ETF Trends, Patterns and Setups – Flags and Flag Breakouts Dominate the Landscape (Premium)

There are lots of flag breakouts here in March. Some triggered in early March, some last week, some this week and some are still working, which means price is still near the breakout zone. There were short flag/pennants that lasted a week or so (KRE), shallow flags (IJR), falling flags that lasted three weeks (SPY) and sharper falling flags that lasted four weeks (QQQ, IBB).

The shallow flags retraced 25 to 33 percent of the October-February advance, while the steep flags retraced 67 percent of their October-February advance. The deeper retracement shows most selling pressure on the pullback.  For example, the pullback in the Mobile Payments ETF (IPAY) was shallow (33%) and this showed modest selling pressure. The pullback in the Biotech SPDR (XBI) was deep (67%) this showed stronger selling pressure.

The tech and growth related ETFs continue to underpeform. SKYY, HACK, FINX, IGV, FDN, PBW, TAN, IBB and XBI retraced 50 to 67% of the October-February advance and bounced here in March. Despite this bounce, all eleven ETFs are down over the last 13 days. This means they did not exceed the highs hit on March 1st or 2nd. Not only did these ETFs correct harder, but they also produced some of the weakest bounces. XLY is the only one that exceeded its early March high. The tech-related ETFs, in particular, are looking shaky and could have further to correct.