Recent Commentary and Analysis
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.
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).
This video and article explain the breadth indicators used in the Index Breadth Model and the key levels used to generate signals. Stock market breadth plays an important role in broad market analysis because it reflects what is happening under the surface. Price action, in contrast, shows us what is happening on the surface.
Stocks took a hit early this week, but quickly rebounded as bigger bullish forces came into play. Today we will review these bullish forces by starting with the long-term picture for the S&P 500. I will then analyze the short-term uptrend, which survived its first test this week.
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The market finally showed a vulnerable side this week with a sharp pullback on Monday and Tuesday. A corrective period at this stage would be perfectly normal because stocks were up sharply in October and November. We also saw several flag breakouts fail. These failures are not enough to affect the long-term trends
The Mobile Payments ETF (IPAY) came to life in November with Square leading the chart. SQ, however, is not the chart leader. This post will identify three chart leaders and highlight three that look poised for new highs by yearend.
Uptrends and new highs are bullish. Sorry, but there is no other interpretation. We can debate the degree of bullishness, we can debate overbought conditions and we can debate non-confirming indicators.
The bull market continues to broaden with 23 of 53 equity-related ETFs hitting new highs (56%) this week. Thus, more than half of the equity ETFs hit new highs and this shows broad strength in the stock market. Note that there are 60 ETFs in the “core” list and just 7 are non-equity
Several finance-related ETFs and stocks broke out with big moves from early October to early November. Many of these then stalled over the last two weeks and this rest could be the pause that refreshes. Today we will look at performance for the finance-related ETFs and the bull flags taking shape in three banking stocks
The S&P 500 SPDR and Nasdaq 100 ETF recorded new all time highs this past week, while the S&P MidCap 400 SPDR hit a new 52-week high in November. Sounds bullish, but the S&P SmallCap 600 SPDR and Russell 2000 ETF are still well below their 2018 highs, even though they are very close to 52-week highs. Which index ETFs tell the real story here?
Today we have a mixed of old and new. Some setups from prior weeks are still in play and near their breakout zones. Four of these are in the Healthcare sector, which is the hottest sector in the market right now.
The sky is falling as the S&P 500 fell a whopping .5% the last four days. Small-caps and mid-caps were hammered as the S&P SmallCap 600 SPDR fell 1% so far this week and the S&P MidCap 400 SPDR declined 1.3%. I am sure that there are probably some good reasons for these miniscule moves. Heck, there are always reasons.
There is broad strength in the equity-related ETFs with leadership coming from large-caps (SPY, QQQ), tech-related ETFs (IGV, SKYY) and even some more defensive names (XLP, USMV). Other defensive names extended their oversold bounces this week with XLU and XLRE moving higher. Stock alternatives
The character of the stock market changed over the last six to seven weeks as the market took on a more offensive tone. Stocks were already in bull mode, but we are now seeing stocks outperforming bonds. In addition, momentum and offensive sectors are leading.