Recent Posts from Chart Trader and System Trader:
Warning Signs vs Weight of the Evidence, Oversold Double Dip, Leading Tech, SMH Holds Triangle Breakout
Some warning signs appeared in December, but the weight of the evidence remains bullish. We will start with the long-term breadth indicators and then show the oversold conditions in the short-term breadth indicators. SPY and QQQ are still in long-term uptrends and testing their 50-day SMAs. Meanwhile, tech-related ETFs are leading as SMH holds its 200-day SMA.
Is this Bounce a Robust Rebound or a Dead-Cat Bounce?
Breadth became oversold last week and stocks rebounded this week. Is this a robust rebound or a dead cat bounce? Today’s report will show a key short-term breadth indicator hitting its lowest level in 2024 and becoming oversold. A rebound is in place, but it is still to early to call this a robust rebound and we will show the critical level to watch.
Weighing Breadth, Yield Spreads and Trends, Warning Signs, Corrections, Breadth for Short-term Signals
Today’s report will highlight the warning signs over the last few weeks and assess the evidence (bull or bear market). Corrections are normal, but what might a normal correction entail? We will review the long-term breadth indicators, yield spreads and the weekly charts for SPY and QQQ, including correction targets. This report ends with two short-term breadth indicators to watch for a bullish signal.
Three Big Negatives Overshadow the Uptrends in SPY and QQQ
SPY and QQQ remain in long-term uptrends, but three big negatives are hanging over the stock market right now. Two negatives are tied to important cyclical groups and the third is reminiscent of summer 2022. This report will analyze the recent breakdown in housing, continued weakness in semiconductors and the big breakout in the 10-yr Treasury Yield.
10-yr Yield Breads 40-wk, Similarities with Summer 2022, SPX Becomes Oversold, What to Watch Now
The 10-yr Treasury Yield surged before, and after, the Fed statement. While interest rates are not the only factor affecting stocks, they are the focus right now and we will cover the relationship. S&P 500 stocks are oversold after a 3-week decline and these conditions could lead to a bounce. We will show how to distinguish between a strong bounce and a dead-cat bounce.
Video – Breadth, Yield Spreads, TLT, GLD, BTC, SPY, QQQ, MAGS, ITB, KBE, ITA, LIT, FXI and Follow Up for 14 Stocks
Today’s video starts with the deterioration in short-term breadth. Even so, long-term breadth remains net bullish and yield spreads narrow. We then address the surge in the 10-yr yields, weakness in small-caps and the break down in Home Construction ETF. There are setups in the Bank and Defense ETFs, while the Lithium and China ETFs fell back into their consolidations. We close with follow up on fourteen recently featured stocks.
Stocks Pullback, Yields Surge, Housing Hit, QQQ Leads, A Setup in Defense, Two Bullish Cloud Stocks
Today’s report starts with an overview of short-term break (weak) and long-term breadth (still bullish). QQQ is leading with a new high, but small-caps breadth is holding up as IJR forms a bullish wedge. We then look at the housing failure, weakness in hard assets, a wedge in gold, a bullish setup in a defense ETF and two cloud stocks with bullish charts.
Beginning in the Midst of a Bull Run and Dealing with Drawdowns
Not all pullbacks result in long-term trend changes and not all drawdowns lead to bear markets. The odds favor the bulls as long as the bull market signal is valid and drawdowns provide opportunities during bull markets. Today’s report will analyze the drawdowns in the Rotation Investor strategies. We will show the Maximum Drawdown, Median Drawdown and a drawdown range for putting money to work.
Revisiting Overbought Filters for Rotation Strategies – Can we Improve Performance with a Tweak?
Momentum-Rotation strategies get their edge from upward momentum. More often than not, this means there will be entry signals for stocks that seem overbought. Not all overbought stocks continue higher and some correct hard after becoming overbought. Can we improve performance by avoiding stocks that are extremely overbought? Today’s report will discuss the recency bias, show some overbought examples and puts an overbought filter to the test.
A Leader in Medical Devices, NVDA Stalls above Breakout, SMH Holds Support, CIBR and 3 Stocks
Today’s report covers a leading stock in the Medical Devices ETF (IHI), which is the strongest group with the Healthcare sector. We then analyze NVDA as it consolidates above the October breakout and shows the SMH chart. Attention then turns to the Cybersecurity group with three stocks forming short-term consolidations.
Video – Breadth, Yield Spreads, SPY, QQQ, IWM, XLV, XLP, CLOU, CIBR, SOXX, SMH, ITB, XHB, LIT, GLD, SLV and Eight Stocks
Today’s video starts with long-term breadth, yield spreads and the major index ETFs to define the broad market environment. We then focus on short-term weakness and the pullbacks in RSP, IWM and MDY. Some tech ETFs are very extended and a key group continues to lag. Housing ETFs are testing support, while gold and silver hold their breakouts. We finish with follow up for eight stocks.
Breadth and RSP Signal Pullback, Two Housing ETFs Set Up, Extended Tech ETFs, Two Stock Setups
Today’s report starts with the Advance-Decline Percent indicators to measure participation over the last two weeks. We then turn to the S&P 500 EW ETF to define the current pullback, as well as two housing-related ETFs. Some tech stocks are looking extended and we offer detailed analysis of the Cybersecurity ETF (CIBR). We close with bullish setups in an animal healthcare stock and a business software stock.
SPX/NDX Breadth, Yield Spreads, SPY/QQQ Trends, MAG7 Leads and Small-caps Try to Lead
Today’s report will cover the broad market environment. We start with the long-term breadth indicators for the S&P 500 and Nasdaq 100 (%Above 200-day, %Above 150-day, High-Low Percent). Attention then turns to the BBB yield spread and long-term chart analysis for SPY and QQQ. QQQ found its mojo as the MAG7 ETF leads. Mid-caps are lagging, micro-caps are leading the small-caps are mixed.
Fintech Leadership Provides Good Hunting Ground for Bullish Setups
Chartists looking for stock setups can start with strong industry groups. The Fintech (FINX) is in a strong uptrend and leading, but looking extended short-term. While there is no setup currently, we can learn from past setups and apply these lessons to stocks within the group.
5 Stocks: Tight Bullish Wedges, A Bullish Setup Zone, A Breakout Leader and One Near a Prior Breakout Level – Plus XLV and XBI (Premium)
Today’s report starts with a defense stock and a fintech stock forming tight wedges. After reviewing the rebounds in the Healthcare and Biotech ETFs, we then focus on two biopharma stocks: one testing a Bullish Setup Zone and the other with a leading breakout. And finally, we feature an under-the-radar tech stock trading near its breakout point from late October.
ITB Consolidates, Yields Fall, SOXX Ignores Curbs, LIT, SLV and FXI Set Up, TSM Reasserts Uptrend, META Leads, MSFT Recovers (Premium)
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Plunge in 10yr Yield Triggers Home Builders – Analyzing ITB and Five Stocks (Premium)
Today’s report analyzes the move in the 10-yr Treasury Yield, the surge in ITB and five home builder stocks. Home Builders were lagging the last few months, but the declines look like normal corrections. The retracements were normal and some surged off bullish setup zones. In addition, we are seeing a momentum thrust in %B.
Drop in Yields Triggers Gap-Surge in Home Builders (Free)
The 10-yr Treasury Yield plunged as Treasury bonds surged on the heels of a new nomination for Treasury secretary. These moves lifted small-caps, banks and homebuilders. Banks have been leading for some time and small-caps started their move last week. Homebuilders held out for interest rates and got their catalyst on Monday. Today’s report will analyze
Four Prerequisites to Improve Your Odds – A Live Example (Free)
Even though trading based on chart analysis involves some discretionary decisions, chartists can improve the odds of success by systematizing their process. This report will show four prerequisite filters based on a top-down approach. We will start with the broader market, look at the sector, and then apply two qualifying filters to the stock. First, I would make sure
Chart Trader – Biotech Oversold, MLPs Surge, Lithium Consolidates, Uranium Breaks Out, Two Leading Stocks and Two with Pullbacks (Premium)
Today’s report starts with some of the leading ETFs in strong uptrends – but without setups. These include software (IGV), fintech (FINX) and finance (XLF). Attention then turns to some oversold setups in Healthcare and Biotech, and the group’s leader (Medical Devices). MLPs are breaking out within the Energy sector and we are seeing two commodity ETFs strengthen (Uranium and Lithium). Turning to stocks, we have two breakout leaders (TJX, VRSK) and two former leaders with pullbacks (AVGO, UHS).
Chart Trader – QQQ Pulls Back, Using %B, Smalls Return to Breakout, Banks Lead, Cybersecurity Tests 50-day, Robotics hold Breakout (Premium)
This report covers recent pullbacks in the major index ETFs (SPY, QQQ, MDY and IJR). Financials are a key driver for small-caps and I will show a leading uptrend in the Bank SPDR (KBE). We will then cover the breakout in the Robotics & AI ETF (BOTZ) and the pullback in the Cybersecurity ETF (CIBR).
Understanding Equity Curve Performance and Setting Realistic Expectation (Premium)
It is important to understand the ebb and flow of the equity curve when trading a strategy. How long is the strategy flat or down? How often do we see strong momentum runs? How often does the strategy experience double-digit drawdowns? How can we take advantage of drawdown? We will answer these questions and more.
A Tale of Two Semiconductor ETFs – Why is SOXX Weaker than SMH? (Free)
The iShares Semiconductor ETF (SOXX) is lagging the VanEck Semiconductor ETF (SMH) as it broke the 200-day SMA and confirmed a bearish pattern. SMH is holding up because its top component remains strong. Nevertheless SMH is at a moment of truth ahead of a big earnings report from Nvidia.
Chart Trader Weekly Report – Broad Market Analysis, Leading Groups (ETFs), Chart Setups and Trading Ideas (Premium)
Stocks went on a tear the last eight days, but most of these moves were simply extensions of existing uptrends. Nevertheless, many stocks and ETFs became very overbought short-term. These include KBE, IGV, SKYY, FINX and CIBR. We also see the market pricing in policy shifts in Healthcare (XLV) and Defense (ITA), as well as the prospects of tariffs (CPER, DBB). Despite overbought conditions, it is a bull market we will highlight three stocks setting up: DDOG, CSX and CCEP.