Point & Figure Analytics September 12, 2019

Wednesday saw a whopping 17 to 1, P&F buy signals to sells. Upside volume was good at 73%. All major S&P 500 sectors closed in the green and the secondary indexes continue their turnaround. The Russell 2000 was the top performer, +2.1%, now higher by 6.1% over the past week. The VIX continues to retreat, lower by 15.7% over the week. Market breadth is also back in bull mode, discussed lower down the report.

 


Indexes

The S&P 500 printed an important 3 box reversal up with Wednesday’s rise of 0.7%. The chart is now back at its record box high. A break of the record high from July at 3027.98 appears inevitable. As we have emphasized in prior reports, there is little to fault on this chart. A Low Pole at the start of the year, followed by a Triple Top breakout in March, then a Double Top in July, and now a fresh Double Top breakout is one box away. As mentioned at the top of Monday’s report, the market is not overbought at all, our ContraGauge has ample room to climb before becoming a concern.

 

 

Decent outperformance by the S&P Midcap 400 Index yesterday, +1.4%. The P&F chart generated a Double Top breakout, negating the sell signal from August, now confirmed as a Bear Trap. Uptrend is well positioned to strengthen from here, going on to challenge the 2018 record high of 2053.

 


Market Breadth

Short-term breadth, the NYSE % 10-week moving average, extended its run, now entering overbought territory of 70%+. That is not a reason to worry just yet, as it typically goes go to trade sideways for a few months.

Over 70% of the NYSE is now above their 10-week moving average, reflects healthy participation as indexes attempt primary uptrend reassertions.

 

 

Medium-term breadth, the NYSE % 30-week moving average, plots constituents of the exchange above their longer moving average. This indicator is also extending higher; participation in the market rally is expanding.

 


Sectors

The Technology sector ETF gained 1% yesterday, maintaining last week’s Double Top breakout. Chart clearly appears to be reasserting the uptrend, with a record high just two boxes away. The summer consolidation successfully found support from the 30-week moving average and that test took the trend off the boil, ultimately healthy.

The P&F relative chart, against the S&P 500, has held a buy signal since 2002. Difficult to fault that performance!

XLK fund constituents are listed here.

 

 

The Aerospace & Defense ETF sits at price and relative record highs, with price and relative buy signals also in effect. The price has retreated on a value basis over the past week but it will not take too much to push out to new uncharted territory. With an undamaged P&F chart, now is the time to consider entry.

The relative ratio, against the S&P 500, illustrates well clues to watch for ahead of a big rally. Note the one box Bear Trap, a failed Triple Bottom, in August 2012. That trap preceded the sharp reversal, a move that to this day remains underway.

The PPA fund’s holdings are listed here.

 


Stocks

AAPL [PRICE DOUBLE TOP | INDEX RELATIVE DOUBLE TOP] | Target = $315, Stop = $192

Apple rallied to a new 2019 high yesterday as it released details of the new iPhone. The release was not without criticism, bullish from a contrarian standpoint. Holding the gain was also a sign of strength, there was no sell the new product reaction. With record highs nearby, a test is expected. The chart is not overbought thanks to the August pull-back, a move commented on at the time.

The P&F relative ratio chart, versus the S&P 500, holds its uptrend of the past few years. Two upside box fills yesterday.

 

 

ANSS [PRICE DOUBLE TOP INDEX RELATIVE DOUBLE TOP] | Target = $250, Stop = $194

Ansys is positioned to soon break out to new all-time highs. The sideways action since July, into the comfort of the 30-week moving average, enabled the uptrend to take a breather. Note the 3SR at the start of the year. The chart was also covered in the August 15th report.

The relative ratio is plotted against the NASDAQ 100. A further two box fills will result in a new record relative high. Outperformance underway for the past 2.5 years.

 

 

TXN [PRICE BULLISH TRIANGLE INDEX RELATIVE DOUBLE TOP] | Target = $138, Stop = $118

Texas Instruments is reasserting its uptrend following the July through August Bullish Triangle. The trend has gained a footing above the 2018 peak, now turned support ($120). A fresh all-time box high is just two boxes away.

The P&F relative ratio, against the NASDAQ 100, depicts outperformance since 2012. A buy signal printed in June, with the necessary subsequent upside follow-through.

 

 

POWI [PRICE DOUBLE TOP INDEX RELATIVE DOUBLE TOP] | Target = $102, Stop = $87

Small cap Power Integrations is reasserting its 2019 uptrend, heading towards new all-time highs. This month has already seen a Triple Top breakout, a defeat of the July Bearish Trendline, followed by a Double Top.

The Point & Figure relative ratio, against the NYSE Composite, shows an acceleration in outperformance this year. Ratio currently sits at a decade high.

 

 

CTS [PRICE QUADRUPLE TOP – expected INDEX RELATIVE LOW POLE] | Target = $40, Stop = $27

Small cap Cts Corp is on price and relative sell signals but the charts have bullish potential. The price is just 23 cents away from a Quadruple Top breakout, a move that would confirm defeat of the July 2018 Bearish Trendline, to reassert the primary uptrend.

The P&F relative ratio, against the S&P 500, shows an outperformance trend since 2013. A Low Pole is in place, with a Double Top buy signal three boxes away.

 

 

FDX [PRICE 3SR SECTOR RELATIVE 3SR – developing] | Target = $200, Stop = $146

FedEx rallied 9.4% over the past week; results due on September 17th. The P&F chart has produced two Double Tops since a 52-week low three weeks ago. That low breached a medium-term support shelf and with the price recovery back above it, a 3SR is activated. That signal projects a return to the 2019 range ceiling.

The relative ratio, plotted against the S&P 500 Industrials sector, also exhibits a 3SR. The signal will need official confirmation via a P&F bullish breakout, two boxes away. Should that 3SR activate, we would anticipate sector outperformance back to the top of the decade range.