Shares fell sharply in September with the S&P 500 SPDR (SPY) breaking beneath its August low. Chartists can now use this low as a benchmark low to gauge relative efficiency. Shares that held above the August low are displaying relative power. That is worthwhile data as a result of shares that maintain up higher throughout declines have a greater probability of transferring increased. Let’s take a look at an instance.
Discovering the Leaders after a Sharp Decline The primary chart exhibits SPY breaking beneath its August low with the decline to round 430. The ETF can also be nicely beneath its 50-day SMA (inexperienced dashed line). Preserve these traits in thoughts when analyzing the following chart.
The following chart exhibits Paccar (PCAR) hitting a brand new excessive in July and transferring sideways the previous couple of months. As a substitute of falling in September, PCAR edged increased and didn’t break the July-August lows. PCAR additionally closed above its 50-day SMA on Monday. Clearly, PCAR is holding up higher than SPY and displaying relative power. Â We used these methods to establish 5 Nasdaq 100 shares holding up nicely in September.
So far as chart patterns are involved, PCAR hit a brand new excessive in July after which consolidated into August. I view this consolidation as a relaxation inside the uptrend. Put one other approach, this can be a bullish continuation sample. A breakout is within the making and I anticipate PCAR to proceed increased.
Tuesday’s Chart Dealer Report and Video featured PCAR and 5 different shares. These shares have related traits: long-term uptrends, bullish consolidations and relative power. Click on right here to be taught extra and achieve fast entry.
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Arthur Hill, CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic strategy of figuring out development, discovering alerts inside the development, and setting key worth ranges has made him an esteemed market technician. Arthur has written articles for quite a few monetary publications together with Barrons and Shares & Commodities Journal. Along with his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Enterprise Faculty at Metropolis College in London.
