Systematic Strategies and Next Level Technical Analysis
Analysis Archives (>6 months old)
Stocks fell sharply the last three days with QQQ and SPY leading the way as they fell 4.12% and 3.32%, respectively. Small-caps held up better as IWM fell just 1.4%. Nevertheless, IWM is trading near its summer lows and the weakest of the three over the past month and since March.
Risk aversion is spreading in the stock market. High-beta ETFs bore the brunt of selling pressure over the last several weeks and QQQ is starting to show some signs of buckling. On the flipside, money is moving into defensive groups with Utilities, Staples, Healthcare and REITs hitting new highs.
The Fed has come and gone without much of a surprise, and the markets are saying good riddance. The market appears to be relieved that the statement is out of the way and the news flow will hopefully lessen. Volatility picked up significantly with the plunge on Back Friday
There could be a change afoot in the stock market over the past month (21 trading days) as money moves out of the riskier parts and into the more defensive areas. The Composite Breadth Model remains bullish overall and the 5-day SMA for the S&P 500 is above the 200-day SMA. Even though
Even though junk bonds bounced and the most oversold ETFs surged this week, the high beta end of the stock market continues to look shaky and this reflects risk aversion. Today’s commentary will look at relative weakness in Advance-Decline Percent for QQQ and
Stocks went from the edge of the abyss last week to a renewed bull market this week. Well, perhaps not so fast there cowboy. The price action over the last few days is certainly bullish because SPY broke out with a three day move accompanied by
The market went through the wringer the last two weeks and the bulls appear to have survived. Today’s analysis looks at the oversold setup and the strength behind the recent bounce. Even though the Composite Breadth Model flipped back to bullish, there are still reasons for concern and we will cover these.
Weakness in mid-caps and small-caps is finally taking its toll on the broader market and the Composite Breadth Model. We are also seeing S&P 500 breadth indicators deteriorate and dip towards bearish levels. Even though
Stocks were hit with a double whammy the last three trading days: the Omicron plunge on Black Friday and the Powell plunge on Tuesday. These, at least, seem to be the reasons given in the financial media. SPY fell 2.2% on Friday, rebounded somewhat on Monday and then fell 2% on Tuesday
I used to have a Friday night poker group and this was the motto when someone needed to call a big bet. Go big or fold. For the stock market, large-caps are the name of the game and technology is still the best performing sector
Big and sudden declines create short-term oversold conditions ripe for a short bounce, but they also distort chart patterns with their volatility. These outsized moves make chart analysis difficult and the volatility increases risk overall. Note that these moves occurred on a pseudo holiday and could be over-reactions
The Market Regime is bullish, which means we are in a bull market. However, there are signs of underlying weakness over the last few days and this could give way to a pullback. Note that predicting a pullback within a bigger uptrend is challenging because the bigger uptrend is still
After a nice run from early-mid October to early-mid November, trading conditions turned rough with choppy price action the last two weeks. The tech-related ETFs are still leading, but still quite extended short-term. Some old economy ETFs extended further on their medium-term breakouts and
The surge in the 10-yr Treasury Yield is the talk of the town this week. Last week it was the breakout in the Russell 2000 ETF (IWM). Is there a correlation here? Today’s commentary will look at the relationship between the 10-yr Treasury Yield and three relative performance charts
The broad market environment remains bullish with more groups participating over the last few weeks. Stocks were hit with a bond-market bombshell on Wednesday as the 10-yr Treasury Yield surged 9%. This sudden move spooked high-beta stocks, emboldened the Dollar and led to a big breakout in gold. Tech-related ETFs were hit the hardest
The Market Regime remains bullish and participation broadened over the last six weeks. SPY and QQQ were already doing their part with clear uptrends and new highs throughout the year. The S&P MidCap 400 SPDR (MDY) broke out of a long triangle in late October
The October run continued into November with small-caps breaking out and participation expanding. Some of the old leaders, however, are still leading with new highs in QQQ, XLK and some tech-related ETFs. The setups and breakouts from early-mid October are bearing fruit and ETFs with big runs the last four to five weeks are in the trend-monitoring phase.
This commentary is an addition to Thursday’s ETF report. ETFs in today’s commentary formed long corrective patterns from spring to fall and made various breakout attempts here in October. The Transports ETF is the leader with a strong move above the August high. The copper and base metals
The Market Regime remains bullish with SPY and QQQ hitting new highs on Thursday. The S&P MidCap 400 SPDR (MDY) and S&P 500 EW ETF (RSP) hit new highs Monday-Tuesday and then fell back pretty hard on Wednesday, before bouncing on Thursday. New highs are clearly more bullish than bearish. The noise level is
Earnings season is in full swing and this is leading to a little more volatility. Volatility mostly affects individual stocks, but it can also affect market cap weighted ETFs when the big components make big moves. Overall, the market regime remains bullish with fresh new highs in SPY, RSP and MDY. There are not
The Biotech ETF (IBB) is a rather peculiar ETF because of the performance differentials among its components and the changing of the weights. Moderna (7.84%) and BioNTech (3.82%) account for almost
The Market Regime remains bullish and participation broadened here in October. The Finance SPDR and Consumer Discretionary SPDR hit new highs in October, and the Technology SPDR ended its correction with a breakout. Broadening participation comes from the Industrials SPDR and
SPY and QQQ ended their corrections with breakouts last week and this is bullish for the broader market. Small-caps (IJR) are also making a breakout bid as strength within the market broadens. In particular, we are seeing leadership from ETFs associated with industrial
The S&P 500 SPDR (SPY) followed through on last week’s gap with a gap-surge on Thursday. In contrast to last week’s gap, SPY moved higher after the strong open on Thursday and formed a long white candlestick. The open is near
Even though breadth during the recent pops was uninspiring, the bulls are not backing down and we are in a bull market environment, as per the Market Regime page. There are really only two trading/investing options in a bull market: long or cash. Short positions are not realistic options. There are
The S&P 500 and broad market indexes popped on Wednesday-Thursday. We also saw short-term breakouts in a number of ETFs. Are these breakouts enough to end the corrective period that began with the September decline? Or, is this just a short-term head fake that will
There are plenty of ETFs with corrections or downtrends the last few months, but some of these are showing short-term relative strength. Similarly, several tech-related ETFs firmed with hamari on Monday-Tuesday and closed strong on Wednesday.
The streak finally ended as the S&P 500 fell more than 5%. Using SPY as the proxy, the ETF had gone some 227 days without a pullback of more than 5% (closing prices). The 5.31% decline here in September is the largest since October 2020. SPY fell around 10% in September
There are some new trend signals over the last five days. The Bank SPDR (KBE) and Regional Bank ETF (KRE) followed through on last week’s surges and StochClose moved above 60 to turn bullish. Also notice that the 52wk Range
Signs of a market rotation began to appear last week as the 10-yr Treasury Yield surged, the 20+ Yr Treasury Bond ETF plunged and the Regional Bank ETF advanced over 3%. Techs and high-flyers held up relatively well last week, but got pummeled on Tuesday with many falling more than 3%.
As its name implies, the Zweig Breadth Thrust quantifies bullish breadth thrusts using a setup level and a signal level. The setup occurs when the 10-day EMA of Advances / (Advances + Declines) dips below .40 and the bullish signal triggers
The Fed has yet to actually start tapering, but dropped some hints that it would if the economy continues to strengthen. The bond market, which tends to lead the Fed, reacted violently as the 20+ Yr Treasury Bond ETF fell over 2% and the 10-yr Treasury Yield broke above
After a dozen new uptrend signals in late August and early September, the tide changed as the S&P 500 experienced its first 4-5 percent pullback since May. This pullback was enough to reverse some of the new uptrend signals and there were 14 new downtrend signals over the last five days. I am referring only to the 113 equity-related ETFs
The Market Regime remains bullish and the S&P 500 is just 4% below its recent high, but breadth has been waning for months and many groups are already in corrective mode. The 4% decline
The stock market remains in a funk. Large-caps finally pulled back with the S&P 500 loosing a whopping 2% from high to low (Sept 2 to 14). SPY remains is a clear uptrend with a rising channel and QQQ has not touched its 50-day SMA since June 3rd. Things are different outside of the S&P 500 because
The broad market environment remains bullish for stocks and the vast majority of equity related ETFs are in uptrends (bullish StochClose signals). Even so, I remain concerned with the broader market environment because breadth continues to deteriorate and a number of ETFs peaked months ago. The Russell 2000
The list of ETFs with uptrend signals over the last three weeks reads line the who’s who of the high flyers. This list includes the Video Games eSports ETF (ESPO), the ARK Innovation ETF (ARKK), the Clean Energy ETF (QCLN)
Timing a correction in the S&P 500 has been a fool’s errand since the November surge and breakout. The index brushed off negative seasonality in February and August. Techs and high flyers declined from mid February to mid May, but the S&P 500 kept right on trucking as money rotated
Of the 113 ETFs in the Core List, 79 are in uptrends (70%) and 34 are in downtrends (30%). This is more than enough to support a bull market in stocks. Six of the seven major index ETFs are in uptrends (SPY, RSP, MDY, IJR, IWM , QQQ) and one
Breadth remains bullish overall. Some 80% of S&P 500 stocks are above their 200-day SMAs and High-Low Percent expanded to +17.82% this week. This means some 18% of stocks in the S&P 500 recorded 52-week highs this week. While the percentage of stocks above the 200, 150 and 100 day SMAs is not as high as it was in April, far more stocks are above their respective SMAs than below and this is enough to support a bull market. Large-caps
There were several new uptrend signals this past week and these signals suggest a stronger risk appetite in the stock market. Today’s report will review the StochClose indicator and some of these new trend-following signals. We will also show these signals on the revamped Ranking and Trend Table. Today’s charts also
The Composite Breadth Model remains bullish, which means the market regime is bullish. Breadth is not as strong as it was in April, but this has yet to affect the S&P 500. Over 90% of S&P 500 stocks were above their 100-day SMAs in April and now
Chop is the name of the game for a large part of the market. Some ETFs are grinding higher with tight and steady uptrends (SPY, XLC) and some are in more volatile uptrends (QQQ, IHI). Several of these are quite extended too. We saw a number of
The Composite Breadth Model remains bullish, which means the market regime is bullish. However, we are seeing more deterioration under the surface and also some strength in Treasuries, which are risk off assets. We were seeing a rotation into ETFs relate to finance, industrials, and materials as the 10-yr yield surged above its 200-day SMA last week. This surge/breakout failed and this failure is threatening to derail the rotation seen in early August. Large-caps are still holding up fine (SPY,
ETF Ranking, Signals and Setups Table Watch out for rising correlation in the stock market. Selling pressure was concentrated in large-caps on Wednesday as S&P 500 Advance-Decline Percent (-78.2%) plunged to its lowest level since June 18th. I view the plus and minus 80% levels as significant because they represent 90% up/down days. Plus/Minus 80% means 450 or more of S&P 500 stocks advanced/declined (450/500 = 90%). Advance-Decline Percent is advances less declines divided by total issues (450 – 50
Today’s commentary will look at the recent widening in Junk bond spreads because this widening shows less confidence in corporate bonds with the highest risk. We are also seeing some risk aversion in the stock market because small-caps are lagging large-caps. Small-caps represent higher
The stock market environment is bullish and we are seeing a rotation within the stock market. Yield spreads are edging up, but so is the Fed balance sheet. Elsewhere, we are seeing more risk appetite when looking at the stock/bond ratio. The recent breakdown in bonds appears
Signs of rotation kicked in with a big surge in the 10-yr yield and the rotations continued over the past week. We are seeing leadership from the groups that lagged from May to July. These are ETFs related to finance, industrials, materials and housing. ETFs related to tech and healthcare led the market from May to July and these groups could be poised
As its name suggests, the Sports Betting iGaming ETF (BETZ) is designed to capture the rise in online gambling. Online gambling has been around for a while, especially in Europe, but it is relatively new in the US because more state legislatures are making it legal. I am not here to argue the fundamentals
This report covers the intermarket arena: oil, bonds, gold and the Dollar. In particular, the 200-day SMAs are in play for the Treasury Bond ETFs, the 10-yr Treasury Yield, the Gold SPDR and the Dollar Bullish ETF. The Treasury bond ETFs and Dollar are just above their FALLING 200-day SMAs, and the Gold