Timing S&P 500 Swings Using the Bullish Percent Index

Topics covers in today’s video: top ranked ETF by StochClose, short-term signals in two breadth indicators, small-caps and banks lead lower, Fed balance sheets expands as junk bond spreads widen, short-term support levels to watch going forward, gold breaks out, junk bonds remain weak and TLT bounces off support.

Today’s report will start with the everywhere and nowhere chart for the S&P 500. We will then weigh the broad market evidence by looking at the weekly RSI range, the S&P 500 Bullish Percent Index and the breadth models. Short-term, the 20-day High-Low Percent indicator triggered a signal on Wednesday’s close and we are seeing short-term breaks in three key equal-weight sectors.

Tech and Healthcare led the market higher over the last eight weeks and these two groups are still holding up, as are their related ETFs. Despite leading, note they fell short of their February highs and could still be vulnerable to broad market weakness. Correlations tend to rise in bear market downturns. Some of the lagging groups are already breaking down, such as industrials and finance, and the SPY is also breaking down.

This is an update for the big three major index ETFs: SPY, QQQ and IWM. Stocks started strong on Tuesday, but ran into selling pressure and bearish candlestick patterns formed. SPY and IWM are in long-term downtrends and showing signs of weakness near key retracements. QQQ remains stronger, but I still think the big surge is a counter-trend bounce.

Today’s video starts with an overview of monthly seasonality and the equity curves for each month over the last 30 years. We then dive into the Index Breadth Model charts and show how the average stock in the S&P 500 is still struggling. I then look at SPX 20-day High-Low% and show the key levels to watch for SPY going forward. We finish with a ChartBook overview and StochClose rankings.

Today’s report shows that the S&P 500 equal-weight index has underperformed the S&P 500 since 2017 and the performance differential surged over the past year. Moreover, the average stock in the S&P 500 is still struggling. We also have an important bearish signal in the Sector Breadth Model and continued weakness in three key sectors.

In broad terms, it is a tale of three markets. First, we have a few ETFs near new highs, in clear uptrends and leading. Second, we have ETFs that are above their 200-day SMAs with above average retracements (>61.8%). Despite relative strength, these ETFs remain below their February highs. Third

This is just a quick update with two charts, SPY and QQQ. Both charts show RSI(14) and 20-day High-Low%, which is the percentage of 20-day highs less the percentage of 20-day lows for each index. This is a short-term breadth indicator that can help define the short-term trend. These charts were created with Optuma and chart is linked to a basic chart at StockCharts.

Today’s report will highlight a few ETF charts and then turn to the counter-trend bounces in the last three bear markets. After notching a 30+ percent gain on Wednesday and coming within 2% of the falling 200-day SMA, the S&P 500 turned down with a sharp decline on Friday. Technically, the short-term trend is still up for SPX, but it remains in a danger zone similar to prior bear market bounces.

A historical advance followed a historical decline as the S&P 500 got close to its late February levels and the scene of the crime. That crime was the breakdown that signaled the beginning of a bear market. Even though the surge over the last six weeks is also record breaking, it has yet to break the bear’s back. Today we will review the weight of the evidence and put this bounce into perspective.

Stocks went on a tear the last three days with small-caps and some forgotten groups springing to life. The S&P SmallCap 600 SPDR and the Russell 2000 ETF are up over 10% the last three days. The Retail SPDR is up around 10%, while the Regional Bank ETF surged 15.6% and the Home Construction ETF soared 17.76%. These are three days moves!

A battle royale is brewing as the long-term downtrends battle the short-term uptrends. Hmm, think I will bet on the heaviest fighter. Today we will try to handicap the winner and mark support for the big three (SPY, QQQ and IWM). I will also examine retracements in the key equal-weight sectors and dissect the signals in the sector breadth model. And finally, I will review recent trend signals in the sector SPDRs using the 125-day Full Stochastic and cover the Fed.

There are just a few clear uptrends, a handful of leaders and lots of counter-trend bounces. IBB and GDX hit new highs and are the leaders right now, while GLD, TLT and UUP are in clear uptrends. Then we get to the rest. Everything else is trading BELOW its prior highs, which were recorded in January or February.

Today we will start with some weekly charts to show performance since January 2018, and it ain’t pretty. I will then focus on the current bounce in the S&P 500 SPDR because it holds the key going forward. We will look at the danger zone for SPY and show that participation narrowed over the last week or so.

Today’s report will focus on the long-term trends for ETFs in the master ETF list (some 200). The vast majority are in downtrends, but 20 or so are bucking the selling pressure or holding up relatively well. I will also talk about trend signals versus setup signals. This report includes a trend table, some scatter plots and charts separating the relatively strong from the relatively weak.