There is some curious activity in the intermarket arena. Namely, we are seeing continued weakness in Treasury bonds, relative strength in inflation-indexed bonds, weakness in the Dollar and strength in several commodity groups. I do not trade off intermarket relationships, but I do trade specific patterns and there are several commodity related ETFs with bullish breakouts working. Today’s commentary will focus on the DB commodity ETFs:

Today we will start with small-caps, industrials and banks, because these three could be turning the corner. The IWM:SPY ratio moved above its 40-week SMA for the first time in 2 years, XLI is above the 200-day and KRE rose from the ashes the last four weeks. GLD may be parting ways with TLT and hooking up with SPY again. The breadth models remain bullish and there were two new signals in the short-term breadth models. The sector breadth model also remains firmly bullish with the newest signals coming

Stocks surged the last two weeks with a new group of leaders. Mid-caps, small-caps, banks and utilities led the charge. Large-caps and tech stocks lagged, but they still gained and remain bullish overall. The period from late May and early June was the last time we saw small-caps and banks take the lead. After a 15% advance in SPY and 25% surge in IWM, stocks rested from June 8th to July 9th with consolidations.

Today’s post starts with trend-following and insights from a recent podcast featuring Nick Radge. I then analyze the benefits and drawbacks of using a market trend filter for a broad-based ETF strategy. And finally, I review the short-term breadth model, which was developed in response to the March-April surge.

The long-term trend is up for the S&P 500 and Nasdaq 100, but questionable for the S&P SmallCap 600 and S&P MidCap 400. Small-caps and mid-caps are largely off my radar right now. Despite long-term uptrends and bullish evidence for large-caps, I remain in the correction camp for three reasons. First, SPY and QQQ became extremely extended in early September, as measured by

SPY and QQQ fell in September and are in short-term downtrends, which are considered corrections within a bigger uptrend. The S&P SmallCap 600 SPDR and S&P MidCap 400 SPDR also fell in September, but these declines do not look like mere corrections within a bigger uptrend. MDY, IJR and IWM fell well short of their January-February highs and broke their downward sloping 200-day SMAs. These three look like they are reversing the uptrends that began with the March blast off.

This is a midweek update to address Monday’s price action and its effect on the breadth indicators and models. At this stage, there was only one new signal: %Above 200-day for $MID broke below 45%. Nine of the ten breadth models remain bullish, but we saw more deterioration in the breadth indicators on Monday. Selling pressure was the strongest un small-caps and mid-caps over the last five weeks (since August 15th).

This is a midweek update to address Monday’s price action in some of the ETFs in the core chart list. We saw a continuation lower in SPY and QQQ, but some of the tech-related ETFs held up relatively well. ETFs that held up relatively well during broad selling pressure are often the ones that lead on any bounce, even if it is just an oversold bounce. Elsewhere

The medium-term indicators and breadth models are still bullish, but the ROC Shock in early September and some waning breadth indicators argue for at least a correction of the March-September advance. I covered the ROC Shock in detail last week and will review the findings. First, keep in mind that the character of the market (SPY) changed in January 2018 as the swings became bigger and 52-week lows were interspersed with 52-week highs. Big swings and volatility are the order of the day for now.

Tech-related ETFs continue to drag their feet and remain in corrective mode. This puts the attention elsewhere and biotechs are picking up the slack. Namely, the Biotech ETF (IBB) and Biotech SPDR (XBI) made bids to end their corrections and resume their bigger uptrends. Elsewhere, precious metals related ETFs bounced within their consolidations and bond proxies popped with XLU and XLRE getting big moves.

The stock market was overextended in late August and the bulls gave it one more push higher with a small acceleration higher into late September. Technically, an acceleration higher signals an increase in momentum, which can be bullish. However, as with most technical signals, perspective is needed for interpretation. Today we will look at the accelerations that led to a reversal and the outsized decline. What do they portend going forward?

The bears fired a shot across the bow, but one or two days is not enough to reverse a strong uptrend. There were already warnings of a correction or pullback because SPY has been more than 10% above its 200-day since August 12th and QQQ has been 20% above its 200-day since July 6th. Of course, overbought indicators are not very good for timing a correction. In fact, I have yet to find a good indicator for timing a peak/pullback during a strong uptrend.

We all know that the S&P 500 is driven by large-caps, especially the big four, which account for over 20% of the index (AAPL, MSFT, AMZN, GOOGL). Furthermore, most of us are aware that breadth measures are not as strong as the S&P 500 and this is reflected in the S&P 500 EW ETF (RSP), which has yet to clear its June high. Breadth, however, is not exactly weak. It is just strong enough to sustain the advance. In other words, the cup is half full, not half empty.

The bulk of the evidence remains bullish for large-caps, large-cap techs and mid-caps, but mixed for small-caps. I am also seeing mixed performance within the S&P 500, especially when looking at the equal-weight sectors. Technology, Healthcare and Consumer Discretionary remain strong, while Finance, Energy and REITs are weak. Finance is the only big sector that shows underlying weakness though.

Today’s video will focus on the core ETF charts. We will start with the scatter plot and see that the bond ETFs in the upper left, which means they are oversold and in uptrends. On the ranking tables, ETFs related to Consumer Discretionary, Healthcare and Technology are leading. I continue to follow the Chandelier Exits for several ETFs as their uptrends extend (XLY, ITB, XRT). Elsewhere

I received some pertinent questions over the weekend and create a post to share the answers. My email answers were not as detailed as in this post, which provides more details and examples. The first question deals with the StochClose ranking and how to use it. This answer will also highlight seven broad trading strategy groups. Second

Even though the current advance is getting quite extended, the broad market environment remains bullish and the medium-term uptrends rule. Tech-related ETFs and stocks drove the market higher from late March to late June. Even though the tech surge slowed, participation broadened over the last six weeks as other groups picked up the slack. The Industrials SPDR (XLI) is the top performing sector since July 1st

The chart below shows year-to-date performance for the top 20 stocks in the S&P 500. Overall, the year is mixed with eleven up and nine down. Amazon is up over 70%, Apple is up over 50% and Microsoft is up over 30%. Facebook and Home Depot are dragging their feet with gains greater than 20%. As strong as the stock market seems, strength is clearly concentrated in a few stocks. Moreover, these few stocks are up big, really big.

There are times for setups and signals, and there are times to wait. The waiting game is either waiting for the next setup/signal to materialize or monitoring the current signal in play. At this stage, we are in the monitoring stage for several signals that triggered in the first half of July.

My current focus remains on the medium-term up trends, which began with the surge in late March. The bulls are still in control of these medium-term trends and we saw several short-term breakouts in July. Some breakouts were strong as price exceeded the June high (SPY), while some were feeble as price remains well below the June high (RSP). Strong or feeble, the breakouts are still holding and have yet to be proven otherwise.

The stock market remains mixed, which means it is a stock picker’s market. As the broad breadth measures suggest, this is not a bull market that lifts all boats and makes everyone look smart. This is a relatively narrow bull market with tech, healthcare and communication services leading the way.

The cup remains half full for the S&P 500 SPDR, but half empty for the S&P 500 EW ETF. This could change as RSI firms in a potential reversal zone with a Bollinger Band contraction. Bearish candlesticks are not slowing down QQQ and even IWM could be ripe for a breakout.

The stock market remains mixed overall with pockets of serious strength and pockets of weakness. The Technology and Healthcare sectors continue to lead, while the Finance and Energy sectors lag. QQQ hit a new high and is leading SPY, while large-caps are leading small and mid caps.

The mighty Nasdaq 100 and related technology groups continue to lead the market. In fact, one could even suggest that they are holding up the broader market, with some help from the Communication Services and Healthcare sectors. Together, these groups account for a big chunk of the S&P 500. Despite a big pocket of strength

The rock and the hard place is back. The major index ETFs are in medium-term uptrends that started in late March and have yet to reverse. These uptrends, however, are hitting resistance as the 200-day SMAs come into play for SPY and IWM. QQQ left its 200-day in the dust a long time ago.

Some ominous chart patterns are taking shape in the Nasdaq 100 ETF, S&P 500 SPDR and S&P 500 EW ETF. QQQ remains in a clear uptrend with a new high this week. SPY did not exceed its early June high this week and is lagging QQQ. RSP is lagging SPY because it is back below its 200-day SMA with a bearish wedge taking shape.

Today we will dive into long-term and short-term breadth models using the same indicators for four different indexes. These models cover the Nasdaq 100, S&P 500, S&P MidCap 400 and S&P SmallCap 600. Looking at a market of 1500 stocks, the evidence is mixed, at best. Three of the four long-term models are net bearish and all four short-term models are net bullish.

This is just a short update for SPY and a decision on the preferred moving average combo for the S&P 500. After a plunge on Thursday, stocks firmed on Friday and forged an intraday reversal on Monday. This firmness is occurring near short-term support for many ETFs and the major index ETFs held their intermediate uptrends, which have been in place since late March. Small-caps, housing, biotech, gold miners and corporate bonds led the advance.

Stocks took it on the chin Thursday with the biggest weekly decline since declines began (March). Once again, small-caps and mid-caps led the way lower with outsized declines. Even more disconcerting, we saw outsized declines in some key large-cap sectors as the Consumer Discretionary SPDR fell over 5%, the Industrials SPDR fell over 8% and the Finance SPDR fell 7%.

The market is a forward looking beast and we are seeing some pretty strong signals from short-term and medium-term breadth indicators. The long-term breadth indicators, however, are still lagging and have yet to trigger. Today I will put a medium-term breadth model to the test and show how to improve results with a simple timing mechanism.