Point & Figure Analytics July 30, 2019 – PHLX Oil Service Index chart

The end of last week saw a decent buy to sell ratio (2 to 1) with respect to P&F signals. Yesterday, Monday, was fairly quiet, with sells slightly more than the buys, though importantly indexes retained much of the ground claimed on Friday. A consolidation remains at the highs, with potential to soon extend higher given then non-overbought condition, as noted yesterday. Semiconductors remain in vogue here and we highlight charts with potential lower down the report. Energy stocks on the other hand remain underperformers and are prime short candidates. PHLX Oil Service Index chart analyzed, as well as FTSE 100 chart analysis.

 


Indexes

The Dow Industrials remains in a consolidation following the breakout during the first half of this month. Holding at highs is bullish and suggests a fresh up leg is on its way. The breakout this month revealed bulls are in the driving seat, given that resistance had rejected a number of rallies over the prior 18 months.

 

 

The S&P 500 saw minor weakness on Monday, -0.2%. This index is also pausing for breath, at its record high, following the breakout earlier this month. Attractive P&F activity precedes present trading: a Low Pole, Triple Top and then a Double Top. Here too, an extension higher is anticipated.

 

 

Despite talk of grey clouds over the U.K., FTSE 100 chart analysis shows good performance, +1.8% on Monday. A fresh box was filled to the upside, extending this month’s bullish breakout. The chart also shows preceding constructive action, a Low Pole followed by a Double Top. Trading over the past 2.5 years appears as a consolidation across from the previous record high (2015), readying itself for an extension up through psychological 8000.

 

FTSE 100 chart analysis.


Market Breadth

Medium-term breadth, the NYSE Bullish %, remains in a holding pattern beneath neutral 50%. The lack of a deterioration from here provides encouragement to the market rally. A box fill at 52% would activate the second Double Top since the Low Pole in January, and in doing so boost upside confidence considerably.

 


Sectors

Oil services remains an area to avoid on the long side. The PHLX Oil Service Index chart sank 4% yesterday, triggering the second Double Bottom in-a-row following the June counter-trend move. The long-term downtrend is clearly reasserting and should soon hit new 15 year lows.

The P&F relative ratio, against the S&P 500, trades at a 20 year low. To achieve any hope it will need to recover back above the 1998 low. No evidence of that anytime soon.

 

PHLX Oil Service Index chart analysis.

PHLX Oil Service Index chart relative ratio


Stocks

SOXX [PRICE DOUBLE TOP | INDEX RELATIVE DOUBLE TOP] | Target = $235, Stop = $194

The iShares Semiconductor ETF managed outperformance on Monday, +0.27%. The P&F target implies more upside ahead. Price and relative charts are both on buy signals. Although already up 38.5% for 2019, the chart is not too overstretched, given the back and forth swings. The fund’s constituents are listed in the factsheet here.

The P&F relative ratio, versus the S&P 500, is one box away from a fresh upside breakout. The deep pull-back in May allowed the chart to cool off; prepping conditions for a resumption higher.

 

 

BRKS [PRICE DOUBLE TOP | INDEX RELATIVE DOUBLE TOP] | Target = $51, Stop = $36

Small Cap semi Brooks Automation is one box away ($43 needed) for its fourth bullish breakout signal in-a-row. The price is free of the 2017/2018 consolidation, reasserting its long-term uptrend. Price and relative buy signals are in effect. Results to be released on August 1st.

The relative ratio, against the S&P 500, has pulled out from a multi-year bottom, and that forecasts further outperformance.

 

 

CCMP [PRICE DOUBLE TOP | INDEX RELATIVE LOW POLE] | Target = $134, Stop = $106

Cabot Microelectronics chart, a small-cap semiconductor heading for new all-time highs. Three Double Tops in-a-row, with trading pulling up from the 30-week moving average. The May correction was a beneficial shake-out. Earnings to be published on August 7th.

The CCMP chart relative ratio, versus the NYSE Composite, maintains a long-term uptrend. This chart too should soon register new record highs.

 

Cabot Microelectronics chart analysis.

CCMP chart relative ratio.

 

NVMI [PRICE DOUBLE TOP | INDEX RELATIVE DOUBLE TOP] | Target = $36, Stop = $24

Another semi resuming its long-term uptrend is the Nova Measuring Instruments chart. The price chart has held a buy signal since April, with a follow-up Double Top just two boxes away. Attractive primary uptrend. Results also due on August 7th.

The NVMI chart relative ratio, against the NYSE Composite, appears ready to resume its long-term trend following a two year pause-for-breath.

 

Nova Measuring Instruments chart analysis.

NVMI chart analysis.

 

HP [PRICE QUINTUPLE BOTTOM INDEX RELATIVE TRIPLE BOTTOM] | Target = $43, Stop = $54

The Bull Trap we anticipated for Helmerich & Payne in the July 16th report is now confirmed. Lower by 6.2% over the past five sessions, with a Quintuple Bottom sell signal last week, the price should soon hit new 52-week lows. Sliding despite an earnings beat is never a good sign.

The relative ratio, versus the S&P 500, is at a decade low, showing persistent weakness since April.

 

 

CXO [PRICE TRIPLE BOTTOM INDEX RELATIVE DOUBLE BOTTOM] | Target = $90, Stop = $106

Concho Resources chart printed a Triple Bottom sell signal last Friday, with follow-through weakness on Monday, -2.1%. A new 52-week low is just two boxes away. The June/July consolidation across $100 resulted in a non-oversold condition, so weakness should come easily.

The CXV chart relative ratio, against the S&P 500, reflects underperformance over the past 18 months. A new 2 year relative low is imminent. Earnings due on Wednesday.

 

Concho Resources chart analysis.

CXO chart analysis.

 

Note – Technical Analysis is a tool in the investor’s toolbox and nothing more. Do not rely solely on charts! Always conduct further research of your own. If you are not an investment professional, seek advice from your broker.