Systematic Strategies and Next Level Technical Analysis

ETF Trends, Patterns and Setups – Oversold Bounces Materialize, Trend Monitoring Phase Kicks In

Use CRTL+P to Print
Annotated ETF ChartBook
Trend and Setup Table

There were dozens of ETFs with short-term oversold conditions and short-term corrective patterns working at the end of January. With a bounce the last two weeks, we now have a slew of ETFs hitting new highs again and 27 ETFs in the Core list (119) with double digit gains here in February. Momentum is just the gift that keeps on giving.

The performance since November is extraordinary. Here are some metrics since November 1st (69 days): 25 ETFs are up more than 50%, 61 are up more than 30% and 86 are up more than 20%. The S&P 500 SPDR (SPY) is up 19.46%, QQQ is up 23.5% and IWM is up 48.2%. The Alternative Harvest ETF (MJ) is up more than 200% and actually outperforming the Bitcoin Trust (GBTC), which is up just 192%. YOLO, PBW, REMX and PRNT are up more than 100%.

And here are the ETFs showing losses since November 1st (69 days): Gold Miners ETF (GDX), Gold SPDR (GLD), 20+ Yr Treasury Bond ETF (TLT), 7-10 Yr Treasury Bond ETF (IEF), Aggregate Bond ETF (AGG), Dollar Bullish ETF (UUP), Yen ETF (FXY)

The long-term trends are up for pretty much everything. In fact, only ten ETFs in the core list show bearish StockClose signals. The Yen ETF (FXY) and the Consumer Staples SPDR (XLP) were the most recent to trigger with bearish signals five and six days ago, respectively. Elsewhere, the bond-related ETFs, precious metals related ETFs and the Dollar are in downtrends.

With oversold conditions in late January and surges here in February, most ETFs are back in the trend monitoring phase. New highs are bullish and reaffirm the existing uptrends, but new highs are not considered tradable setups. In contrast, new highs are fine for trend-following and momentum strategies. For traders focused on mean-reversion setups and playable pullbacks, the trend monitoring phase is when we consider profit targets, trailing stops and/or exit strategies.

The January highs and the late January lows become bench mark levels to watch going forward. ETFs that exceeded their January highs this month continue to show leadership. ETFs that did not show some short-term relative weakness. Most ETFs also established short-term lows in late January and I will be watching these going forward. ETFs that should break these lows would show relative and absolute weakness. ETFs that hold would show relative strength.

Flying High, Really High

MJ, REMX

Momentum Leader Since March and November

SOXX, PBW, TAN, XBI

You can learn more about ATR Trailing stops in this post,
which includes a video and charting option for everyone.

Sharp Advance since November Breakout

SKYY, HACK

Steep Zigzag Higher Since November Breakout

MDY, IJR, IWM, QQQ, IBB, DBA

Modest Zigzag Higher Since November Breakout

RSP, SPY, XLK, TIP, HYG

Flag Breakouts in early January, Extension to New Highs

IGV, FDN

Short-term Support Break, Oversold Bounce to New Highs

IPAY, FINX

Mid January Breakout, New High this Week

ITB

Sharp Advance, Oversold/Flag, Breakout, Follow Through

XLF, KRE, XAR

You can learn more about ATR Trailing stops in this post,
which includes a video and charting option for everyone.

Oversold Bounce, Flag Breakout, Strong Follow Through

DBE, XLE, XES, XOP, DBB

Oversold Bounce and/or Flag Breakout, Weak Follow Thru

XLB, AMLP, XME

Slow and Stable Uptrend

XLV, IHI, IHF, PHO

Early December Breakout, Choppy Follow Through

SLV

ETFs from here are lagging over the last few months or in downtrends. Note the gold and Treasury bonds are the weakest of all right now.

Slow Uptrend, Below November High, Wedge Breakout

XLU, REZ

Other ETFs and Groups:

Breakout from Long Consolidation, but still Lagging: XLRE

Lagging the last Few Months: XLI, XLP, KIE

Downtrend or Nowhere for 5+ Months: TLT, AGG, LQD, UUP, GLD, GDX

Thanks for tuning in and have a great day!

Timing Models – Red Herrings, Big Oversold Bounces, New Highs, RSI Streak Ended and IWM Remains Extended

By

Stocks shrugged off a sharp decline the last week of January and rebounded the first week of February with a strong surge. This surge extends the bigger uptrends as SPY, QQQ and IWM recorded new highs. The Technology SPDR (XLK) and Communication Services SPDR (XLC) led the sector SPDRs with new highs. The Consumer Discretionary SPDR (XLY) came close to a new high on Thursday and could hit one with further strength on Friday. The Energy SPDR (XLE) led with the biggest

Timing Models – Red Herrings, Big Oversold Bounces, New Highs, RSI Streak Ended and IWM Remains Extended Read More »

ETF Trends, Patterns and Setups – Oversold Bounces Materialize, Techs Lead, Energy-Related ETFs Break Out, REITs Perk Up

By

Dozens of ETFs became short-term oversold last week and most of these bounced this week. A combination of bullish seasonal patterns (turn of the month), short-term oversold conditions and longer-term uptrends paved the way for this bounce. Despite these bounces, stocks in general still seem ripe for a corrective period and February is historically one of the weaker months.

ETF Trends, Patterns and Setups – Oversold Bounces Materialize, Techs Lead, Energy-Related ETFs Break Out, REITs Perk Up Read More »

Turn of the Month Strategy – Strong Long-term Performance, Beats Buy-Hold, Some Weak Months

By

The turn of the month shows a strong bullish bias with an extremely stable equity curve that really took off the last few years. This strategy, which is only invested 38% of the time, outperformed buy and hold with a higher Compound Annual Return. Overall, the eight day percentage change at the turn of the month is positive 68% of the time for SPY. Despite strong numbers overall, February is weakest month when testing over the last twenty years, and we just happen to be in February.

Turn of the Month Strategy – Strong Long-term Performance, Beats Buy-Hold, Some Weak Months Read More »

SOXX Follows Overbought Extreme with Outsized Decline

By

Last weekend’s post showed the Semiconductor ETF (SOXX) with a 10 day overbought streak and several ETFs with even bigger overbought streaks. These streaks came to an end this week as SOXX fell 6.21%, its biggest weekly decline since mid March. As measured by Normalized ROC, this is an outsized decline that argues for at least a corrective period over the next few weeks.

SOXX Follows Overbought Extreme with Outsized Decline Read More »

Timing Models – Weight of the Evidence, SPY Breaks RSI Streak, ROC Shocks and Bearish Breadth Signals

By

The weight of the evidence for stocks remains bullish because the big trends are up, the breadth models are bullish and yield spreads are narrow. Stocks are up considerably since late October and we started seeing signs of excess in January. This week we started seeing signs that some uptrends are under threat. There were outsized declines in some key ETFs, the RSI above 50 streak ended for SPY and there were three bearish

Timing Models – Weight of the Evidence, SPY Breaks RSI Streak, ROC Shocks and Bearish Breadth Signals Read More »

ETF Trends, Patterns and Setups – Outsized Declines, Year-to-date Laggards, Correction Consequences

By

With some pretty sizable declines the last five days, a number of ETFs are now in the red for the year. 99 of the 118 ETFs in the Core list are down over the last five days and 38 are down year-to-date. This shows some pretty broad selling pressure. The biggest losers year-to-date include: Gold Miners ETF (GDX), Mobile Payments ETF (IPAY), Aerospace & Defense ETF (ITA), Airlines (JETS), Industrials SPDR (XLI) and Metals & Mining SPDR (XME).

ETF Trends, Patterns and Setups – Outsized Declines, Year-to-date Laggards, Correction Consequences Read More »

Bull Markets, Gold, Silver and Narratives

By

While intermarket narratives make for interesting debate over a beer, we cannot possibly know all the factors driving asset prices and their weighted influence. Well, at least I cannot. How to we factor in Fed policy, interest rates, interest rate differentials, inflationary pressures, inflation differentials, fiscal stimulus, debt, trade flows, current accounts, economic growth, internal politics and geopolitics. You get the picture.

Bull Markets, Gold, Silver and Narratives Read More »

SOXX and other ETFs with Extended Overbought Conditions

By

The Semiconductor ETF (SOXX) and several other ETFs are on a serious roll in 2021. For the fourth time since 2009, 14-day RSI was above 70 for ten or more days. This is an exceptional streak, but SOXX is not alone and there are even longer streaks. The following list shows some ETFs and the number of days RSI has been above 70: ROBO (39), DRIV (25), ARKQ (13), EWT (13), MOO (12), XRT (11), SOXX (10), YOLO (10). Note that these numbers are based on Thursday’s close.

SOXX and other ETFs with Extended Overbought Conditions Read More »

Timing Models – Broad Strength Remains, Breakouts Extend, QQQ Returns, Yield Spreads Narrow Further

By

Just when you thought it could not get any better, we are seeing fresh new highs in SPY, a resurgence in QQQ, new lows in the yield spreads and a new high in the Fed balance sheet. Over 90% of stocks in the S&P MidCap 400 and S&P SmallCap 600 are above their 200-day SMAs and 150-day SMAs, while over 85% of stocks in the S&P 500 are above these moving averages. Breadth and price action are strong so what could go wrong?

Timing Models – Broad Strength Remains, Breakouts Extend, QQQ Returns, Yield Spreads Narrow Further Read More »

ETF Trends, Patterns and Setups – New Highs Galore, Techs Still Leading, Bond-Proxies Pop

By

Stocks as a whole remain overextended and strong. The big three (SPY, QQQ, IWM) are setting the tone for the overall market as they remain with tight rising channels and steady short-term uptrends. Some ETFs look quite ripe for a pullback (SOXX, PBW, TAN), but there are also ETFs that sport fairly fresh breakouts (XLI, KIE, XLU and REZ). In fact, we are seeing some money move bond-proxies with the breakouts in XLU and REZ

ETF Trends, Patterns and Setups – New Highs Galore, Techs Still Leading, Bond-Proxies Pop Read More »

A Top or a Mere Correction?

By

Visual chart analysis is prone to subjectivity and biases. While we cannot completely remove subjectivity, we can approach chart analysis in a systematic fashion and increase objectivity. This commentary will show an example using the Home Construction ETF (ITB) because the ETF has traded flat since mid October. Is this a top or merely a correction?

A Top or a Mere Correction? Read More »

Timing Models – Weight of Evidence, Not Everything is Overextended, Yield Spreads Narrow Further

By

Stocks are in the middle of a strong advance with small-caps leading the charge. The middle, in this instance, refers to a point after the beginning because I do not know where the end will be. IWM appears quite extended after a 39% advance the last eleven weeks, but the price charts for SPY and QQQ do not look that extended. The latter two broke out in early November and continue to work their way higher. Even though small-caps, micro-caps and mid-caps are getting most of the attention right now, SPY and QQQ are holding their own just fine.

Timing Models – Weight of Evidence, Not Everything is Overextended, Yield Spreads Narrow Further Read More »

ETF Trends, Patterns and Setups – Breakouts Hold and Uptrends Extend as RSI Reaches New Extremes

By

There are not a lot of setups this week because most equity-related ETFs moved higher the last two to three weeks. Most, but not all. There are still some setups working in XLU, REZ and ITB, but these three are lagging over the last few months. We are also seeing some relatively fresh breakouts in XLI and XAR, as well as hard throwbacks in GLD and SLV. These four are still in setup territory. All charts are covered below.

ETF Trends, Patterns and Setups – Breakouts Hold and Uptrends Extend as RSI Reaches New Extremes Read More »

Treasury Yields, Inflation, Real Yields and Gold – Setting Stops to Filter Out Noise

By

Bonds and gold were spooked last week as the 20+ Yr Treasury Bond ETF (TLT) fell 4% and the Gold SPDR (GLD) fell 2.81%. Note that GLD surged over 2% on Monday’s open and then fell over 5% the last three days of the week. Wow! Today we will look at the 10-yr Yield, Inflation, the Real Yield and gold. There is an interesting narrative at work, as always, but we are usually better off focusing on the chart of the underlying and ignoring the narrative.

Treasury Yields, Inflation, Real Yields and Gold – Setting Stops to Filter Out Noise Read More »

Timing Models – Small-caps continue to Lead, Leadership Broadens, Junk Yields Narrow Further

By

The rally is gaining steam (momentum), the leadership circle is broadening (new highs) and the riskiest stocks are leading (small-caps). We are also starting to see stories suggesting that this rally is unstoppable. Maybe it is, maybe it isn’t. There will be a pullback at some point, but it is much harder to time “overbought” pullbacks than oversold bounces. The big trend and bull market are the dominant forces at work in the

Timing Models – Small-caps continue to Lead, Leadership Broadens, Junk Yields Narrow Further Read More »

Exit Indicators – Trend Reversal, Chandelier, Parabolic SAR and ATR Trailing Stop – Resources

By

Chartists trading oversold bounces and short-term bullish continuation patterns have two basic choices when it comes to an exit: trailing stop or trend reversal. Trailing stops are used initially as stop-losses and then trail price if/when it moves higher. Trend reversal exits are used to accumulate during an uptrend and exit when the longer-term trend reverses. This article will cover the trend reversal exit and three trailing stop alternatives.

Exit Indicators – Trend Reversal, Chandelier, Parabolic SAR and ATR Trailing Stop – Resources Read More »

ETF Trends, Patterns and Setups – Reopening ETFs Resume the Lead, Healthcare Stays Strong, GLD Breaks Out

By

Stocks are on the march again with the re-open trade leading the way here in 2021. The year ended with small-caps, retail, banks and energy leading the last two months of the year and this theme picked up again this week. A new year and a new month translates into money ready to go to work and this money found its way into the momentum leaders of the last three months.

ETF Trends, Patterns and Setups – Reopening ETFs Resume the Lead, Healthcare Stays Strong, GLD Breaks Out Read More »

ETF Trends, Patterns and Setups – Bull Market, Recent Breakouts, Current Consolidations, Inflationary Pressures

By

The bull market in stocks remains intact as we start 2021. The S&P 500 SPDR and Nasdaq 100 ETF finished the year at new closing highs, while the Russell 2000 ETF finished less than 2% from its December 23rd closing high, which was a 52-week high. For the year, IWM was up 18.34%, QQQ rose 47.57% and SPY gained 16.16% (sans dividends). Note the Silver ETF kept pace with QQQ in 2020.

ETF Trends, Patterns and Setups – Bull Market, Recent Breakouts, Current Consolidations, Inflationary Pressures Read More »

Scroll to Top