Recent Commentary and Analysis
The market is a forward looking beast and we are seeing some pretty strong signals from short-term and medium-term breadth indicators. The long-term breadth indicators, however, are still lagging and have yet to trigger. Today I will put a medium-term breadth model to the test and show how to improve results with a simple timing mechanism.
Before looking at the ETF rankings and charts, note that the S&P 500 closed above its 200-day SMA at the end of May and this signaled the all clear for some trend-following and momentum strategies. Many trend-following and momentum strategies are only active when the S&P 500 is in a long-term uptrend because
Today’s video will start with a 16+ year backtest of a slightly modified version of the Index Breadth Model. These results will be compared to buy-and-hold and a 5/200 cross for the S&P 500 SPDR. I will then review the current signals in the StockCharts breadth indicators. The upswing since late March dominates right now so
Today we will dive into breadth indicators and test a modified version of the Index Breadth Model here at TrendInvestorPro. First, however, I will review the S&P 500 SPDR as it toys with its 200-day SMA here at month end. In particular, I am monitoring upswings in four key major index ETFs. After the breadth dissertation
We are seeing some rotation in the market as the leaders stall and the laggards get in gear. The leaders from mid March to mid May lagged over the last two weeks, while the laggards from this period led. ETFs related to bonds, gold, healthcare and technology led the market during the rebound period and were the first to move back above their 200-day SMAs
We all know that many stocks in the Nasdaq 100 ETF (QQQ) are also part of the S&P 500 SPDR (SPY). In addition, it is clear that these QQQ stocks affect the performance of SPY. But how much exactly? Today we will answer that question and compare performance for these two ETFs.
The S&P 500 is at a moment of truth and the direction it takes will have ramifications throughout the stock market. Today we will review the indicators in the Index Breadth Model, show that the large-cap Bullish Percent Indexes are holding up better and cover the rising High-Low Lines. I will then turn to the QQQ effect on SPY and look at recent signals in SPY
The market, as measured by the S&P 500 SPDR, is at make or break level. Analysts love to talk about key levels and it seems that there is a new “key” level every week if you watch the wrong news outlets. Well, the S&P 500 is at a key level that we should watch closely. The long-term trend remains
Several key ETFs broke down last week and then recovered with big gap-surges on Monday. SPY was also seemingly on the verge of a breakdown, but snapped back with a gap and flag breakout. Today’s charts are littered with gaps and flag/pennant breakouts so we will focus on these.
Stocks surged on Monday with QQQ closing at its highest level since February 21st, SPY closing at its highest level since March 6th and IWM closing at its highest level since April 29th. And there you have the pecking order. QQQ is back to late February levels, SPY is back to early March levels and IWM has yet to exceed its April high. To record a 52-week high
The Bullish Percent Index is a breadth indicator that quantifies double top breakouts and double bottom breakdowns, Point & Figure style. Basically, this indicator measures higher highs (breakouts) versus lower lows (breakdowns). This makes it a great candidate to quantify underlying strength and weakness in the S&P 500. There have been three signals in the last few months and one triggered this week.
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.
Last week I backtested a strategy using crossover signals in the StochClose with an all-weather list of 50 ETFs. The returns were in line with market returns and the drawdowns were much less. Today I want to expand on this strategy by using a simple trend filter instead of a crossover signal and adding a profit target. Profit targets often increase the win percent and positive influence returns without affecting drawdowns. I will also consider the number of positions in the portfolio.
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.
When it comes to analysis and trading signals, seasonality is behind price action in the pecking order of importance. In general, seasonal patterns carry most weight when they jibe with the underlying trend. For example, bullish seasonal patterns in an uptrend can provide a tailwind.