Complimentary Articles and Analysis

SPY: You Spin Me Right Round

The S&P 500 SPDR (SPY) fell over 2% this week for the biggest weekly decline since June. The long-term trend is still up because SPY remains well above the rising 40-week SMA. However, a big Spinning Top candlestick formed last week and a volatility indicator ticked higher. Spinning Tops signal indecision that

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Trend Composite Turns Fully Bullish for Verizon

Verizon (VZ) participated in the first leg up from late March to mid April, but then stumbled with a decline into mid June. This stumble, however, looks like a classic correction and the stock broke out with a strong move over the last six weeks. In addition, the TIP Trend Composite, which aggregates five trend-following indicators turned positive in early August. Let’s investigate further.

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New 52-week Highs Underwhelm, But Outpace New Lows

The total number of new highs in the S&P 500, S&P MidCap 400 and S&P SmallCap 600 continues to underwhelm. Even so, new highs are still outpacing new lows and this is enough to keep the uptrend since late March going. The first chart shows new highs and lows for the three indexes with horizontal lines at the 10% level (e. g. 50 and -50 for the S&P 500).

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Four Stocks Poised to Drive Healthcare Higher

The Healthcare SPDR (XLV) is one of the strongest sectors in 2020. Even though it does not sport the biggest gain, XLV recorded a new high in July and some 80% of its components are above their 200-day EMAs. The new high points to a long-term uptrend and upside leadership, while the percentage of stocks above the 200-day EMA points to broad strength within the sector. Sector SPDRs, however, are only as strong as the sum of their parts (component stocks).

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A Bollinger Band Breakout or the Dreaded Head Fake?

There were a number of Bollinger Band squeeze plays over the last two weeks and also a number of breakouts. These breakouts are bullish until proven otherwise, but chartists should also be aware of the head fake. In his book, Bollinger on Bollinger Bands, here’s how John Bollinger puts it: Traders beware! There is a trick to The Squeeze, an odd turning of the wheel that you need to be aware of, the head fake.

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Measuring the Balance of Power in the Equal-weight Sectors

The 200-day SMA is a long-term trend indicator that chartists can use across the equal-weight sectors to measure the balance of power in the broader market. The more sectors trading above their 200-day SMAs, the more bullish the market. The more sectors trading below their 200-day SMAs, the more bearish the market.

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Knowing When to Add Risk and When to Reduce Risk

The S&P 500 is the most widely used benchmark for the US stock market and the 200-day SMA is perhaps the most widely used moving average. These two came together again in late May as the index crossed back above on May 27th. Today we quantify the performance of prior signals and show how a little smoothing can go a long way. Furthermore, a simple market timing mechanism can tell investors when to add risk and when to seek alternatives to stocks.

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Quantifying the QQQ Effect on SPY

We all know that many stocks in the Nasdaq 100 ETF (QQQ) are also part of the S&P 500 SPDR (SPY). In addition, it is clear that these QQQ stocks affect the performance of SPY. But how much exactly? Today we will answer that question and compare performance for these two ETFs.

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Timing S&P 500 Swings Using the Bullish Percent Index

The Bullish Percent Index is a breadth indicator that quantifies double top breakouts and double bottom breakdowns, Point & Figure style. Basically, this indicator measures higher highs (breakouts) versus lower lows (breakdowns). This makes it a great candidate to quantify underlying strength and weakness in the S&P 500. There have been three signals in the last few months and one triggered this week.

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