Monthly Archives: April 2017

New Relic — The Data Analytics Company Is Ready to Make New Highs

Shares of the data analytics software company, New Relic (NEWR) bucked the broader market trend closing up over 5% in Wednesday’s session. Technical resistance was broken and the stock looks prepared to make new all-time highs.

The weekly chart reflects the wide weekly and intermediate term price swings in the price since it first became publicly traded in late 2015. Those swings have formed a large cup-and-handle pattern on this timeframe with resistance in the $40.00 area. The handle portion of the pattern was completed this year and the highs are once again been tested. Accumulation/distribution is tracking higher over its 21 period signal average and the relative strength index has moved above its centerline, a positive combination of price and money for momentum.
On the daily time frame, several fractal versions of the weekly cup-and-handle pattern have formed with shared rim resistance in the $37.50 area. That mutual resistance level was broken Wednesday with a surge in upside volume more than 300% greater than the 50 day moving average of volume. Chaikin money flow is in positive territory and moving average convergence/divergence is making a bullish crossover above its center line. The most recent of the smaller fractal cup and handle patterns projects up through the $40.00 level, but the intermediate and the weekly patterns project substantially higher.
The stock offers a good risk/reward ratio at its current level using an initial percentage stop under the $37.50 rim line resistance-turned-support level.

(This article was published on this morning.)

Yesterday it was all about breaking resistance -today it is all about holding support

The strong opening in yesterday’s session took the board market averages up through their March down trend lines, and we noted the importance of holding above those levels into the close. That was not to be the case, and they began to reverse sharply after the Federal Reserve minutes were released around 2:00 PM, closing below their opening levels and forming bearish candles on their individual charts.

The emphasis is now shifting from resistance levels to support levels. On the NASDAQ, Dow Jones Industrial Average, and S&P 500 charts that support is currently being supplied by their 50 day moving averages, and on the Russell 2000 chart it is a horizontal level of well tested support in the 1350 area.
There will be resolution to the consolidation that has been going over the last month, and while it is hard to say in what direction the border market is eventually headed, when it does make its move, it will probably be swift.

Yahoo! Sharp Pullback Potential: Technical Divergences Setting Up Short-Side Trade

There are several bearish technical divergences on the Yahoo (YHOO) daily chart that suggest the stock may be preparing for a potentially sharp pullback. An uptrend line is being retested and a break below that support would be a good risk/reward short entry point.

The chart shows the stock price rising sharply in January and February this year but appearing to lose some momentum in March and forming a rounded top. A series of high wick candles have formed and the uptrend drawn off recent lows is being retested. Daily moving average convergence/divergence is overlaid on a weekly histogram of the oscillator, and has been moving lower on both timeframes in divergence to the stock price. The relative strength indicator has also been moving lower as shares have been moving higher, and transitioned below its 21 period moving average. A series of high wick candles formed over the last four trading sessions reflecting an inability of the stock to hold higher price levels. Over that same period Chaikin money flow dropped below its signal average and is moving into negative territory. The Bollinger bandwidth graph at the bottom of the chart measures standard deviation around the 20 period moving average, and the low reading reflects decreasing volatility. Periods of low volatility are often resolved by periods of increasing volatility. A combination of waning momentum and buying interest, plus the potential for volatile price action suggests a break of trend line support.
Yahoo is a speculative short candidate after penetration of the $46.00 level, using a position size that accommodates a stop above the $47.00 highs. The nearby 50 day moving average could supply some temporary support but after that there is little in the way of further technical support until the January upside gap area.

(This article was published on this morning.)

For the Indices – It’s All About the Close Today

Today’s the day those down trend resistance lines on the major market index charts are broken, at least that’s the way it looks at the open. The ability to hold above those levels on a closing basis will be key to reversing the recent pullbacks, and re-establishing the primary uptrends. After a strong start today, it would be a very negative sign for the markets to fade and close below those trend lines. Resistance must now become support.