Complimentary Articles and Analysis

A Medium-term Breadth Indicator Waves the Caution Flag

The Nasdaq 100 has been on a tear the last few months with a move to new highs, but a medium-term breadth indicator is not keeping pace here in February. This indicator is simply flashing the yellow caution sign right now and we have yet to see an actual signal that would point to a correction. Here’s what to look for.

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An Industrials ETF with More Juice than XLI

Not all ETFs are created equal and the name does not always tell the entire story. One would think that the Industrials SPDR (XLI) and the Industrials iShares (IYJ) are similar in make up and performance. This is not the case because one has a clear edge over the other.

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Seasonality Looks Weak, but Price Action is Not

The seasonal patterns over the next two months are not very strong, but price action is strong with the S&P 500 hitting a new high. Price action is more important than the seasonal pattern because profits and losses are driven by price changes, not seasonal tendencies. Seasonality becomes a force when it aligns with price action. Let’s investigate.

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SOXX Follows Overbought Extreme with Outsized Decline

Last weekend’s post showed the Semiconductor ETF (SOXX) with a 10 day overbought streak and several ETFs with even bigger overbought streaks. These streaks came to an end this week as SOXX fell 6.21%, its biggest weekly decline since mid March. As measured by Normalized ROC, this is an outsized decline that argues for at least a corrective period over the next few weeks.

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SOXX and other ETFs with Extended Overbought Conditions

The Semiconductor ETF (SOXX) and several other ETFs are on a serious roll in 2021. For the fourth time since 2009, 14-day RSI was above 70 for ten or more days. This is an exceptional streak, but SOXX is not alone and there are even longer streaks. The following list shows some ETFs and the number of days RSI has been above 70: ROBO (39), DRIV (25), ARKQ (13), EWT (13), MOO (12), XRT (11), SOXX (10), YOLO (10). Note that these numbers are based on Thursday’s close.

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A Top or a Mere Correction?

Visual chart analysis is prone to subjectivity and biases. While we cannot completely remove subjectivity, we can approach chart analysis in a systematic fashion and increase objectivity. This commentary will show an example using the Home Construction ETF (ITB) because the ETF has traded flat since mid October. Is this a top or merely a correction?

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Squeezing Apple for a Breakout as QQQ and SPY Hit New Highs

Several big tech stocks have consolidation patterns working the last few months and Bollinger Band squeezes in December. These include Apple, Amazon, Microsoft and Nvidia. Today’s article will focus on the strongest of the four, and the one with a breakout working already.

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Performance Divergences that Make You Go Hmm…

There was a serious shift over the last five weeks as commodities surged, bonds fell and the Dollar recorded new lows. There were also some noticeable divergences as the Inflation-Indexed Bond ETF (TIP) edged higher and the 20+ Yr Treasury Bond ETF (TLT) moved lower. This divergence is only five weeks old, but it does suggest a whiff of

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Volatility Contraction in QQQ could Foreshadow an Expansion

The weekly high-low range for the Nasdaq 100 ETF (QQQ) was the narrowest of the year this past week and the ETF is battling triangle resistance. A narrowing range shows indecision and a volatility contraction. Even though this is just one weekly bar, QQQ is at a moment of truth. Will we see a triangle breakout and continuation higher or a failure at resistance and extended correction?

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