Stock Report – Shaky Market – 3 Defense Stocks – Off-Price Retailer – Healthcare Leader

There are sizable and concerning pockets of weakness within the stock market, but SPY and QQQ are still in uptrends and testing key levels. The EW S&P 500 ETF, Technology SPDR and Industrials SPDR joined the breakdown list, along with small-caps (IJR) and mid-caps (MDY). One tech ETF stands out. We are also seeing long-term uptrends and relative strength in these eight ETFs (XLF, XLC, XLU, CIBR, IHI, AMLP, IYZ, GLD).

Stocks were hit hard the last two weeks with small-caps and tech stocks leading the way lower. SPY is down around 4.6% from its late February high and entering the garden-variety correction range (5-8 percent). Believe it or not, five to eight percent pullbacks are not that uncommon – but they feel a lot worse

The weight of the evidence remains bullish for stocks, but this is not a bull market that lifts all boats. I am also seeing splits within sectors and industry groups. This is a selective bull market. Large-caps are holding up better in February and small-caps are lagging. The tech sector and Nasdaq 100 are also holding up relatively well, even with the swoon over the last five days.

Breadth weakened into January as the market corrected, but then rebounded into February with NDX breadth leading the way. S&P 1500 breadth remains the weakest of the three (blame small-caps and mid-caps). This week’s big shift is the breakout in the 7-10 Yr Treasury Bond ETF (IEF) and the break down in the 10-yr Treasury Yield. Lower rates may seem positive for stocks, but

Stocks were hit hard the last three days with the high-beta names leading lower. Defensive groups (Healthcare, Staples, Utes) and bonds picked up the slack. Even though the weight of the evidence remains bullish for stocks, there are some sizable pockets of weakness with lower highs forming in key groups (banks, industrials, software, infrastructure), as well as fresh new lows in housing ETFs. Gold is holding strong, but Bitcoin is under pressure as part of the risk-on trade.

Today’s report features five new setups and three setups from the prior week. The Cybersecurity ETF (CIBR) is perhaps the strongest group in the market right now and we are covering two stocks from this group. We also have a data center REIT setting up as well as a Mag7 stock hitting a Bullish Setup Zone.

The weight of the evidence continues to support a bull market in stocks. All three major index ETFs are in long-term uptrends and all nine breadth indicators are on bull signals (%Above 200-day SMA, %Above 150-day SMA, High-Low Percent). The breadth indicators weakened into January as the market corrected, but then rebounded into February with Nasdaq 100 breadth

Don’t look now, but tech is back with XLK joining QQQ in the new high parade. We are also seeing new highs in ETFs related to Cybersecurity and AI, as well as breakout extensions in Software (IGV) and Cloud (SKYY). Semis continue to lag, but we will take a second look at the SMH chart with a longer timeframe. Elsewhere, ETFs related to industrials are turning back up, defense ETFs pulled back after new highs and the banking ETFs are holding their breakouts.

The weight of the evidence remains bullish for stocks (bull market). Large-caps (SPY, QQQ) are leading equal-weights, mid-caps and small-caps (RSP, MDY, IWM). QQQ is leading SPY because the former recorded a fresh 52-wk high last week. Several tech-related ETFs are leading the market with bullish setups forming in MAGS and CLOU. I am also watching the flag breakout in Industrials SPDR and setups in four related ETFs (Aerospace & Defense and Infrastructure).

There are two new setups in this report (PAYC, S), and two monitoring setups (ABNB, COIN). The latter two are monitoring setups because these stocks report earnings after the close today. Trading based on chart setups and signals is discretionary in nature. I do not

The weight of the evidence remains bullish for stocks, but signs of weakness are appearing under the surface and rates are rising. SPY is near a new high this year, but fewer stocks made it back above their 150 and 200 day SMAs this year, and there were fewer new highs. Breadth is deteriorating and we are now seeing a breakout in the 10-yr Treasury Yield. This could foreshadow a corrective period for the broader market.

Large-caps remain strong with SPY forming a bullish continuation pattern and QQQ holding its recent breakout. Small-caps, in contrast, are struggling with their breakouts and lagging. There were lots of wedge breakouts in mid January and these are holding. I am raising my re-evaluation levels on several ETFs. More recently, I am seeing short-term breakouts in ETFs related to industrials and utilities. We also cover ETFs related to AI, blockchain and managed futures.

The weight of the evidence remains bullish for stocks, but small-caps and mid-caps continue to lag. We are watching a bullish pattern in SPY and a breakout QQQ. Several tech-related ETFs extended on their mid January breakouts and hit new highs. Elsewhere, short-term bullish patterns formed for ETFs related to industrials, infrastructure and defense.
The Finance SPDR (XLF) and Communication Services SPDR (XLC) are leading the sectors with new highs here in February. The Technology SPDR (XLK) is holding up as it surged off support

The long-term trends are up for the major index ETFs and their respective breadth indicators are net bullish. Long-term breadth indicators deteriorated sharply in December and rebounded in January, but the rebounds were not that strong. Around 60% of S&P 500 stocks are above their 200-day SMAs, which means 40% are below

There were many wedge breakouts in mid January and most of these breakouts are holding. Chartists must now set the level that proves these breakouts wrong. Today’s video starts with an example using the Software ETF. We then show the re-evaluation levels for several ETFs with wedge breakouts. Elsewhere, the Technology SPDR is lagging, the Healthcare SPDR is rebounding, the Biotech ETF is going for a breakout and the Gold SPDR is leading with a new high.