Point & Figure Analytics October 3, 2019

Wednesday saw huge one-way breadth when measured by P&F sell signals to buys. The ratio stood at 36 to 1, sells to buys, a staggering difference. Furthermore, NYSE volume on Wednesday came in at 85% to the downside. Those figures alone hint at another potential wash-out session.

Sectors were mostly red yesterday, the only up industry were the gold miners. The NYSE Gold Bugs Index clawed back 1.7% following its recent retreat. The Gold ETF Point and Figure chart is analyzed lower down the report.

The oil industry continues to sink, underperforming, and we highlight two sell candidates at the end of the report. Other stocks covered are medium-term outperformers to consider long side, despite near-term sell signals and the like.

The Volatility Index jumped 10.8% on Wednesday but closed off its session high (21.46). The 2019 range ceiling is just three boxes away – volatility may soon settle.

 

 


Indexes

The S&P 500 fell 1.8% on Wednesday, fulfilling a pull-back to moving average support, the index closed just to the underside of the 30-week moving average (2898). Recent weakness remains insufficient to cause any change to the P&F chart. A 3 box reversal down would occur at 2850, a level which is also potential support, having previously been resistance during 2018. A Double Bottom would print at 2800 but that would need to be followed by secondary confirmation to threaten the uptrend. Therefore, despite the size of the market drop yesterday, the chart suggests sticking with the bull.

 

 

The NASDAQ Composite has shifted over recent sessions but so far it has not been damaging. The pull-back has merely extended the sideways consolidation that started in July. A move to 7600 would be a little worrying, aside from printing a Double Bottom, it would raise the possibility that this year’s trading was a failed breakout above the 2018 peak, a P&F 3SR. However, for the time being, the general uptrend is best respected, viewing weakness as an entry window.

 

 


Market Breadth

The NYSE % 10-week moving average (constituents trading above the average)has already declined back to oversold. The indicator fell 15.48% points on Tuesday, then -10.95% yesterday. An uninterrupted drop such as this is unusual. We now watch for a base to build.

 

 

The NYSE Bullish % (constituents on P&F buy signals) maintains confidence over the medium-term. It has only shed 2.69% points over the past two sessions and a Triple Bottom sell signal remains a safe distance away (38% needed). This is the chart investors follow.

 

 


ETFs

The Sectors section is replaced by ETFs. Covering the whole ETF universe enables us to explore more areas of interest to readers. Sector ETFs will be covered but it really depends on what ETF areas are making noteworthy moves.

The iShares 20+ Years Treasury Bond ETF printed a 3 box reversal to the upside yesterday following Septembers retreat off the long-term high. That pull-back found support from the 10-week moving average. Uptrend likely now resuming, heading towards fresh highs.

The TLT P&F relative ratio is challenging its long-term downtrend against the equity market. It must also overcome a two year ceiling, just two boxes away.

 

 

The Gold ETF Point & Figure maintains its rally out of the 2013 through 2018 base; the bottom’s projection is unfulfilled. P&F direction recently reversed down, a move that was necessary given the preceding over-extended X column. A gain of $3 from Wednesday’s close would enable a 3 box reversal back up, a move that would suggest an upside reassertion. Either way, the trend is up, with the ETF on a buy signal.

The GLD ETF P&F relative ratio, against the CRB Index, shows this is the commodity to own. Decent outperformance trend over the past year, firming yesterday with a 3 box reversal up.

 

Gold ETF point and figure

GLD etf P&F

 


Stocks

AXP [PRICE DOUBLE TOP | INDEX RELATIVE DOUBLE TOP] | Target = $130, Stop = $108

American Express is down 5.3% over the past week and now sits 86 cents away from a Double Bottom. The price dived through the 30-week moving average yesterday but such tests are never perfect. Trading is at a support shelf, previously resistance in December last year. We would watch for signs of a recovery from here; the general trend remains up.

The AXP P&F relative ratio, versus the S&P 500, has worked higher over the past year. A deep down O column retreat in September, similar in appearance to past healthy reversions.

 

 

ACN [PRICE BEAR TRAP/LOW POLE - expected | INDEX RELATIVE TRIPLE TOP] | Target = $200, Stop = $178

Accenture Point and Figure chart, down 3.2% over the past week, with a Triple Bottom registering yesterday. That sell signal is the first off a record high and on its own, not enough to suggest the bull market is over. Support is currently being tested, the 30-week moving average.

The ACN P&F relative ratio, against the S&P 500, exhibits a strong long-term uptrend. Present down O column is healthy so far.

 

Accenture Point and Figure chart.

ACN P&F relative ratio chart.

 

KEYS [PRICE BEAR TRAP/LOW POLE - expected | SECTOR RELATIVE DOUBLE TOP] | Target = $110, Stop = $89

The Keysight Technologies Point and Figure chart has backed off from its record high. A sell signal activated yesterday but the close was across a horizontal support shelf plus the 10-week moving average. The general uptrend is strong and we anticipate either a Bear Trap or Low Pole to soon form.

The KEYS P&F relative ratio, plotted against the S&P 500 Information Technology sector, shows reliable outperformance over the past three years.

 

Keysight Technologies point and figure chart.

Keys P&F chart.

 

WST [PRICE BEAR TRAP/LOW POLE - expected | SECTOR RELATIVE DOUBLE TOP] | Target = $160, Stop = $120

Mid-cap West Pharmaceutical Services chart corrected 5.5% over the past week but remains an outperformer, +40.4% year-to-date. A Triple Bottom printed yesterday, with the price moving to its lowest level since early August. The long-term uptrend remains; not good practice to follow the first sell signal off a record high. Watching for a trap to develop here.

The P&F WST chart sector relative ratio, S&P 500 Healthcare Index, also holds a long-term uptrend. Present down O column is natural.

 

West Pharmaceutical Services chart

wst chart.

 

COP [PRICE HIGH POLE INDEX RELATIVE DOUBLE BOTTOM] | Target = $45, Stop = $61

ConocoPhillips produced the High Pole we were looking for, as discussed at the bottom of the September 17th report. The price failed at both Bearish Trendline resistance and the 30-week moving average. The downtrend of the past year is resuming and should soon hit new 52-week price lows.

The COP P&F relative ratio, against the S&P 500, remains weak, heading towards the 17 year low.

 

 

HP [PRICE BULL TRAP SECTOR RELATIVE HIGH POLE] | Target = $21, Stop = $48

Helmerich Payne chart is heading fast towards new 7 year price lows. July saw a Bull Trap, followed by a Quintuple Bottom, both signals highlighted at the time in the July 30th report. Attractive deep downside target from present level.

The P&F HP chart relative, against the S&P 500 Energy sector, is breaking to the downside following a recent High Pole.

 

Helmerich Payne chart.

HP chart.