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Weekend Video – Falling Wedges Take Shape, Select Tech and Housing Hold Up, Energy and Finance Remain in Doghouse

Today’s video starts with the broad market charts as SPY formed a weekly spinning top and QQQ formed a piercing pattern. Even though the ROC Shock reversal earlier this month remains the dominant chart feature, falling wedges are taking shape and breakouts from these corrective patterns would be short-term bullish. The Nasdaq 100 is holding up the best and its short-term breadth indicators are oversold. In addition, we are also seeing relative strength in several tech-related ETFs

Timing Models – The Only Game in Town, Double-Edged Swords and Some Bearish Breadth Signals

SPY and QQQ fell in September and are in short-term downtrends, which are considered corrections within a bigger uptrend. The S&P SmallCap 600 SPDR and S&P MidCap 400 SPDR also fell in September, but these declines do not look like mere corrections within a bigger uptrend. MDY, IJR and IWM fell well short of their January-February highs and broke their downward sloping 200-day SMAs. These three look like they are reversing the uptrends that began with the March blast off.

Breadth Model Update: %Above 200-day SMA Sags for SPX and OEX and AD% Reflects Broad Downside Participation

This is a midweek update to address Monday’s price action and its effect on the breadth indicators and models. At this stage, there was only one new signal: %Above 200-day for $MID broke below 45%. Nine of the ten breadth models remain bullish, but we saw more deterioration in the breadth indicators on Monday. Selling pressure was the strongest un small-caps and mid-caps over the last five weeks (since August 15th).

Weekend Video – Spinning Top Follow Thru, Correction or more?, Breadth Indicators Deteriorate, 4 Channel/Flag Breakouts, 2 to Watch

Today’s video starts with the S&P 500 and the reversal seen over the last few weeks. We look at the spinning top, the outside week, downside follow through and the ROC shock. With a reversal in play, I put forth a correction target for the S&P 500 SPDR and this serves as the base case for the broader stock market (a correction within a bigger uptrend).

Timing Models – ROC Shock Lingers, SPY Follows Thru on Outside Week, Breadth Models Remain Bullish

The medium-term indicators and breadth models are still bullish, but the ROC Shock in early September and some waning breadth indicators argue for at least a correction of the March-September advance. I covered the ROC Shock in detail last week and will review the findings. First, keep in mind that the character of the market (SPY) changed in January 2018 as the swings became bigger and 52-week lows were interspersed with 52-week highs. Big swings and volatility are the order of the day for now.

ETF Trends, Patterns and Setups – SPY and QQQ Look Vulnerable, Bond Proxies Catch a Bid, Gold Stalls as Dollar Firms

There’s been a shake up this week. A handful of equity-related ETFs are in the top group, as far as the trend, patterns and setups are concerned. However, I downgraded several groups because it looks like SPY and QQQ are moving further into correction mode. The majority of stock-related ETFs will be under pressure should SPY correct and the majority of tech-related ETFs will be under pressure should QQQ correct.

Update for Precious Metals (GDX, GLD, SLV), Healthcare (XLV, IBB, XBI) and Bond Proxies (TLT, XLU, XLRE)

Tech-related ETFs continue to drag their feet and remain in corrective mode. This puts the attention elsewhere and biotechs are picking up the slack. Namely, the Biotech ETF (IBB) and Biotech SPDR (XBI) made bids to end their corrections and resume their bigger uptrends. Elsewhere, precious metals related ETFs bounced within their consolidations and bond proxies popped with XLU and XLRE getting big moves.

Timing Models – Accelerations, Trend Shocks, Indicators turn Mixed, Downside Targets and Breadth Models

The stock market was overextended in late August and the bulls gave it one more push higher with a small acceleration higher into late September. Technically, an acceleration higher signals an increase in momentum, which can be bullish. However, as with most technical signals, perspective is needed for interpretation. Today we will look at the accelerations that led to a reversal and the outsized decline. What do they portend going forward?

ETF Grouping and Ranking Report – Outsized Declines, Retracement Targets, Patience During Corrections, Gold and Bonds Balk

Stocks were hit hard from Friday to Tuesday with the S&P 500 SPDR, Nasdaq 100 ETF and others recording outsized declines. Today we start with these outsized declines and show what they entail going forward. Stocks were already extended and these sharp declines signal the start of a corrective period. At this point, I will treat any weakness in SPY and QQQ as a correction within a bigger uptrend.

Weekend Video – Spinning Top, Indicators Turn Mixed, Correction Targets, Bond Breakouts Fail, Banks Buck Selling and More

The extended uptrend in stocks hit a speed bump this week with a sharp decline on Thursday-Friday. Today we will review the percent above 200-day SMA indicators and their extended nature. Attention then turns to the medium-term indicators, which turned mixed this week. The odds for a correction were already brewing and it looks like some sort of correction is unfolding. I will look at potential targets for SPY and QQQ, as well as for several ETFs in the ChartBook. Elsewhere

Timing Models – Bears Fire a Shot, SPY Tags and Pulls Back, Volatility Ticks Up and Breadth Model Review

The bears fired a shot across the bow, but one or two days is not enough to reverse a strong uptrend. There were already warnings of a correction or pullback because SPY has been more than 10% above its 200-day since August 12th and QQQ has been 20% above its 200-day since July 6th. Of course, overbought indicators are not very good for timing a correction. In fact, I have yet to find a good indicator for timing a peak/pullback during a strong uptrend.

Weekend Video – Breadth and Key Indicator Overview, Flag Breakouts (IWM), REITs Perk Up, GLD Winds UP and Bonds Extend Pullback

Today’s video starts with an overview of the breadth models for the S&P 500, Nasdaq 100, Mid-caps and Small-caps. We then turn to the all important medium-term trend and the four key indicators to watch. Diving into the chartbook, there are flag breakouts working in IWM and XLI. REITs are perking up and making good on their Bollinger Band breakouts. The gold and silver ETFs have bullish patterns and mean-reversion setups in the making. Bond ETFs, however, extended their pullbacks after the Fed announcement. The video finishes with

Timing Models – Overextended, but Breadth and Medium-term Indicators Support Current Upswing

We all know that the S&P 500 is driven by large-caps, especially the big four, which account for over 20% of the index (AAPL, MSFT, AMZN, GOOGL). Furthermore, most of us are aware that breadth measures are not as strong as the S&P 500 and this is reflected in the S&P 500 EW ETF (RSP), which has yet to clear its June high. Breadth, however, is not exactly weak. It is just strong enough to sustain the advance. In other words, the cup is half full, not half empty.

ETF Trend/Pattern Ranking and Grouping – Strong Extensions, Second Winds, Modest Extensions, Corrective Patterns, Laggards and Breakdowns

Stock-related ETFs remained strong and many so-called overbought ETFs became even more overbought as their uptrends extended. Many ETFs are in the trend-monitoring or waiting phase. The early breakouts occurred in July and these ETFs followed through with further gains the last several weeks. Some tech-related ETFs stalled in late July and early August, but caught a second wind with breakouts over the last few weeks.

Picking Moving Average Combos that Adapt to Changing Environments – Comparing Daily, Weekly and Monthly Signals

This article will explore and backtest different moving average combinations on the S&P 500 SPDR over the last twenty years. Most moving average strategies work great when SPY trends, regardless of the period settings. However, SPY (aka, the market) does not always trend and trends are not uniform. Some are short and fast, while others are long and steady. This means we need moving averages that can best adapt to different environments.

Timing Models – SPY Tags a New High, Medium-term Indicators Favor the Bulls and SPX Breadth Model Remains Bullish

The bulk of the evidence remains bullish for large-caps, large-cap techs and mid-caps, but mixed for small-caps. I am also seeing mixed performance within the S&P 500, especially when looking at the equal-weight sectors. Technology, Healthcare and Consumer Discretionary remain strong, while Finance, Energy and REITs are weak. Finance is the only big sector that shows underlying weakness though.

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