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Chart Trader Weekly Report – Broad Market Analysis, Leading Groups (ETFs), Chart Setups and Trading Ideas (Premium)

Posted By Arthur Hill, CMT On In Archive | No Comments

Video and Report Headlines

  • September Scheduling
  • Composite Breadth Model is Bullish
  • Yield Spreads Show No Stress
  • SPY Remains near a 52-week High
  • QQQ, MAGS, XLK and SOXX Consolidate
  • September Lows Hold the First Key
  • Northrop Grumman Holds above Breakout
  • Bristol Meyers Consolidates after Big Move
  • Thermo Fisher Consolidates above Breakout Zone
  • Money Moving into Commodities
  • DB Agriculture ETF Breaks Out of Channel
  • DB Base Metals ETF Recovers after Hard Throwback
  • Copper ETF Joins DBB with a Breakout
  • Copper Miners ETF Tests Bullish Setup Zone
  • Is the Palladium ETF for Real this Time?
  • Platinum Joins the Party
  • GLD Consolidates after Pennant Breakout
  • TLT Extends Uptrend with Pennant Breakout
  • Bitcoin: Downtrend with Counter-Trend Bounces

The next Weekly Report will be posted on Sunday (~12PM ET), September 28th.

September Scheduling

Due to upcoming travel, the September publishing schedule for the Chart Trader Weekly Report/Video will be as follows:

  • Thursday, September 19th
  • Sunday, September 28th

I will also publish two educational reports and videos.

  • Friday, September 20th – Finding and Trading Bullish Setup Zones
  • Friday, September 27th – Breadth for Capitulation, Thrust and Market Signals

The technology sector and large-cap tech stocks are lagging, but other groups are picking up the slack. Over the last two weeks, we saw new highs in finance (XLF), industrials (XLI), communication services (XLC) and materials (XLB). We also saw new highs in two defensive groups: consumer staples (XLP) and utilities (XLU). These six groups (sectors) are powering the broader market right now.

Overall, we remain in a bull market. Seasonal patterns and the elections are lurking, but the weight of the evidence is clearly bullish. The Composite Breadth Model is firmly bullish and yield spreads show no signs of stress. Even the lagging Technology SPDR (XLK) remains in a long-term uptrend, though it is correcting over the last two months.

Today’s report and video will highlight some commodity-related ETFs because commodities are performing well since August. We are seeing breakouts in agriculture (DBA), base metals (DBB) and copper (DBB). We also cover three stocks: one from the defense sector and two from the healthcare sector.

Composite Breadth Model is Bullish

The chart below shows SPY with the 5-day SMA of the Composite Breadth Model at +5. This model turned bullish on December 7th and remains bullish. A positive CBM signals a favorable environment for stocks (bull market). Even within a bull market, we can still see pullbacks, corrections, volatility, rotations and trading ranges.

The Composite Breadth Model aggregates [1] signals in over a dozen breadth indicators from the S&P 500 and S&P 1500. This means it covers large-caps, mid-caps, small-caps, NYSE stocks and Nasdaq stocks. It ranges from +5 to -5. A bull market is present when the 5-day SMA of the CBM is at +1 or higher. A bear market is present when below +1.

BAA-AAA Spread Remains Bullish for Stocks

The next chart shows the BAA-AAA yield spread edging higher from June to August and then turning lower the last few weeks. It remains below the red line (.78), which means the spread between the BAA and AAA yields is narrow and showing no signs of stress (bullish for stocks). A break above .78 would put this spread at its widest level since January and signal increasing stress in the corporate bond market.

According to Moody’s, AAA bonds are the highest grade corporate bonds with the lowest level of default risk. BAA bonds have moderate credit risk and “certain speculative characteristics”. The spread between these two narrows (falls) when credit conditions are favorable (no stress). The spread widens (rises) when conditions are deteriorating (increasing stress).

BBB Spread Remains at Low End of 2024 Range

The next chart shows SPY, the BBB spread, the Junk bond spread and the CCC bond spread with their 200-day SMAs. The BBB and Junk bond spreads turned back down this week and remain at narrow levels. They are still at the low end of their 2024 ranges and showing no signs of stress, which is bullish for stocks. Breakouts at 1.4 in the BBB spread and 4 in the Junk spread would be bearish for stocks.

These spreads show the difference between a corporate bond yield (BBB) and the equivalent US Treasury bond yield. BBB bonds are the lowest rated investment grade bonds. US Treasuries are the ultimate safe-haven bonds. The spread between these two widens (rises) when stress builds in the corporate bond market. This is negative for stocks. The spread narrows (falls) when stress levels are low or subsiding. This is positive for stocks.

SPY Challenges its 52-week High

The S&P 500 SPDR (SPY) remains near a new high and the S&P 500 EW ETF (RSP) hit a new high this week. Big tech? We don’t need no stinkin tech stocks. The broader market is just fine. But wait, don’t forget that Nasdaq 100 stocks account for around a third of the S&P 500. SPY is near a new high without help from big tech, but its performance is still influenced by tech, which is the biggest sector (27%).

There is no change in the pattern at work: a cup-with-handle. This is a bullish continuation pattern that forms within an uptrend. SPY is challenging rim resistance and a breakout would signal a continuation higher. While a breakout would be bullish, I would be skeptical if a breakout was not confirmed by breakouts in two of the three tech-related ETFs below (QQQ, XLK, MAGS). With the sharp decline in early September and quick rebound, SPY established support at 540. Failure to break out and a break below 540 would be negative, especially if we see support breaks in QQQ et al.

QQQ, MAGS and XLK Consolidate

The chart below shows QQQ triangulating within a long-term uptrend. There is really no change since last week because QQQ remains within this triangle. Ditto for the Technology SPDR (XLK) and Mag7 ETF (MAGS). The August highs mark resistance and the September lows mark support. Traders should watch these levels for the next directional bias.

Triangles are typically continuation patterns that represent a consolidation or rest within the trend. As such, they take their bias from the bigger trend, which is up. This gives the current triangle a bullish bias and a break above the August high would project a move to new highs (long-term trend continuation). Chartists looking for the early jump can watch for a break above the upper line of the triangle.

Even though these triangles are bullish continuation patterns, relative weakness and seasonal tendencies could impede a successful breakout. QQQ, XLK and MAGS lagging since July. SPY is near a new high and the S&P 500 EW ETF (RSP) hit a new, but these three have yet to exceed their August highs and remain well below their July highs. Relative weakness remains a concern and a downside break would target a move to the next bullish setup zones (blue shading).

I covered the seasonal tendencies in prior reports. September is up 50% of the time over the last twenty years and is the weakest of the 12 months (the average gain/loss is a .80% loss). We are also in an election year and uncertainty is above average. The stock market does not really care about the outcome, it just wants an outcome. Not knowing is sometimes worse than knowing.

September Lows Hold the First Key

Note that I covered the tech-related ETFs and seven big tech stocks last week (here). [2] I covered seasonal patterns and defensive ETFs (XLP, XLU, XLV) and the leading ETFs two weeks ago (here). [3]

For the tech-related ETFs, the September lows mark first support to watch. IGV, FINX, CIBR and SKYY are holding up better than SOXX:

  • Semiconductor ETF (SOXX) – 203
  • Cybersecurity ETF (CIBR) – 55
  • Software ETF (IGV) – 83
  • FinTech ETF (FINX) – 26.5
  • Cloud Computing ETF (SKYY) – 92

We continue to see upside leadership from the defensive groups. However, utilities, staples and REITs are looking frothy and ripe for a corrective period. The following ETFs are in leading uptrends:

  • Utilities SPDR (XLU)
  • Consumer Staples SPDR (XLP)
  • Real Estate SPDR (XLRE)
  • Residential REIT ETF (REZ)
  • Healthcare SPDR (XLV)
  • Biotech ETF (IBB)
  • Home Construction ETF (ITB)
  • Aerospace & Defense ETF (ITA)
  • Food & Beverage ETF (PBJ)

Northrop Grumman Holds above Breakout

Northrop Grumman (NOC) is part of the Aerospace & Defense ETF (ITA), which represents one of the strongest groups in the market. The stock was a laggard in the first half of the year, but caught a strong bid in July and broke resistance. Overall, the stock advanced 60% into November 2022 and then retraced 67% with a correction back to 420 in July 2023. NOC then moved sideways for seven months as a triangle took shape. This is when it lagged the Aerospace & Defense ETF, which advanced throughout 2024.

NOC broke out of the triangle with a big move in late July and continued higher into August. This looks like a strong breakout that signals a continuation of the 60% advance. I am targeting a move to new highs (>580). The breakout zone around 480 turns into the first support zone to watch should we see a pullback. The lower window shows the Close/40wkSMA %Differential moving above 3% in late July and exceeding 10% the last few weeks. This shows the strongest upside momentum since 2022.

Bristol Meyers Consolidates after Big Move

Bristol Meyers (BMY) is a big pharma stock and part of the Healthcare SPDR (XLV), which is one of the stronger groups right now. BMY lost half of its value as it fell from 80 in December 2022 to 50 in June 2024. The stock was left for dead in early July, but suddenly sprang to life with a massive surge above 50. This is an outsized move that can jumpstart an uptrend. BMY consolidated after this surge with a pennant on the weekly chart. This would be a triangle on the daily chart because it extends seven weeks. Regardless of the pattern, an upside breakout would signal a continuation higher. A close below 47 would negate this setup.

The indicator window shows the Close/40wkSMA %Differential moving above 3% in late July. This means the weekly close was more than 3% above the 40-week SMA. This signal is relatively young, but it signals the start of a long-term uptrend. A move below -3% would result in a whipsaw.

Thermo Fisher Consolidates above Breakout Zone

The next chart shows Thermo Fisher (TMO), which is a medical equipment and services company. TMO fell from January 2022 to October 2024 with a large falling channel. The stock then surged 44% and broke out in early 2024. This breakout was not clean as the stock oscillated around the breakout zone for several months. A smaller falling channel formed with the stock retracing 33% of the prior advance and returning to the rising 40-week SMA. TMO hit the bullish setup zone twice and broke out with a massive move in July.

This breakout signals a continuation of the 44% advance and I am targeting new highs in the coming weeks or months. Short-term, TMO consolidated with a pennant, which also looks like an Ascending Triangle. These are bullish continuation patterns and an upside breakout would be bullish. A break below the August lows would negate this pattern and argue for a deeper correction, perhaps to the rising 40-week SMA. The indicator window shows the Close/40wkSMA %Differential exceeding +3% in January to signal the start of a long-term uptrend.

Money Moving into Commodities

The PerfChart below shows performance for eleven commodities since August. Eight of the eleven are up and four are up double digits. Oil is down sharply, while Platinum and Soybeans are down slightly. Of note, we are seeing strength in copper (+2.93%), which is a base metal. We are also seeing strength in some agricultural commodities. Wheat, corn and coffee are up strong.

The charts below show the 5/200 %Differential or the Close/40wkSMA %Differential. The 5/200 version shows the percentage difference between the 5 and 200 day SMAs, while the Close/40wkSMA version uses the weekly close and the 40-week SMA. There are signal thresholds at +3% and -3%. A move above 3% signals an uptrend and the indicator turns black. This uptrend signal remains until the indicator crosses below -3% and turns pink. This is a long-term trend-following indicator.

DB Agriculture ETF Breaks Out of Channel

The chart below shows the DB Agriculture ETF (DBA) in a long-term uptrend since the 5/200 %Differential broke above 3% in late February (bottom window). DBA went on a tear from January to April as it surged 30% and broke the 2023 highs in the process. DBA then corrected from April to August with a large falling channel. Notice that this channel retraced 50-67% of the 30% advance. DBA also returned to the rising 200-day SMA and almost returned to the breakout zone (blue shading). There was a big bullish setup zone around the 200-day. DBA moved higher since August and broke two resistance levels in the process (green arrows). These breakouts signal an end to the corrective period and a continuation of the bigger uptrend. I will mark support at 23.50 (green line).

DB Base Metals ETF Recovers after Hard Throwback

The DB Base Metals ETF (DBB) is also getting in on the action with a breakout, a hard throw back and sharp rebound. Overall, the DBB chart has characteristics similar to DBA. DBB surged 30%, broke the 2023 highs, corrected into August and broke out. The DBB correction was steeper as DBB overshot its 67% retracement line. Nevertheless, it firmed near the early April breakout zone and broke out of the falling channel in late August. After a hard throwback to 17.5, the ETF recovered with a move back towards 19. I view this chart as bullish and will re-evaluate on a close below 18.40 (throwback low).

The DB Base Metals ETF (DBB) holds equal parts of copper, zinc and aluminum. The TradingView chart below shows DBB, Copper Continuous Futures (COPPER1!), Zinc Continuous Futures (ZINC1!) and Aluminum Continuous Futures (ALI1!). All four are above their rising 200-day SMAs (red lines).

On Friday (20-Sept) I will publish a detailed
report and video covering bullish setup zones. 

Copper ETF Joins DBB with a Breakout

The next chart shows the Copper ETF (CPER) with a chart similar to DBB. CPER surged 44% into May, retraced 67% with a decline back to the breakout zone and firmed near the rising 200-day SMA. CPER broke the wedge line in August, fell back and rebounded with a move back above its 200-day SMA the last two weeks. I am marking long-term support at 25 (green line).

Copper Miners ETF Tests Bullish Setup Zone

The next chart shows the Copper Miners ETF (COPX), which is CPER on Red Bull. It has more volatility and the swings are bigger. The overall chart looks the same as CPER. There is a bullish setup zone in the 38-39 area. This is defined by the 67% retracement line and broken resistance turning support. COPX was also oversold from July 22nd to August 9th as RSI(10) flirted with the 30 level (not shown). The combination argues for a bullish setup zone that can lead to a reversal. This Friday I will publish a report and video showing how to identify and trade these zones. COPX tested this zone in August and again in September. CPER and DBB are bullish so I expect a breakout in COPX. Key support is set at 38. The indicator window shows the 5/200 %Differential moving below -3% last week, which signals a long-term downtrend. This may be a whipsaw and I am willing to ignore it as long as CPER and DBB hold up.

Is the Palladium ETF for Real this Time?

The Palladium ETF (PALL) is the weakest of the metals over the last two years. The chart below shows PALL forming a massive double top and breaking down en route to a 70% decline. PALL found support in the 80 area in 2025 with lows in January and July. A double bottom formed and challenged the intermittent high with a surge the last two weeks. This double bottom extends from 80 to 100 so the initial target is in the 120 area, provided we get a breakout. The indicator window shows the Close/40wkSMA %Differential moving above 3% last week to signal the start of an uptrend.

Platinum Joins the Party

The next chart shows the Platinum ETF (PLTM) breaking out of a falling wedge. Note that PLTM has been range bound since July 2022 when it first touched the 8 area. This ETF has traded between 8 and 11 since October 2021. On the daily chart below, PLTM established support in the 8.5-8.7 area from January to April and successfully tested this zone in August-September. Notice the two lows in the 8.8 area. PLTM formed a falling wedge and exceeded resistance with a surge the last two weeks. Despite a dip the last three days, I view this breakout ss bullish and will set key support at 8.7 (just below the September low).

GLD Consolidates after Pennant Breakout

GLD remains in a long-term uptrend and continues to lead with a new high again this week. The ETF is well above its rising 200-day SMA with the May-June lows marking long-term support at 210. Most recently, the ETF broke to new highs in mid July, consolidated around this breakout with a pennant and broke out of the pennant in mid August. Pennants are short-term bullish continuation patterns and this breakout keeps the uptrend alive, and kicking. Another pennant formed into September and the ETF broke out again last week.

TLT Extends Uptrend with Pennant Breakout

What ever happens with the Fed, there is no change in the long-term picture for the 20+ Yr Treasury Bond ETF (TLT). This chart is bullish and TLT has been trending higher since the June breakout. The ETF labored  higher after this breakout and then surged in early August. A pennant formed after this surge and TLT broke out in early September. What happens between 95 and 102 is anybody’s guess. Personally, I will allow some wiggle room and set key support just below the rising 200-day SMA (93).

Bitcoin: Long-term Downtrend with Counter-Trend Bounces

Bitcoin remains in a long-term downtrend with a series of lower highs since May and a support break in early July. The 5/200 %Differential also broke below -3% in early August and remains on a downtrend signal. Since the support breach in early August, BTC bounced three times with counter-trend moves. The first two formed rising wedges and the third one looks like a rising flag. This most recent bounce retraced around 67% of the prior decline. A break below the 16-Sep low (57500) would signal a continuation lower.

Thanks for tuning in and have a great day!