Systematic Strategies and Next Level Technical Analysis
Analysis Archives (>6 months old)
There was a big oversold bounce with some of the most beaten down ETFs leading the way. The ARK Innovation ETF (ARKK), Clean Energy ETF (PBW), Consumer Discretionary SPDR (XLY), Cloud Computing ETF (SKYY) and Home Construction ETF (ITB) were up over 10% in three days.
There are two commodity ETFs with falling wedge patterns working. One falling wedge resulted in a deep pullback and the other in a shallow pullback. Either way, I view these falling wedges as corrections within uptrends and am watching for breakouts. This article will look at the deep pullback in the
The market regime is bearish, but SPY and QQQ are still in oversold territory that could give way to a bounce. In addition, we are seeing short-term strength in some of the high-beta ETFs as Treasury yields fell over the last two weeks. Personally, I am not
Stocks remain short-term oversold and the major index ETFs are still near their May lows. This could give way to a bounce, but the bear market and long-term downtrends continue to provide stiff headwinds. There
The market regime remains bearish because the Composite Breadth Model is negative and yields spreads are showing stress in the credit markets. Note that the BBB spread exceeded its March high over the last few days. Short-term, stocks are still quite oversold after a big decline from mid April to early May. Oversold
Bearish outcomes are more likely in a bear market and this is playing out as even the defensive groups were hit with selling pressure on Wednesday. We are also seeing this play out in certain commodities, such as industrial metals. Industrial metals
Stocks became extremely oversold last week after strong selling pressure and sharp declines. We are seeing an oversold bounce right now, but this is considered a bear market bounce because the Composite Breadth Model is net bearish and yield spreads show serious stress in the credit markets.
Stocks became extremely oversold last week after a sharp five day decline that looked like a selling climax. This five day decline was already on top of a sharp decline from April 21st to 27th (-8.5%). All told, there was
Stocks remain under pressure and failed to bounce after becoming quite oversold after a three-day decline on Tuesday. This decline continued with many stocks and ETFs becoming even more
The bear market widened its grip on stocks as more participated in the decline over the last few weeks. New lows expanded dramatically the last two weeks and more stocks are below their 200-day SMAs. Safe-haven groups were also hit as utilities and consumer staples fell. The safe-haven groups are
The ugly just got uglier. The Composite Breadth Model turned bearish on April 11th and the 5-day SMA for the S&P 500 crossed below the 200-day SMA that same day. At worst
Market volatility was also high and seemed to get even higher the last two weeks. Moreover, volatility and selling pressure are not just in the stock market. We saw selling pressure in almost all groups over the last five
The Composite Breadth Model remains bearish and we are in a bear market environment for stocks. Oil and agricultural commodities remain relatively strong, but industrial metals were hit pretty hard the last two weeks. Downside participation
The weight of the evidence remains bearish for stocks and participation to the downside expanded significantly over the last six trading days. Even the low volatility leaders were hit hard and there were few places to hide as correlations rose among stocks. Bonds managed to firm, but do not offer an alternative to stocks
The Market Regime is bearish and this means there is a headwind for stock-related ETFs. At the very least, we should be extremely selective and reduce exposure to stocks. Even though we will still have sharp oversold bounces,
It is not pretty out there. The Composite Breadth Model is bearish and yield spreads are rising. We are also seeing large-techs (QQQ) and small-caps (IWM) lead the broader market lower. Selling pressure intensified with lopsided down days on Friday and Tuesday. Basically
The broad market environment for stocks was more bearish than bullish early last week and became even more bearish after the sharp decline on Thursday-Friday. Downside participation broadened as many of the market leaders were hit hard. We are talking about the Metals & Mining SPDR, the
Today we are going to dive into the subjective world of chart analysis. The weight of the evidence is bearish for stocks, but it is not overwhelmingly bearish because the S&P 500 breadth models are still net bullish. The market is quite divided and this is why SPY has been flat since September. The January-March decline
The weight of the evidence for the stock market remains more bearish that bullish. More stocks are below their 200-day SMAs than above, volatility is above average for SPY and the Composite Breadth Model is net bearish. Nevertheless, the S&P 500 SPDR and the S&P 500 EW ETF are trying to forge short-term reversals with big moves on Tuesday.
The broad market environment for stocks is more bearish than bullish. The Composite Breadth Model is negative, more stocks are below their 200-day SMAs than above and the S&P 500 is below its 200-day. Also note that yield spreads are rising again, offensive groups are lagging and defensive groups are leading.
There are often crosscurrents in the market and these can create confusion. For example, the Trend Composite for SPY is positive, but the 5-day SMA is below the 200-day SMA. On the price chart, SPY appears to be in a downtrend in 2022, but there is a short-term bullish
The Composite Breadth Model flipped back to bearish as the 5-day SMA for SPX crossed below the 200-day SMA. Despite whipsaws in the model, the percentage of stocks above the 200-day SMA and High-Low Percent paint a picture of weakness in 2022. SPY and RSP may be holding up, but the
Weakness under the surface and weakness within the Nasdaq 100 is weighing on the S&P 500, which cracked again. The weight of the evidence was already bearish for small-caps, mid-caps and
The broad market ETFs were hit with selling pressure on Wednesday with growth oriented groups leading the way lower. SPY fell 1%, QQQ was down 2.17%, the Semiconductor ETF fell 2.5% and the Russell 2000 Growth ETF was down 1.88%. In contrast, groups associated
The Composite Breadth Model is net bullish, but the stock market is as split as ever and some key groups are leading the way lower. Large-caps are leading and small-caps are lagging. We are even seeing a serious split
There are large pockets of strength in the stock market, but also large pockets of weakness. In fact, these pockets are almost equal and this is the reason the S&P 500 has gone nowhere since Thanksgiving. The Composite Breadth Model is net bullish and split. The S&P 500 trend model is net bullish
This video starts with broad market analysis and then moves to the individual ETFs. The broad market section includes the Composite Breadth Model, Fed balance sheet and yield spreads. Breadth indicators, SPY, QQQ, bonds, gold and the Dollar are also covered. Analysis, then turns to the ETFs charts with leading trends, emerging trends and setups.
The market environment is never certain and there are often conflicting signals. It would be easy to say this is one of the most uncertain times ever, but that is probably not the case. There have been plenty of price shocks, global events
It as been 18 days since Putin invaded Ukraine and SPY is up 5.32% since the close on Wednesday, February 23rd. QQQ is up 6.3% and IWM is 6.5%. The 20+ Yr Treasury Bond ETF (TLT), an alleged safe-haven, is down 4.6%. While the gains in stocks are
It is important to remember that the major trends in play right now were in place before Russia invaded Ukraine. High-flying tech stocks were out of favor late last year and remain out of favor. Weakness spread as the Market Regime turned bearish in mid February and remains bearish.
The idea was to continue the Trend Composite series today, but the markets are moving fast so I thought I would address yesterday’s big bounce in stocks and the big declines in the commodity related ETFs. These moves did not reverse existing
The markets are dealing with some serious systematic shocks and volatility remains well above average across the board. First and foremost, the Composite Breadth Model is
The Composite Breadth Model is bearish so I am focused on ETFs that are not correlated to stocks (commodities), ETFs that are defensive (staples, utilities) and ETFs that are perhaps less correlated to stocks (agribusiness, steel, defense). Volatility is
The Composite Breadth Model remains bearish and the S&P 500 SPDR is in a downtrend since the January breakdown. The S&P SmallCap 600 SPDR (IJR) held up a little better than SPY in January-February, but remains short of a resistance breakout that would negate the January breakdown. In short, the trends
The markets are getting rattled with big moves after the invasion of Ukraine, but these moves are in the direction of existing trends. Oil, industrial metals, gold and agriculture were already in market leading uptrends. They are also up strong today. SPY, QQQ and many ETFs were already in downtrends after impulse declines in January. There were oversold bounces in February, but
The stock market is as divided as ever with the pockets of weakness at the risk-on end. Risk-off ETFs and commodity-related ETFs are performing the best right now. Finance-related ETFs are also holding their own as the 10-yr Treasury Yield exceeds 2%. There are some
February is the month of the big bounce. As is normal after a big decline, names that led the way lower and fell the most are getting the biggest bounces. Most of the ETFs with the biggest bounces were in downtrends already and these are still considered oversold bounces within downtrends.
Small-caps were the talk of the town in mid November as they broke out of a seven month range and the skies opened up. Volatility then reared its ugly head in late November when the Russell 2000 ETF (IWM) fell some 12 percent from a new high. IWM continued lower in January and hit a 52-week low. The Russell 2000 Growth ETF (IWO) led the way as money fled high-beta stocks and ETFs.
There were lots of downtrend signals this past week and over the past month. Selling pressure expanded and broadening participation on the downside was enough to push the Composite Breadth Model back into bear market mode. Note that I will update the Market Regime page on Friday morning. For now, the pickings are slim among the equity-related ETFs
The Composite Breadth Model has yet to trigger bearish as stocks recovered on Monday and closed strong. Despite this reversal, the technical damage has already been done to several big sectors and key industry group ETFs. Even so, the S&P 500 EW ETF (RSP) managed to hold its
Stocks continued their recent ways with small-caps (IWM) and high-beta tech stocks (QQQJ) leading the way lower in January. IWM is down around 8% year-to-date and QQQJ is down around 11%. The year is starting just how it ended: growth and high beta remain out
Last Tuesday, I wrote about the transition phase currently underway in the markets. Actually, there are a number of transitions underway and perhaps they are linked. While I do not like to dive deep into the fundamentals, the macro backdrop for 2022 is looking very different from 2020 to 2021.
The transition process is difficult and the markets are undergoing a transition from a covid-driven economy to a normal economy. A covid economy implies Fed easing, fiscal stimulus and falling Treasury yields. A normal economy means no more balance sheet expansion, no more fiscal stimulus and a normalization of Treasury yields.
Stocks were rattled on Wednesday with Technology, Communication Services and Consumer Discretionary leading the way lower. As noted on Tuesday, the magnificent seven dominate these three sectors. Selling pressure was not limited to tech as REITs, Biotechs, Airlines and
QQQ and the Technology SPDR are holding up and near new highs, but there are still some serious pockets of underperformance within the tech sector and even within the top stocks. Today’s commentary will look at QQQ breadth, the big seven and QQQ’s little brother, QQQJ. We will analyze charts
Stocks started the new year with gains, but there were still some pockets of weakness. The Nasdaq 100 Next Gen ETF (QQQJ) fell as money shied away from high beta tech, weakness in transports weighed on the Industrials SPDR and the Materials SPDR fell over 1%. The Russell 2000 ETF gained
The Composite Breadth Model flipped back to bullish with the bounce in stocks over the last five days. Even so, the market remains quite divided right now. Large-caps are still leading, small-caps are still lagging and mid-caps remain caught in the middle. The divide is visible within some sectors as well.
The stock market is about as divided as can be. It is clear that this is no longer a bull market that lifts all boats. Should we get a bear market, it may not be one that sinks most boats. The Composite Breadth Model is net bearish, but could go either way as the percentage of S&P 1500 stocks above the 200-day SMA gyrates around
This commentary will cover bonds, gold, silver and the Dollar. Oil was covered in the ETF Report on Wednesday. TLT and the 10-yr Yield have big continuation patterns working, but the swings within these patterns are going the other way. Gold is going for a breakout as silver surges off support. The Dollar became overbought after a big advance and stalled the last few weeks.
Even though the Composite Breadth Model is net bearish, the stock market seems to be more split than anything. This means we could see some sort of rotation instead of a broad bear market. In fact, we are already seeing some signs in December and there are splits within sectors. In Consumer Discretionary