Recent Posts from Chart Trader and System Trader:

Premium

The Trading Methodology behind Falling Wedges and Subsequent Breakouts

Stocks moved sharply higher last week with several ETFs breaking out of corrective patterns. In particular, there are several falling wedge breakouts so I will detail this pattern using XLI as an example. I will show the prerequisites (uptrend), the Bullish Setup Zone, the pattern signal and the re-evaluation level. After this section, I will link to a PDF report that highlights these breakouts and sets the re-evaluation levels going forward.

Read More »
Free Chart Analysis

Mid-Caps Make a Statement with a Breadth Thrust

Mid-caps show leadership and were the first to trigger a breadth thrust. Stocks surged this week with mid-caps showing the highest participation rate. Chartists can quantify the participation rate and identify breadth thrusts using the percentage of stocks above their 20-day SMAs. We will analyze these indicators for six broad indexes and show the breadth thrust for the S&P MidCap 400

Read More »
Premium

Strength Emerging in the Middle, Finance, Industrials and Utilities Lead, Gold and Industrial Metals Move

After rising sharply from mid December to mid January, Treasury yields fell sharply on benign CPI numbers. The 10-yr Treasury Yield remains in a long-term uptrend with a breakout, but short-term yields are still trending lower and more reflective of Fed policy. The decline in yields sparked a buying binge on Wall Street with leadership coming from the middle of the market (mid-caps). Broad strength in mid-caps triggered a breadth thrust for this group. We are also seeing leadership in ETFs related to finance, industrials and utilities. Seven feature in today’s report. The Gold SPDR and DB Base Metals ETF are also going for breakouts, as is IBIT.

Read More »
Premium

Long-term Breadth has Yet to Break, Yield Spreads Show No Stress, Fed Easing, 10yr Yield Ignoring

The long-term breadth indicators deteriorated in December, but did not fall enough to trigger bearish signals. The absence of bearish signals means the weight of the evidence is bullish for stocks. This also means the current weakness is considered a correction within a bigger bull market. All bear market signals start with corrections, but not all corrections lead to bear market signals.

Read More »
Premium

A Breadth Divergence, SPY/QQQ Hold, Small-caps Fold, XLK Oversold, Industrials-Defense Set Up

The evidence still supports a bull market, but stocks are in the midst of a corrective phase. I am watching short-term breadth indicators for thrust signals that would signal an end to the correction. SPY and QQQ are holding up best, while IWM and KRE (banks) lead lower. Elsewhere, I see promising setups in Industrials and Defense ETFs, as well as a critical support test for the Semiconductor ETF (SMH).

Read More »
Free Chart Analysis

Market Pullbacks Provide Opportunities to Build your WatchList – Here’s How

The stock market is in pullback mode with the S&P 500 EW ETF down 5.15% over the past month and down 1% year-to-date. This makes it a good time to monitor relative performance and create a relative strength watch list. Stocks and ETFs holding up best during pullbacks often lead when the market regains its footing. Today’s report will show a starter list and analyze the chart for an AI Robotics ETF.

Read More »
Premium

SPY/QQQ Hold Up, MDY/IWM Draw Battle Lines, 6 Short-term Breakouts, 4 Pullback Setups, Breakouts in Semis

Report with video. The weight of the evidence remains bullish, but there are some sizable pockets of weakness within the market. SPY and QQQ are holding up, but RSP and IWM have yet to recover since their December declines. We draw the battle lines. The Industrials SPDR and Finance SPDR are in pullback mode and near Bullish Setup Zone. We also highlight several ETFs with short-term breakouts and bullish setups.

Read More »
Premium

Levels to Watch for Breadth Thrusts, Small-caps Fail at Breakout Attempt, Semiconductor ETFs Break Out

Today’s report will show the deterioration in long-term breadth and the key levels to watch for short-term breadth. We will then review the breakout in the 10-yr Yield and breakdown in the Home Construction ETF. Attention then turns to the key levels for SPY, QQQ and a number of important ETFs. We close with the breakouts in the semiconductor ETFs (SMH and SOXX).

Read More »
Free Chart Analysis

How to Trade Erratic Uptrends – An Example and Setup using IWM

The Russell 2000 ETF managed a double digit gain in 2024, but did it the hard way with several deep pullbacks along the way. Pullbacks within uptrends are opportunities and we can find such opportunities using %B. The chart below shows the Russell 2000 ETF (IWM) with the Zigzag(8) indicator. This indicator changes direction when there is a move greater than 8%, which means it ignores price moves that are less than 8%.

Read More »
Premium

Video – Breadth Stays Oversold, Large-caps and Techs Lead, Small and Mids Lag, Lots of Pullbacks within Bigger Uptrends

Today’s video starts with the long-term breadth indicators to establish the market regime. Short-term breadth became oversold and remains oversold after a weak bounce. We will set the level needed for a bullish thrust. Large-caps and techs are leading, while mid-caps and small-caps feel the heat from rising rates. A rough December produced pullbacks and many ETFs are trading in bullish setup zones. We cover these and identify short-term resistance going forward.

Read More »
Premium

A Rough December, Pullbacks within Uptrends, Marking Setup Zones and Resistance, Gold, Bitcoin and China

Today’s report starts with average stocks (equal-weight, mid-caps and small-caps). These groups fell rather sharply in December and gave back their November gains. They have fallen and cannot get back up. Many are trading near bullish setups zones, but remain short of breakouts needed to reverse the short-term pullbacks. We will set the key levels to watch for a dozen ETFs with setups. Attention then turns to gold, Bitcoin and China.

Read More »
Premium

Warning Signs vs Weight of the Evidence, Oversold Double Dip, Leading Tech, SMH Holds Triangle Breakout

Some warning signs appeared in December, but the weight of the evidence remains bullish. We will start with the long-term breadth indicators and then show the oversold conditions in the short-term breadth indicators. SPY and QQQ are still in long-term uptrends and testing their 50-day SMAs. Meanwhile, tech-related ETFs are leading as SMH holds its 200-day SMA.

Read More »
Free Chart Analysis

Is this Bounce a Robust Rebound or a Dead-Cat Bounce?

Breadth became oversold last week and stocks rebounded this week. Is this a robust rebound or a dead cat bounce? Today’s report will show a key short-term breadth indicator hitting its lowest level in 2024 and becoming oversold. A rebound is in place, but it is still to early to call this a robust rebound and we will show the critical level to watch.

Read More »
Premium

Weighing Breadth, Yield Spreads and Trends, Warning Signs, Corrections, Breadth for Short-term Signals

Today’s report will highlight the warning signs over the last few weeks and assess the evidence (bull or bear market). Corrections are normal, but what might a normal correction entail? We will review the long-term breadth indicators, yield spreads and the weekly charts for SPY and QQQ, including correction targets. This report ends with two short-term breadth indicators to watch for a bullish signal.

Read More »
Free Chart Analysis

Three Big Negatives Overshadow the Uptrends in SPY and QQQ

SPY and QQQ remain in long-term uptrends, but three big negatives are hanging over the stock market right now. Two negatives are tied to important cyclical groups and the third is reminiscent of summer 2022. This report will analyze the recent breakdown in housing, continued weakness in semiconductors and the big breakout in the 10-yr Treasury Yield.

Read More »
Premium

10-yr Yield Breads 40-wk, Similarities with Summer 2022, SPX Becomes Oversold, What to Watch Now

The 10-yr Treasury Yield surged before, and after, the Fed statement. While interest rates are not the only factor affecting stocks, they are the focus right now and we will cover the relationship. S&P 500 stocks are oversold after a 3-week decline and these conditions could lead to a bounce. We will show how to distinguish between a strong bounce and a dead-cat bounce.

Read More »
Premium

Video – Breadth, Yield Spreads, TLT, GLD, BTC, SPY, QQQ, MAGS, ITB, KBE, ITA, LIT, FXI and Follow Up for 14 Stocks

Today’s video starts with the deterioration in short-term breadth. Even so, long-term breadth remains net bullish and yield spreads narrow. We then address the surge in the 10-yr yields, weakness in small-caps and the break down in Home Construction ETF. There are setups in the Bank and Defense ETFs, while the Lithium and China ETFs fell back into their consolidations. We close with follow up on fourteen recently featured stocks.

Read More »
Premium

Stocks Pullback, Yields Surge, Housing Hit, QQQ Leads, A Setup in Defense, Two Bullish Cloud Stocks

Today’s report starts with an overview of short-term break (weak) and long-term breadth (still bullish). QQQ is leading with a new high, but small-caps breadth is holding up as IJR forms a bullish wedge. We then look at the housing failure, weakness in hard assets, a wedge in gold, a bullish setup in a defense ETF and two cloud stocks with bullish charts.

Read More »
Premium

Beginning in the Midst of a Bull Run and Dealing with Drawdowns

Not all pullbacks result in long-term trend changes and not all drawdowns lead to bear markets. The odds favor the bulls as long as the bull market signal is valid and drawdowns provide opportunities during bull markets. Today’s report will analyze the drawdowns in the Rotation Investor strategies. We will show the Maximum Drawdown, Median Drawdown and a drawdown range for putting money to work.

Read More »
Premium

Revisiting Overbought Filters for Rotation Strategies – Can we Improve Performance with a Tweak?

Momentum-Rotation strategies get their edge from upward momentum. More often than not, this means there will be entry signals for stocks that seem overbought. Not all overbought stocks continue higher and some correct hard after becoming overbought. Can we improve performance by avoiding stocks that are extremely overbought? Today’s report will discuss the recency bias, show some overbought examples and puts an overbought filter to the test.

Read More »
Premium

Video – Breadth, Yield Spreads, SPY, QQQ, IWM, XLV, XLP, CLOU, CIBR, SOXX, SMH, ITB, XHB, LIT, GLD, SLV and Eight Stocks

Today’s video starts with long-term breadth, yield spreads and the major index ETFs to define the broad market environment. We then focus on short-term weakness and the pullbacks in RSP, IWM and MDY. Some tech ETFs are very extended and a key group continues to lag. Housing ETFs are testing support, while gold and silver hold their breakouts. We finish with follow up for eight stocks.

Read More »
Premium

Breadth and RSP Signal Pullback, Two Housing ETFs Set Up, Extended Tech ETFs, Two Stock Setups

Today’s report starts with the Advance-Decline Percent indicators to measure participation over the last two weeks. We then turn to the S&P 500 EW ETF to define the current pullback, as well as two housing-related ETFs. Some tech stocks are looking extended and we offer detailed analysis of the Cybersecurity ETF (CIBR). We close with bullish setups in an animal healthcare stock and a business software stock.

Read More »
Scroll to Top