Recent Commentary and Analysis

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Weekend Video – Breadth Model Indicators, the SPY/TLT Reversals and the ChartBook

Today’s weekend video starts with the indicators that make up the breadth model and their individual signals. We then add some basic market timing and show the model signals over the last 20 years. I will also provide a preview of a short-term breadth model. Attention then turns to potential reversals in SPY and TLT, the rising wedges in RSP and IWM, the StochClose rankings and the ChartBook

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Stocks and Treasuries:
The Yin and Yang of the Markets

The 20+ Yr Treasury Bond ETF (TLT) retreated as stocks advanced from mid April to early June and then popped as stocks dropped this week. Bonds are the natural alternative to stocks and TLT appears to be forming a classic bullish continuation pattern.

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Timing Models – Here we Go Again – Models Flip as Outsized Declines Hit Key Areas

Stocks took it on the chin Thursday with the biggest weekly decline since declines began (March). Once again, small-caps and mid-caps led the way lower with outsized declines. Even more disconcerting, we saw outsized declines in some key large-cap sectors as the Consumer Discretionary SPDR fell over 5%, the Industrials SPDR fell over 8% and the Finance SPDR fell 7%.

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ETF Ranking and Grouping – Volatility and Risk Remain High as Bonds and Gold Perk Up

The broader environment for stocks is technically bullish, but risk remains well above average. The S&P 500 moved above its 200-day SMA and the 5-day SMA moved above the 200-day SMA. The %Above 50-day SMA indicators surged above 80% to trigger bullish and the Index Breadth Model based on StockCharts data triggered bullish on June 5th with five of nine indicators on bullish signals. That’s the bullish part.

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StochClose Strategy (Part 3) – Testing Trend Signals and Comparing with Other Indicators

This article will test crossover signals in the StochClose indicator and the compare these signals with other trend indicators. These are “all signal” tests to quantify performance as a trend-following indicator. Even though good past performance does not guarantee future performance, an all signals test gives us an idea of what to expect going forward. How often does a bullish signal result in a profit, how big are the profits on average and how big are the losses.

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Knowing When to Add Risk and
When to Reduce Risk

The S&P 500 is the most widely used benchmark for the US stock market and the 200-day SMA is perhaps the most widely used moving average. These two came together again in late May as the index crossed back above on May 27th. Today we quantify the performance of prior signals and show how a little smoothing can go a long way. Furthermore, a simple market timing mechanism can tell investors when to add risk and when to seek alternatives to stocks.

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ETF Ranking and Grouping – Rotation Takes Hold as Flag Breakouts Extend

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

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Quantifying the QQQ Effect on SPY

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.

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Weekend Video – Breadth, Flags, Narrow Ranges, the QQQ Effect and the ChartBook

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

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Market Timing Models – This Really is a Make or Break Level

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

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ETF Ranking and Grouping – From Breakdowns to Breakouts

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.

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What Drives SPY?
Hint: It has 3 Letters and Begins with Q

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

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Timing S&P 500 Swings Using
the Bullish Percent Index

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.

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