treasury yields continue lower with the ten year closing on its low of the week, and likely to test the 38% retracement level of its 2012 low and 2013 high. The TLT broke out of out of a small channel consolidation, and the TBT is back down to its 2012 and 2013 lows.

55. 10 year bond weekly chart

55. TLT TBT chart

I had previously written about the bottom that was forming in the PowerShares US Dollar Index Bullish Fund (UUP), below clearly defined resistance. This week there was a break above that resistance and the 50 day moving average. There was also a break above an important resistance line in the ProShares UltraShort Euro (EUO) fund which, of course, reflected the continuing weakness in the Euro currency.

55. UUP EUO chart

The Volatility Index was up 7% on Friday and the 5% on the week, adding to the sense of bearishness that several of these index charts project.

Reader Chart Request: Chemed – 41% Rally/41% Short Interest

Richard asked if I’d take a look at the Chemed (CHE) chart.

Here’s an interesting company with an interesting technical profile. Chemed (CHE) operates in two segments, hospice services and drain cleaning. They provide palliative care through a network of physicians, nurses, and health care aides, and they own the Roto-Rooter company.
The stock price is up over 41% in the last 52 weeks and, coincidentally, it has a 41% short interest. On Thursday the company reported earnings that the street seemed to like, and it broke $100.00 for the first time. There was attempt to make new highs on Friday against the tidal effect of the sinking broader market, but it failed and the close was about equal to Thursday’s close.

54. CHE RVT chart
There are two speculative long trading options: after a pullback to recent resistance-turned-support levels and the formation of a reversal candle, or buying a break to new highs. Both are speculative and require close protective stops, but either could initiate a covering rally.