#$fdn

Here are some of the most noteworthy trendline developments across the markets for Wednesday, November 13, 2019.

10-Year Yield Rejected By Post-2018 Down Trendline

Value Line Geometric Composite $VALUG Testing Broken Post-2018 Down Trendline

Cisco Systems $CSCO Testing Breaking Post-2016 Up Trendline

Broker-Dealer Index $XBD Testing Post-2018 Down Trendline

First Trust Internet ETF $FDN Testing Post-2008 Up Trendline…Again

Cocoa Testing Post-2015 Down Trendline

If you’d like to see these charts as they come out in real-time, follow us on Twitter and StockTwits. And if you’re interested in the daily “all-access” version of all our charts and research, please check out our site, The Lyons Share. You can follow our investment process and posture every day — including insights into what we’re looking to buy and sell and when. Thanks for reading!

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After a choppy week, key bull market trendlines are still being tested in many stock indices.

A week ago, we dedicated a blog post to the trendline developments that we posted in our weekly #TrendlineWednesday feature on Twitter. The reason for the unusual post was because of the prolific number of key trendlines being tested at the time in a wide array of indices and stocks. Well, after a volatile week that basically saw the market make little headway, up or down, there has been scant resolution among these trendline tests. Therefore, our #TrendlineWednesday feature is just as prolific as last week’s.

Here are this week’s relevant trendlines that we highlighted (among many other worthy candidates):

Will these trendlines continue to hold? Only time will tell. In our experience, the more times a trendline is tested, and the more frequently it is tested, the more likely it is to break. However, the proof is in the prices and until proven otherwise, it’s all bend but no break at this point.

If you’re interested in the “all-access” version of our charts and research, please check out our new site, The Lyons Share. You can follow our investment process and posture every day — including insights into what we’re looking to buy and sell and when. Thanks for reading!

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The stock of Facebook is testing a key Up trendline stemming nearly back to its IPO.

One of the stalwarts of the ongoing bull market in stocks has been technology. Just recently, however, the sector has hit a few bumps in the road and its leadership status may now be getting tested. One of the leaders within the sector, Facebook (FB), is also undergoing a potentially key test itself. Specifically, FB is testing the Up trendline that has existed for almost the entire lifespan of the stock.

The trendline (on a log scale) begins at the June 2013 low and connects the low occurring near the end of 2016/beginning of 2017. Presently, the trendline is intersecting the approximate 161 level, just below yesterday’s low.

This is a key test for FB in maintaining its upward trajectory. Additionally, given FB’s weight and influence within the technology space, it is also important for the sector that it holds the trendline.

A break doesn’t necessarily imply the bull run is over for FB, or tech. However, it would mean a shallower trajectory and a potential loss of leadership status. Thus, tech bulls want to see this trendline hold.

So what is our hunch -- do we think the trendline will hold? And are there other levels on FB’s chart that are perhaps even more meaningful? In a Premium Post at The Lyons Share, we break down our views on the Facebook chart, including all of the important levels to be conscious of if you trade, or are considering trading, the stock.

If you’re interested in the “all-access” version of our charts and research, please check out our new site, The Lyons Share. Given the cross-currents within the stock market -- and other asset classes --  there has never been a better time to reap the benefits of our risk-managed approach. Thanks for reading!

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Long-time rally leader, Alphabet, looks to undergo another successful test of its long-term Up trendline.

In technical and charting analysis, one of the simplest techniques to utilize is trendline analysis. It basically just involves drawing a line on a chart connecting either a rising series of lows (Up trendline) or a declining series of highs (Down trendline). Of course, there are nuances involved. Though, to be honest, the more nuances that are included, the less successful the trendline analysis is likely to be. The beauty of trendlines really are in their simplicity.

That is probably what allows them to continue to work as well. Most market observers scoff at the technique, considering it too basic to be taken seriously. Yet, time after time we see this barbarous chart technique work -- and make observant analysts some money in the process. You can see examples weekly in our #TrendlineWednesday feature on Twitter and StockTwits.

Today’s headline trendline -- and the Chart Of The Day -- highlights a trendline that has consistently supported one of this bull market’s leaders over the past few years: Alphabet (GOOG). We featured it today as the trendline was tested again yesterday -- successfully, so far.

The trendline in question originates at the July 2015 low and connects roughly a half a dozen lows since then, including the Brexit low, the lows near last year’s U.S. presidential election and a couple touches this past spring. Presently, the trendline is intersecting near the 905 level. Yesterday’s low price (into the North Korea-induced jitters) was 905.00 on the dot. It bounced immediately off of that level, arguing for the trendline’s continued relevance.

Where does it go now? First off, as long as the trendline holds, expect GOOG to remain on the rise and a leader in this rally. Furthermore, as long as the rally leaders are still moving higher, a significant decline remains doubtful.

Beyond that, in a premium post at The Lyons Share, we lay out our specific strategy for taking advantage of the GOOG opportunity, including the key levels to watch on the upside and the downside.

If you’re interested in the “all-access” version of our charts and research, we invite you to check out our new site, The Lyons Share, where we are currently running our PRE-“FALL” SALE. The SALE ends September 4 so considering the discounted cost and a potentially treacherous market climate, there has never been a better time to reap the benefits of our risk-managed approach. Thanks for reading!

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Amazon’s stock is threatening to break below a trendline that has supported it during its epic 2 and a half year run.

When historians look back at the current period in the stock market, one of the stocks that doubtless will define the era is Amazon (AMZN). Not only does the company seem bent on world, or at least U.S., domination but its stock has reflected it as well. From its IPO in 1997 until early 2015, AMZN’s stock price essentially doubled every 2.5 years. In the 2.5 years since, the stock has hit another gear.

By October 2015, AMZN’s stock price had doubled again. And at its high last Thursday of 1083, it had nearly doubled again. Over the last 3 days, however, the stock has not been so hot, losing almost 100 points from its high of last Thursday. The pullback also has the stock testing an important line on AMZN’s chart.

Since its January 2015 low, AMZN had been supported by a well-defined rising trendline (using a log chart). On about a half dozen occasions during the past 2 and a half years, the stock has bounced off nearly precise tags of the trendline.

As of today’s close (988), the stock finds itself testing the line (currently intersecting near the 990 level) once again.

As this trendline has served as near-perfect support during Amazon’s dramatic 2 and a half year run, it is obviously an important technical line to monitor for the sake of the stock. So will it hold? Obviously, we have no way of knowing for sure, although, we are a bit concerned about the now 3 touches of the trendline in the past 2 months alone. The increased frequency of touches may put the trendline in danger of being broken.

Beyond just AMZN’s stock, however, this trendline test could hold implications for the market at large. AMZN has served as one of the steady leaders during this portion of the bull market. If it breaks down, might it be a bad sign for the overall market?

In a premium post at The Lyons Share, we discuss the key levels to monitor regarding this important test in AMZN, as well the next important levels above and below this area. Additionally, we share our 2 cents on how important this test, and this stock, is to the broader market rally.

If you want that “all-access” version of our charts and research, we invite you to check out our new site, The Lyons Share. Thanks for reading!

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Amazon and Alphabet -- 2 important generals of the market rally -- are undergoing similar tests of their uptrends.

Over the past week, we’ve seen the stock market tested moreso than any other point since the post-election rally kicked off. Some of the recent laggards, like small caps and value stocks, have suffered breakdowns to some degree. Even the leadership areas of the market have not been immune to challenges of their own. For example, 2 stocks in particular – Amazon and Alphabet (Google) – veritable 4-star generals among the leadership ranks, are undergoing similar tests as we speak.

First off, let’s look at Amazon (AMZN), which is up an astounding 200% in just over 2 years.

If we draw a trendline (on a log chart) since its January 2015 launch point, connecting the February 2016 low and the low at the turn of this year, we find it presently intersecting near the 838 level. That happens to be where the stock opened yesterday into the early morning selloff on Wall Street. After dipping to as low as 833.50, the stock rebounded to successfully hold above the trendline.

Next up, we have Alphabet (GOOG), formerly Google (still have a hard time adjusting to the new name). Like Amazon, GOOG has been on a tear since 2015, rising more than 60% since July of that year.

Also similar to AMZN is the Up trendline that has defined GOOG’s advance over the past 20 months (also on a log chart). Its rally has advanced along a line connecting the lows in July 2015, June 1016 and November-December 2016. The latest location of that line is in the vicinity of the 806 level. In yesterday’s opening weakness, GOOG opened at 806.95. Like AMZN, the stock would briefly dip below the trendline before recovering to close definitively above the trendline.

So the leaders have passed their respective tests...for now. While that perhaps bodes well for the near-term (indeed, they showed some follow-through today), we would say that they -- and the broader market -- are far from being out of the woods. There are a number of immediate-term concerns that we have still, as well as a great many longer-term concerns. Those apply to both the overall market as well as to leaders like AMZN and GOOG. Regarding the leaders here, in particular, we have identified the levels, and the structure by which we would be compelled to jettison the leadership tag, and also adopt much graver concerns.

However, for the moment, as long as the leaders continue responding well to these tests, the market should be compelled to follow their lead -- in general, to the upside.

Like our charts and research? Get an All-Access pass to our complete macro market analysis, including tons of charts like this EVERY DAY, at our new site, The Lyons Share.

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The stock of Facebook has been in a rising wedge pattern for most of its lifetime -- and the pattern is nearing a resolution.

Today’s Chart Of The Day takes a rare detour into single stock territory. As we do not trade individual equities for our clients, it is typically not a focus of ours. But with Facebook (FB) in the news today (along with a dearth of exciting charts) we take a look at a chart pattern relevant to FB throughout most of its history -- and in particular, right now.

A “rising wedge” pattern involves a series of higher highs and higher lows on a price chart -- with the lows demonstrating a steeper ascent. Given the sharper rise in the lows, the trendline connecting the highs and the trendline connecting the lows will necessarily intersect at some point, which we call the “apex”. That is where one can expect resolution to the pattern, if the wedge has not already been broken. Despite the higher highs and lows, the pattern is generally considered to be a bearish one. That is, prices more often than not resolve, or break out of, the wedge to the downside. 

In the case of Facebook, one can consider nearly its entire history as one big rising wedge. After its IPO in 2012, FB began its launch higher in earnest in June 2013. Since that point, it has demonstrated a long-term series of higher highs and higher lows. However, the lows have been rising faster than the highs, resulting in the rising wedge seen on its chart here.

If this interpretation is correct, the apex is fast approaching. The upper and lower bounds of the wedge will intersect before the end of the year, with the exact time dependent upon where one draws the lines. We drew them on a weekly chart and the intersection should come by the end of November. That means we should have resolution of this wedge by that time. Absent a breakout before then, the range in FB trade should continue to squeeze tighter and tighter.

Should FB break the wedge to the downside, significant support (at this time) may lie just north of 100, then just south of 90. Those areas are not targets, but speculative support levels and subject to change based on the action in FB prior to a breakdown. A breakout above the top of the wedge obviously opens up considerable upside, with no resistance at all-time highs. Additionally, if one is to monitor this development, be on guard for a false breakout that eventually fails. That is, a breakout above the top bound, followed by an eventual reversal below the bottom bound. See this post for an example of a failed rising wedge breakout.

There’s no doubt that Facebook -- the “F” in F.A.N.G. -- has been one of the more steady and reliable stock climbers in recent years. As it is approaching the apex of its rising wedge, one can expect more volatility from FB once it finally breaks out of the wedge, whichever direction it breaks.

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