Systematic Trading Strategies and Next Level Trading Setups

REIT SPDR Holds Key Moving Average as its Biggest Components Spring to Life

Ten of the eleven sector SPDRs are positive over the last three months. The Real Estate SPDR (XLRE) is the only sector sporting a loss (~.75%), but I am not concerned with relative weakness because the price chart looks bullish overall. Note that XLRE was the leading sector in early September with the biggest year-to-date gain at the time. It basically moved from leader to laggard over the last three months. Can it move back to leader? Let’s check the chart.

Despite relative and absolute weakness since mid October, the price chart shows promise as XLRE bids to end its correction. The advanced some 35% from late December to late October, and hit a new high in the process. This was a massive move and the ETF was entitled to a rest at some point. That point came in the fourth quarter as the stock fell back to the rising 200-day SMA. I still think the long-term trend is up because the PPO(20,200,0) remains positive. This means the 20-day EMA is above the 200-day EMA.

Now let’s look at the pattern at work. A falling wedge formed from October to December. These patterns are typical for corrections after advances. The ETF broke above the wedge line in late December and this breakout is largely holding over the last two weeks. This breakout signals an end to the corrective period and a resumption of the bigger uptrend. As such, a move towards, and above, the October high is expected. I would re-evaluate this bullish thesis on a close below 37.50.

The sector SPDRs are often dominated by a few large-caps and XLRE is not an exception. The two largest stocks, American Tower (AMT) and Crown Castle (CCI) account for over 20% of the ETF. Unsurprisingly, these two cell tower REITs have similar patterns at work. Both hit new highs in early September after big advances, corrected into November and broke out in December. These breakouts bode well for the stocks and for XLRE.

Price is the Only Thing that Matters

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Putting Declines into Perspective to Find Opportunities – A Tech Stock Poised to End its Correction

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2019 was quite the year with many stocks moving sharply higher from January to July or August. In particular, several Technology stocks moved higher during this period and then corrected into October. We can see this pattern reflected in the Equal-Weight Technology ETF (RYT) as it advanced over 40% and then corrected for three months.

Putting Declines into Perspective to Find Opportunities – A Tech Stock Poised to End its Correction Read More »

Market Timing Models – Short-term Test Awaits as Noise Levels Increase

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It’s just the second trading day of 2020 and already the markets are setting up for a test. Stock futures are sharply lower as the S&P 500 looks set to open down around 1%. Gold, the Dollar and Treasury bonds are sharply higher as money looks for alternatives. A sharp decline in the S&P 500 could reverse the short-term uptrend and herald the much awaited correction.

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Grouping and Ranking Core ETFs – Broad Strength in Equity-Related ETFs and a few Pullbacks

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There are plenty of strong uptrends in the core ETF list. In fact, 50 of the 60 ETFs in this core list are in uptrends of some sort. The S&P 500 SPDR (SPY), Nasdaq 100 ETF (QQQ) and Technology SPDR (XLK) are in group 1 and in the strongest uptrends. Large-caps and large-cap techs are still the strongest overall.

Grouping and Ranking Core ETFs – Broad Strength in Equity-Related ETFs and a few Pullbacks Read More »

Grouping and Ranking Core ETFs – Consumer Discretionary and Precious Metals Come to Life

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The strong continue to strengthen and the laggards are leading short-term. Overall, this suggest that the bull market continues to broaden and pick up more converts. The S&P 500 SPDR, Nasdaq 100 ETF and Technology SPDR were leading all year and they simply extended their leads with fresh new highs this week. The energy-related ETFs were lagging all year and then surged over the last five weeks.

Grouping and Ranking Core ETFs – Consumer Discretionary and Precious Metals Come to Life Read More »

Market Timing Models – S&P 500 is Extended, but not Yet Frothy

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There is not much change in the broad market picture. The S&P 500 SPDR hit a new high again this week and extended its uptrend. The long-term trend has been up since February and SPY has been on a tear since early October. Barring a 2.22 point decline today (Friday), the S&P 500 SPDR is set to close higher for 11 of the last 12 weeks. It is an extraordinary run (+9.71% since early October), and shows no signs of slowing.

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Market Timing Models – History does not Repeat itself, but it Often Rhymes.

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Today’s report will focus on the S&P 500, the current advance and a future scenario. I am focused on the S&P 500, and SPY by extension, because this index is the driving force in the stock market. It accounts for some 80% of the US equity market and is the most widely followed benchmark for US stocks. Small-caps and mid-caps are more likely to follow the S&P 500, not the other way around.

Market Timing Models – History does not Repeat itself, but it Often Rhymes. Read More »

Grouping and Ranking Core ETFs – Leaders Extend Gains as ETFs in Downtrend Get Big Bounces

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Strength in the US stock market is broad-based with 25 of the 46 (53%) equity-related ETFs hitting new highs over the last five days (including EFA). Of the 21 ETFs that did not hit new highs, several led the stock market over the last two weeks with big counter-trend bounces. Four energy-related ETFs were up double digits the last 11 days and XLE (+5.83%) is the leading sector over this time period.

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Market Timing Models – Bull Market Continues to Broaden with More Sectors and Stocks Leading

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The major index ETFs extended their breakouts as the bullish forces, which were highlighted last week, dominate heading into year end. Three of three technical forces remain bullish. Two of the three “other” forces turned from rumor to news this week.
Even though I mentioned these fundamental forces last week, the technical forces are what really drive my market stance.

Market Timing Models – Bull Market Continues to Broaden with More Sectors and Stocks Leading Read More »

Grouping and Ranking Core ETFs – Some Rotation Surfaces as Leaders Pull Back and Laggards Bounce

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After a big advance in October and November, many ETFs finally succumbed and pulled back. Some of the leading ETFs weakened the last two weeks, while some of the lagging ETFs picked up the slack. The tech-related ETFs led the pullback the last eight days (FINX, IPAY, HACK, SKYY, IGV and FDN).

Grouping and Ranking Core ETFs – Some Rotation Surfaces as Leaders Pull Back and Laggards Bounce Read More »

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