Video and Report Headlines
- %Above 50-day Rising for SPX and MID
- Bull Market Sequence
- 15 Leading ETFs with New Highs
- 4wk High-Low Percent Remains Bullish
- SPY and QQQ Maintain Steep Uptrends
- IBB Consolidates after Breakout Surge
- ON Holds Wedge Breakout
- SWK Corrects and Reverses
- ATR Stops Extending (MDFY, IPAY, IOT, XLRE, XLU)
The next Chart Trader will be posted on Thursday morning, March 14th.
SPX and MID Pick up the Slack
Some tech stocks stumbled over the last few weeks, but other parts of the market picked up the slack. The chart below shows the percentage of stocks above their 50-day SMAs for the S&P 500, Nasdaq 100, S&P MidCap 400 and S&P SmallCap 600. This indicator fell for the Nasdaq 100 and S&P SmallCap 600 in 2024 (red arrows). It also fell for the S&P 500 and S&P MidCap 400, but only from January to mid February. The green arrows show these indicators improving for large-caps and mid-caps. Currently, 79% of S&P 500 stocks are above their 50-day SMAs and 72% of S&P MidCap 400 stocks are above their 50-day SMAs. This improvement means the advance is broadening.
Bull Market Sequence
The weight of the evidence is bullish for stocks. The chart below shows the bullish sequence starting with the Zweig Breadth Thrust on November 3rd. See the ZBT1500 Thrust in the middle window and the green arrows on the price chart. SPY broke out of its falling channel (red lines) a week later and also moved above the upper Keltner Channel for a volatility breakout (blue arrow). The Composite Breadth Model (bottom window), which has 14 breadth indicators, then turned bullish on December 7th with a move to +1. There can still be corrections and pullbacks along the way, but the weight of the evidence points to a bull market.
Links: Zweig Breadth Thrust and Composite Breadth Model
4wk High-Low Percent Remains Bullish
The next chart shows the 4-wk High-Low Percent indicators for the S&P 500, Nasdaq 100, S&P MidCap 400 and S&P SmallCap 600. I am only focused on the S&P 500 and Nasdaq 100 for signals. 4-wk High-Low Percent is the percentage of 4-week highs less the percentage of 4-wk lows within an index. These indicators turn bullish with a move above +20% (green bars) and bearish with a move below -20% (red bars). The green shading on the chart below shows the active bullish signals for the S&P 500 and Nasdaq 100. The red shading shows the active bearish signals.
The green arrows on the price chart show when 4-week High-Low Percent is bullish for both the S&P 500 and Nasdaq 100. This means BOTH must be bullish to signal a short-term uptrend in SPY. A downtrend signal triggers when BOTH are bearish. This indicator combo turned bullish in early November and remains bullish. The indicator turned bearish for SPX in late January (red shading) and bearish for NDX in mid February (red shading). They were not bearish at the same time and this is why the bullish signal on the price chart remained. They are currently bullish with SPX 4wk High-Low Percent exceeding +20% the last three days.
SPY and QQQ Maintain Steep Uptrends
SPY continues to stair-step higher with short pullbacks and new highs. The red lines show the ATR Trailing Stop (3 x ATR(22). This ATR Trailing Stop started in early November and held throughout the short-term uptrend, which means pullbacks in 2024 were less than 3 ATR(22) values. A break below this line (501.38) would signal a pullback that was more than 3 ATR(22) values and this would be deemed an outsized decline. Notice that SPY experienced an outsized decline on August 9th (3 ATR drop) and this signaled the start of a correction.
I am also using the ATR Trailing Stop (3 x ATR(22)) to define the short-term uptrend in QQQ (429.59). QQQ broke this line in early January and then surged to a new high. As with the 4-wk High-Low Percent indicators, I would like to see both SPY and QQQ trigger their ATR Trailing Stops before calling for a market correction.
Leading ETFs with New Highs
The list and CandleGlance charts below show notable ETFs recording 52-week highs last week. New highs in the S&P MidCap 400 SPDR and S&P 500 EW ETF reflect broadening in the bull market. We are also seeing new highs in Industrials, Finance and Materials, which represent the non-tech sectors. Elsewhere, Housing, Insurance and Aerospace/Defense remain leaders.
- S&P 500 SPDR (SPY)
- S&P MidCap 400 SPDR (MDY)
- S&P 500 EW ETF (RSP)
- Industrials SPDR (XLI)
- Finance SPDR (XLF)
- Materials SPDR (XLB)
- FinTech ETF (FINX)
- Mobile Payments ETF (IPAY)
- Semiconductor ETF (SOXX)
- Home Construction ETF (ITB)
- Insurance ETF (KIE)
- Retail SPDR (XRT)
- Aerospace & Defense ETF (PPA)
- Medical Devices ETF (IHI)
- Water Resources ETF (PHO)
Chart Analysis, Setups and Trading Ideas
IBB Consolidates after Breakout Surge
The Biotech ETF (IBB) remains with a wedge breakout in mid February and follow through to a new high in late February. After this breakout advance, the ETF consolidated with a pennant and this is a short-term bullish continuation pattern. A breakout at 140.5 would signal a continuation higher. This chart also shows two ATR Trailing Stops for reference. The red one is 2 x ATR(22) values and the gray one is 3 x ATR(22) values. I originally set the stop using 2 as the multiplier because this meant it started just below the lowest “close” before the breakout. Traders looking for more wiggle room can consider a wider trailing stop by using 3 for the multiplier. A wider stop reduces the chances of whipsaw, but this means the loss will be larger if/when the stop triggers.
ON Holds Wedge Breakout
On Semiconductor (ON) hit a new high in July 2023 and then fell sharply with a massive gap-plunge in late October. The stock completely filled this gap with a surge into December and then fell back with a falling wedge into February. This wedge retraced around 67% of the prior advance and the stock reversed with a big gap-breakout in early February. This gap-breakout put the stock on a bullish footing again. Just as important, the breakout held as the stock consolidated with a flag into early March. I view this flag as a short-term bullish continuation pattern. ON broke out three days ago, but fell back sharply on Friday. The stock recovered on Monday with a close above 80 and I still think the breakout is working. The flag lows mark support at 75 and a close below this level would argue for a re-evaluation.
SWK Corrects and Reverses
Stanley Black & Decker (SWK) sports a classic advance, correct and breakout sequence. The stock advanced 35% into December, retraced 50-67% with a falling channel and broke out over the last two days. SWK did not make it all the way to the breakout zone (blue shading) as it firmed in the 86 area in February. Overall, the breakout signals a continuation of the October-December advance and I would target a move to the low 100s (blue shading). The March low marks re-evaluation support at 88.
TDY Consolidates after Breakout Surge
Teledyne (TDY) was first featured on February 22nd and I am showing it again because the setup remains valid. TDY is part of the Aerospace & Defense ETF (PPA), which is trading near a new high and up 7% this year. TDY is lagging the market and its group this year because it corrected after the big advance. Overall, the stock surged 22% and then retraced 33-50% with the pullback this year. A sort of wedge/triangle formed and I view this as a bullish continuation pattern. A breakout at 432 would be bullish and I would then set re-evaluation support at 420.
ILMN Consolidates after Big Surge
ILMN was first featured on March 7th and I am showing it again because the setup remains. Illumina (ILMN) surged 58% and then consolidated between 128 and 148. The consolidation is too long to be considered a flag, but it is still a consolidation after a sharp advance. This means it is a bullish continuation pattern and a breakout at 148 would provide confirmation. I would then target a move to the 180-190 area (blue shading). For reference, the red line shows the ATR Trailing Stop (3 x ATR(22)) at 131.25. This level held over the last three months because pullbacks were less than 3 ATR(22) values. A pullback greater than 3 ATR(22) values would show stronger selling pressure.
ATR Trailing Stops Extending
The following charts show stocks that were featured as trading setups (falling wedges, triangles, falling channels …). There were subsequent breakouts and follow through. I am updating these charts to show how the ATR Trailing Stops work. The first chart shows the S&P MidCap 400 SPDR (MDY) with a breakout on February 8th and prices extending higher into early March. The ATR Trailing Stop is at 529.62.
The chart below shows the Mobile Payments ETF (IPAY) with a breakout on February 8th and prices extending higher into early March. The ATR Trailing Stop is at 49.58.
The chart below shows Samsara (IOT) with a breakout on February 9th and prices extending higher into early March. The ATR Trailing Stop is at 49.58.
The chart below shows the Real Estate SPDR (XLRE) with a breakout on February 15th and follow through into early March. The ATR Trailing Stop is at 38.92.
The chart below shows the Utilities SPDR (XLU) with a breakout on March 4th and the ATR Trailing Stop at 61.62.
The chart below shows the KBW Bank ETF (KBWB) with a breakout on February 29th and the ATR Trailing Stop at 48.54.
