ChartTrader – Oversold Bounce within Bigger Downtrend – Symbols Covered: SPY, QQQ, UNG, FCG, FRE, FTNT, NTAP and ZTS (Premium)

The weight of the evidence remains bearish for stocks. First, long-term breadth indicators are net bearish. Second, the S&P 500 EW ETF, Russell 2000 ETF and S&P SmallCap 600 are below their 200-day SMAs. These ETFs also fell back to their

The S&P 500 SPDR (SPY) almost tagged its rising 200-day SMA after a sharp decline from early September to early October. SPY is short-term oversold, but the weight of the evidence is bearish. The Composite Breadth Model is at -1 and most stocks within the index

There is a clear bearish chain of events over the last few months. It all started when the Russell 2000 ETF, S&P 500 EW ETF and S&P MidCap 400 SPDR failed at their February highs in July. SPY and QQQ were well above these highs, but small-caps and mid-caps were not keeping pace

SPY and QQQ remain in corrective mode, but they are both oversold after sharp declines the last nine days. These oversold conditions could pave the way for a bounce in the coming days. The risk is that SPY becomes oversold and remains oversold (continues lower). Most

SPY and QQQ broke down last week and the medium-term trends are down. That’s the negative news. On the positive side, the long-term trends are still up and both are well above their 200-day SMAs. This suggests that the current decline is a correction within the long-term

The near-term outlook is negative with SPY and QQQ in corrective mode. Today’s report will put forth some downside projections, but take these with a pinch of salt. Or rather, take these with a handful of salt and a shot of tequila. Projections are subject to change should

It ain’t over until large-caps buckle. SPY and QQQ have yet to break short-term support. These two are holding the market up because we are seeing widespread weakness outside of a few large-caps. The S&P MidCap 400 SPDR and Russell 2000 ETF hit their lowest (closing) levels since late June. The Retail SPDR hit its lowest (closing

There are no changes in the broad market conditions. SPY and QQQ are in short-term uptrends and their breakouts held as both bounced over the last four days. These bounces affirm short-term support and keep

SPY and QQQ fell back after their breakouts and bounced off broken resistance levels. These short-term bounces affirm supports and keep the short-term uptrends alive. It is important to monitor these two because the rest of the market looks rather shaky. Breadth is not keeping pace, September seasonality is here and mid-caps are lagging.

The market looks fragile and is definitely split. Large-cap techs are leading, small-caps are lagging and mid-caps are caught in between. The long-term trends are up for SPY and QQQ as both hit new highs in July. The S&P MidCap 400 SPDR (MDY) and Russell 2000 ETF (IWM), in contrast, did not break their early February highs. They are largely range bound

The chart below shows 25-year seasonality for the S&P 500. There are three strong periods and three weak periods. The strong periods are mid March to early May, July, and mid-October to yearend (green arrows). The seasonally weak periods are January, mid-February to mid-March

The big trend is the dominant force at work and SPY remains in an uptrend since the higher high in early February. Seasonal patterns, even when strong, are secondary to the bigger trend. Seasonal weakness in September could still materialized

SPY peaked on July 27th with a big outside reversal day (red arrow) and broke short-term support with a gap-decline on August 2nd. SPY and the major index ETFs then fell into mid August and became

The S&P 500 SPDR and Nasdaq 100 ETF fell sharply in August, but these declines look like corrections within bigger uptrends. However, the S&P MidCap 400 SPDR and Russell 2000 ETF also fell. These two, in contrast, are in long-term trading ranges and immediate downtrends. We

A classic trading technique is to look for short-term oversold conditions within longer term uptrends. Short-term oversold conditions provide opportunities to partake in the long

Selling pressure intensified in August as we saw the first bearish breadth thrust since mid March. I use the 10-day EMA of Advance-Decline Percent to measure breadth thrusts.

Stocks are in pullback mode right now. We never know which pullback will extend far enough to result in a larger downtrend. Currently, the declines in SPY,QQQ and others look like pullbacks after big advances from May to July. There is, however, concern with recent reversals in retail (XRT) and banking (KRE). I would

Stocks moved into pullback mode the last few weeks. It started with QQQ peaking on July 19th and SPY peaking on July 31st. It is way too early to call these “major” peaks. At present, these are just short-term peaks because both ETFs are

The weight of the evidence remains bullish for stocks. The Composite Breadth Model is positive (since March 31st), yield spreads show no stress and upside participation remains strong. SPY and QQQ remain in short-term

The weight of the evidence remains bullish for stocks. The Composite Breadth Model is positive (since March 31st), yield spreads show no stress and upside participation remains strong. The only short-term negative is actually a long-term positive.