Systematic Trading Strategies and Next Level Trading Setups

IBB: Still a Correction within a Bigger Uptrend (Free)

I wrote about the Biotech ETF (IBB) on February 28th as it pulled back from a new high. The pullback was viewed as a correction within the bigger uptrend, but the correction extended further than expected. At the time, I drew a falling wedge on the chart and marked resistance with the red line at 163. IBB did not break out and did not reverse the short decline. Instead, the ETF fell all the way to the 146 area. What now?

Despite further weakness, I still view the February-March decline as a correction within a bigger uptrend. It was just a bigger correction within the box of chocolates. First and foremost, the bigger trend is up because IBB recorded a new high in February and price is above the rising 200-day SMA.

Even though the recent decline was big in percentage terms, it still looks like a “normal” correction for three reasons. First, the decline retraced 61.8% of the prior advance. This is part of a two steps forward and one step backward sequence of an uptrend. Second, IBB returned to prior resistance and this area turned into support. Broken resistance turning into support is a classic tenet of technical analysis. Third, IBB returned to the rising 200-day SMA.

These three technical items made for a confluence of support in the 144-146 area and IBB surged off this zone the last two weeks. There may be some backing and filling as the market finds its footing, but I think the path of least resistance is up for IBB.

This week at TrendInvestorPro we analyzed some Asian ETFs using Heiken-Ashi candlesticks and identified some possible reversal zones. Friday’s commentary looked at the secular downtrend in oil, while Thursday’s report showed what to watch for the flag breakouts in several ETFs. Click here to subscribe and get immediate access. 

Weekend Video – QQQ Pullback, Flag Breakouts Under Threat, Secular Downtrend in Oil, Healthcare ETFs Strengthen (Premium)

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QQQ and the tech-related ETFs triggered flag breakouts last week and these breakouts were challenged with a pullback this week. Some breakouts failed (IGV) and some are at their moment of truth (IPAY). Today’s video focuses on trailing stops and breakout zones for several of these.

Weekend Video – QQQ Pullback, Flag Breakouts Under Threat, Secular Downtrend in Oil, Healthcare ETFs Strengthen (Premium) Read More »

Timing Models – Triple Shock Thursday, the Secular Downtrend in Oil, Tech Sector Continues to Lag (Premium)

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We finally got a bit of a shake up this week as oil fell sharply on Thursday. We also saw big declines in the Nasdaq 100 ETF and Russell 2000 ETF. It was basically triple shock Thursday with small-caps, large-techs and oil getting hit hard. Tech and growth related ETFs were also hit hard as money moved out of the high-beta end of the market.

Timing Models – Triple Shock Thursday, the Secular Downtrend in Oil, Tech Sector Continues to Lag (Premium) Read More »

ETF Trends, Patterns and Setups – Flags and Flag Breakouts Dominate the Landscape (Premium)

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There are lots of flag breakouts here in March. Some triggered in early March, some last week, some this week and some are still working, which means price is still near the breakout zone. There were short flag/pennants that lasted a week or so (KRE), shallow flags (IJR), falling flags that lasted three weeks (SPY) and sharper falling flags that lasted four weeks (QQQ, IBB).

ETF Trends, Patterns and Setups – Flags and Flag Breakouts Dominate the Landscape (Premium) Read More »

Weekend Video and Chartbook – Flags and Zigzags, Big Week for XLP and XLU, Bullish Setups in 5 International ETFs (Premium)

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Stocks perked up this week and we saw flag breakouts in several ETFs. Small-caps led the charge with IWM hitting a new high. QQQ even rebounded with a breakout, but is still lagging year-to-date. Strategically, the Composite Breadth Model remains in bull market mode. Tactically, the breakouts are holding and we will show how to monitor SPY and QQQ going forward. It was also a big week for Utilities and Consumer Staples,

Weekend Video and Chartbook – Flags and Zigzags, Big Week for XLP and XLU, Bullish Setups in 5 International ETFs (Premium) Read More »

Timing Models – Going for Short-term Breakouts, Split Market with Enough Strength, Composite Breadth Model (Premium)

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SPY and IWM recorded new highs this week and continue to lead the broader market. Even though QQQ and XLK are underperforming this year, the old school sectors held strong and propped up SPY. After short pullbacks into early March, stocks caught a bid this week and we are seeing flag breakouts in

Timing Models – Going for Short-term Breakouts, Split Market with Enough Strength, Composite Breadth Model (Premium) Read More »

ETF Trends, Patterns and Setups – Energy, Banks and Industrials Lead, Tech ETFs Try to Find Footing after Normal Retracements (Premium)

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There are a lot of pullbacks to deal with today. Some pullbacks are shallow, some are deep and some are in between. Often, the bigger the advance, the deeper the pullback or retracement. Despite some big percentage declines, most of the pullbacks are normal in retracement terms (33 to

ETF Trends, Patterns and Setups – Energy, Banks and Industrials Lead, Tech ETFs Try to Find Footing after Normal Retracements (Premium) Read More »

Weekend Video and Chartbook – Split Market, S&P 1500 Breadth Signals, Short-term ETF Leaders, Treasury Yield Distractions (Premium)

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Despite an increase in intraday volatility the last few weeks, the recent pullback is actually quite tame, especially for the Russell 2000 ETF and S&P 500 SPDR. QQQ bore the brunt of selling pressure and the Nasdaq 100 Breadth Thrust Model turned bearish. I am not concerned with this signal because the S&P 1500 Thrust Model remains bullish. Today’s video will show backtest results

Weekend Video and Chartbook – Split Market, S&P 1500 Breadth Signals, Short-term ETF Leaders, Treasury Yield Distractions (Premium) Read More »

Timing Models – QQQ Leads Short-term Pullback, but Long-term Evidence Remains Bullish (Premium)

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The long-term evidence remains bullish, but the major index ETFs have moved into corrective mode of varying degrees. The S&P 500 SPDR and Russell 2000 ETF are in the midst of shallow pullbacks, while the Nasdaq 100 ETF is leading the way lower with a sharp pullback. Downside participation was so strong in the Nasdaq 100 that the Breadth Thrust

Timing Models – QQQ Leads Short-term Pullback, but Long-term Evidence Remains Bullish (Premium) Read More »

ETF Trends, Patterns and Setups – Finance, Industrials and Energy Hold up as Tech, Healthcare and High-Flyers Correct (Premium)

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Even though ETFs related to small-caps, mid-caps, industrials, finance and energy are performing well and not part of the correction process, a big portion of the core ETF list are in some sort of pullback or correction over the last few weeks. 48 of the 119 ETFs in the core list are down over the last 22 trading days (since January 29th) and 22 are down more than 5%.

ETF Trends, Patterns and Setups – Finance, Industrials and Energy Hold up as Tech, Healthcare and High-Flyers Correct (Premium) Read More »

Secondary Downtrends in Primary Uptrends Create Opportunities (IBB Example) (Free)

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With a pullback led by QQQ and the high flyers, several ETFs have become short-term oversold in a longer term uptrend. In Dow Theory terms, the primary trend for these ETFs is up and the secondary trend is down. A secondary downtrend within a primary uptrend is considered a correction within that uptrend and a possible opportunity.

Secondary Downtrends in Primary Uptrends Create Opportunities (IBB Example) (Free) Read More »

Weekend Video and Chartbook – QQQ Leads Lower, SPY and Oversold Conditions, Turn of the Month, Selling Climax in TLT (Premium)

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Stocks corrected over the last two weeks with QQQ leading the way. IWM held up the best and RSI moved into the oversold zone for SPY. Today we will look at previous instances when RSI became oversold for SPY. Some indicators are pointing to a multi-week correction (NDX %Above 50-day), but we also have the turn of the month upon

Weekend Video and Chartbook – QQQ Leads Lower, SPY and Oversold Conditions, Turn of the Month, Selling Climax in TLT (Premium) Read More »

Timing Models – QQQ Reverses Short-term Uptrend, 3 Big Sectors Weigh, Medium-term Participation Wanes within SPX (Premium)

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The long-term evidence (primary trend) is bullish, but we are seeing some short-term weakness (secondary trend). This is especially true in the Nasdaq 100 and Technology sector. SPY is holding up better because the Finance, Industrials and Communication Services are picking up the slack. The table below summarizes the broad market environment using the

Timing Models – QQQ Reverses Short-term Uptrend, 3 Big Sectors Weigh, Medium-term Participation Wanes within SPX (Premium) Read More »

ETF Trends, Patterns and Setups – Cyclical ETFs Lead, Tech ETFs Pullback, High-Flyers Correct Hard (Premium)

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February is turning into a big month for cyclically oriented ETFs. These include: Copper Miners ETF, Metals & Mining SPDR, DB Base Metals ETF, Oil & Gas Equipment & Services ETF, Oil & Gas Exploration & Production ETF, Airline ETF, Transports ETF, Industrials SPDR, Regional Bank ETF, S&P SmallCap 600 SPDR, S&P MidCap 400 SPDR and Semiconductor ETF. The lists below shows ETFs with big gains over the last 17 trading days (February).

ETF Trends, Patterns and Setups – Cyclical ETFs Lead, Tech ETFs Pullback, High-Flyers Correct Hard (Premium) Read More »

Weekend Video and Chartbook – Oil and Base Metals lead, XLI and XLF Hit New Highs, TLT Plunges with Outsized Decline (Premium)

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Today’s video starts with a performance overview for 14 asset class ETFs, sectors and top S&P 500 stocks. Small-caps, oil and commodity-related ETFs are leading the charge here in 2021. Financials are leading as XLF hit a new high and industrials came to life with XLI hitting a new high on Friday. Even though the long-term trends are up and the market is bullish overall, participation is narrowing within

Weekend Video and Chartbook – Oil and Base Metals lead, XLI and XLF Hit New Highs, TLT Plunges with Outsized Decline (Premium) Read More »

Timing Models – Commodities Lead in 2021, SPY Extends Uptrend, Extended Conditions Extend, Fed Balance Sheet Pops (Premium)

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Stocks and commodities are leading in 2021 (risk on). Small-caps took a breather this week, but the Russell 2000 ETF (IWM) is still the second best performer among 14 intermarket ETFs. The DB Energy ETF (DBE) is the top performer with an 18.9% gain and the DB Base Metals ETF (DBB) gets third place with a 7.5% gain. QQQ is holding its own with a 6% gain and the

Timing Models – Commodities Lead in 2021, SPY Extends Uptrend, Extended Conditions Extend, Fed Balance Sheet Pops (Premium) Read More »

ETF Trends, Patterns and Setups – Big Gains Since November, Big Months for Finance and Energy, A Few Corrections Underway

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Making money in the stock market has been pretty easy since November. And not just stocks. Oil, base metals, agriculture and silver are also up. Gold, the Dollar and bonds are down as money moved out of stock-alternatives and into riskier assets. As shown below, dozens of ETFs are up more than 40% since early November and many are up more than 20%.

ETF Trends, Patterns and Setups – Big Gains Since November, Big Months for Finance and Energy, A Few Corrections Underway Read More »

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