Some Interesting Chart Patterns as Q3 Gets Started


Stocks began July on a positive note yesterday, led by technology. Several big names are also showing some patterns that could be interesting — especially if investors are seeking opportunities at the start of a new quarter.

As usual, we started by firing up RadarScreen® with a few handy indicators. We clicked on the Data menu to import all the S&P 500’s members and here’s what we found:

Some big technology names are holding their 50-day moving averages. That’s a classic intermediate-term indicator. In particular, Apple (AAPL), Microsoft (MSFT) and Adobe Systems (ADBE). All three made new all-time highs last month, so they’ve been in an uptrend — even with the broader market range-bound.

Apple (AAPL) chart with potential support line and 50-day moving average.

Two major chip stocks made outside days (lower lows and higher highs versus than Friday): Micron Technology (MU) and Intel (INTC). That’s often viewed as a reversal pattern — especially after the sharp selloffs both experienced in the last few weeks.

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One of the great things about RadarScreen is you can have all kinds of lists. Aside from my S&P 500 tab, I also monitor some indexes and ETFs that track broader sectors. A few of those also lit up my 50-day moving average test:

  • SPDR Technology ETF (XLK): This has been holding its 50-day moving average since June 25.
  • iShares North American Software (IGV): Not very liquid but a decent benchmark for tracking the entire software industry. It’s outperformed XLK by a wide margin all year. (Don’t forget about the revolution in cloud-computing.)
  • DJ U.S. Railroads ($DJUSRR): This one can’t be traded, but Union Pacific (UNP) and CSX (CSX) are pretty liquid names that also held their 50-day moving averages. Both are also near all-time highs. (Click here for our special report on railroads, and update on traffic.)

In conclusion, this isn’t a recommendation and everyone needs to do their own homework. But the economy continues to perform well and some upward trending stocks have patterns that might interest some traders.

DJ Railroad index ($DJUSRR), with potential support line and 50-day moving average.
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David Russell is Global Head of Market Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.