Systematic Trading Strategies and Next Level Trading Setups
Complimentary Analysis
The pockets of strength are shrinking as more stocks succumb to selling pressure. The Nasdaq 100 is the strongest of the major indexes, while the Finance sector is one of the weakest sectors. Today’s report will highlight two leaders within the Nasdaq 100 and two laggards within the finance sector.
Stocks were hit hard the last two weeks with the S&P 500 SPDR (SPY) breaking below its August low. SPY also forged a lower high from July to August. Stocks and ETFs that held above their August lows are showing relative strength. With that in mind, the three cyber security ETFs stand out and one is stronger than the others.
Stocks fell sharply in September with the S&P 500 SPDR (SPY) breaking below its August low. Chartists can now use this low as a benchmark low to gauge relative performance. Stocks that held above the August low are showing relative strength. This is valuable information because stocks that hold up better during declines have a better chance of moving higher. Let’s look at an example.
It has been a rough ride for most commodities this year and especially over the last 100 trading days (since May). Of the twelve spot prices I track, nine are up and three are down. Precious metals, base metals, lumber and grains are all down. The energy complex
A few large-caps and large-cap techs are holding up, but other areas of the market are showing weakness. Namely, the Retail SPDR (XRT) and Regional Bank ETF (KRE) are two of the weakest groups right now. These two groups are under selling pressure and this could bode ill for the broader market. Why? Because they represent key areas of the economy.
The Russell 2000 ETF (IWM) closed below the 200-day SMA for the first time since, well, June 1st. The last cross was not that long ago and recent crosses simply resulted in whipsaws. Truth be told, 200-day SMA crosses are not that relevant for IWM.
The S&P 500 SPDR bounced the last three weeks, but we did not see an improvement in breadth. Weak breadth is also reflected in performance for mid-caps and small-caps, which are lagging. Even so, SPY and QQQ are in short-term uptrends and I am watching the tech sector for clues.
Stocks surged in the second half of August with several ETFs breaking out of corrective patterns, such as falling flags or falling wedges. Even though September is a seasonally weak month, these breakouts are bullish until proven otherwise. Today’s commentary will analyze the breakout in the Technology SPDR (XLK).
According to the Stock Trader’s Almanac, the best six-month period runs from November to April. The worst six-month period runs from May to October. This is where the phrase “sell in May and go away” comes from. There is some validity to the best
Stocks were hit hard in August with QQQ leading the way lower and breaking its July low. Stocks that did not break their July lows are holding up better and showing relative strength. These are the stocks I want on my WatchList for tradable pullbacks and short-term breakouts.
Chartists can find leaders by ranking ETF performance in ATR multiples, and there is even an indicator for that. Normalized-ROC puts point performance in ATR multiples and we can compare these values against others. Current Normalized-ROC
Overbought and oversold conditions are tricky because stocks can become overbought/oversold and remain overbought/oversold as the move continues. This is why traders need another indicator
Breadth is holding up for Nasdaq 100 stocks, but deteriorating for S&P 500 stocks and I view this as a warning sign for the stock market. Breadth indicators measure the degree of participation. For example, the percentage of S&P 500 stocks
Small-caps are leading the way lower and breadth indicators are showing some serious deterioration under the surface. Large-caps are holding up for now, but keep in mind that weakness in small-caps foreshadowed the
Sometimes markets trend, sometimes they oscillate and sometimes they simply frustrate. I would venture to guess that trading since 2022 falls into the frustration basket. Trend following and momentum strategies are suffering because big moves
Chartists considering a trend-following strategy can use the Trend Composite to identify trend signals and then turn to the ATR Trailing Stop for an exit strategy. A bearish Trend Composite signal could also be used as an exit strategy, but these signals
Stocks and exchange-traded funds (ETFs) trading at or near new highs lead with clear uptrends. These are the names you’d want on your ChartLists or portfolio. You can find leaders by checking the list of
The stock market has been a tough place for trend-following since January 2022, which is when the S&P 500 first triggered a bearish trend signal. The bearish signal in question is the humble
The S&P 500 SPDR (SPY) is a period of big swings and above average volatility. There were six swings of at least 10% from late January to early February 2023. Looking at other 12-14 month periods, this
Stocks went on a tear from late December to early February with the S&P 500 SPDR (SPY) advancing some 11% from low to high. SPY then pulled back last week with
The S&P 500 has been trending lower since the peak in January 2022, but this decline could be a long correction after a massive advance. The pattern taking shape and
The stock market has a long-term bullish bias and the monthly return metrics reflect this positive bias. Chartists looking for a seasonal edge can compare benchmark metrics with the monthly performance numbers.
Trevor Lawrence put in a performance for the ages in the AFC Wild Card game on Saturday. Chapeaux! Lawrence started the game with four interceptions in the first half, but kept on throwing
The S&P 500 SPDR (SPY) surged from mid October to early December, but this advance was considered a counter-trend bounce within a bigger downtrend. In fact, the S&P 500 SPDR (SPY) reversed