Download the Schwab app from iTunes®Get the AppClose

  • Find a branch
To expand the menu panel use the down arrow key. Use Tab to navigate through submenu items.

Midweek Market Trend for October 11, 2017

Follow us on Twitter @Schwab4Traders. For more technical insights, join my weekly webinar, Charting the Markets, where I provide market analysis and answer your trading questions in real time.  

In spite of hurricanes, wildfires and geo-political angst, the stock market has continued to trade stubbornly around new highs.  Many technical analysts look at the ratios of different areas of the market to gauge the strength of the market “under the hood.” 

The first of these is the relative strength of the transportation stocks to the utility stocks.  As seen in Figure 1 (A), since the August lows, the transports are clearly outperforming, generally a positive sign.

Source: StreetSmart Edge®

Second, the healthcare sector contains a mix of defensive and offensive industries.  Notice how the more aggressive biotech industry is outperforming the overall sector, another indication of the “risk-on” nature of the current advance (Figure 2)(A).

Third, let’s look at the performance of the consumer discretionary stocks as compared to consumer staples.  Again, since August, the more offensive discretionary stocks are out performing the more defensive staples (Figure 3)(A).

Source: StreetSmart Edge®

Within the consumer discretionary sector, the hotel stocks have recently broken out of a five month long trading range (Figure 4).  So how far might they run?  Some technical analysts would take the height of the range (626 points) and add this to the breakout price of 7883 to get an initial target of 8509.  Keep in mind, though, that the “target” is based on historical performance, and should therefore not be considered a certainty.

Staying within the consumer discretionary sector, the automobile manufacturers are also trading well. Notice that there has been no momentum divergence: as the automakers have pushed to new highs the RSI has been making new highs as well Figure 5 (A).

Turning to interest rates, notice how on the chart of the yield on the thirty year treasury, the 20 day exponential moving average has just recently crossed above the 50 day exponential moving average. While no signal works all the time, such a cross has often predicted higher rates (Figure 6).


The Comprehensive Schwab Guide to Buying and Owning Gold
The Comprehensive Schwab Guide to Buying and Owning Gold
Consider Closing Short Options Commission-free
"Consider Closing Short Options Commission-free

Schwab has tools to help you mentally prepare for trading

Learn more >

Talk trading with a Schwab specialist anytime.
Call 888-245-6864
M-F, 8:30am - 9:00pm EST

Get 500 Commission-Free Online Equity and Options Trades for Two Years

Learn More >

Important Disclosures

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. Examples are not intended to be reflective of results you can expect to achieve.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions.

Past performance is no indication (or "guarantee") of future results.

Schwab does not recommend the use of technical analysis as a sole means of investment research.

Indexes are unmanaged, do not incur management fees, costs and expenses, and cannot be invested in directly.


Thumbs up / down votes are submitted voluntarily by readers and are not meant to suggest the future performance or suitability of any account type, product or service for any particular reader and may not be representative of the experience of other readers. When displayed, thumbs up / down vote counts represent whether people found the content helpful or not helpful and are not intended as a testimonial. Any written feedback or comments collected on this page will not be published. Charles Schwab & Co., Inc. may in its sole discretion re-set the vote count to zero, remove votes appearing to be generated by robots or scripts, or remove the modules used to collect feedback and votes.