Friday Video – Risk Aversion Remains in Play, Utes, Staples and Healthcare Lead, 10-yr Treasury Yield Reverses Upswing (Premium)

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Risk aversion is spreading in the stock market. High-beta ETFs bore the brunt of selling pressure over the last several weeks and QQQ is starting to show some signs of buckling. On the flipside, money is moving into defensive groups with Utilities, Staples, Healthcare and REITs hitting new highs. The weight of the evidence remains bullish for the broader market, there are concerns with a few breadth indicators and it would not take much to tip the Composite Breadth Model bearish again. Elsewhere, Wall Street is assuming that rates will rise, but the 10-yr Treasury Yield is not confirming this assumption. My analysis suggests that the 10yr Yield reversed its upswing and the 20+ Yr Treasury Bond ETF (TLT) is in an uptrend. Rising Treasury yields, which nobody expects, could have negative ramifications for banks and the finance sector. Gold is perking up with GLD getting a short-term breakout.

Note that I will update the Market Regime page again on Saturday morning.

       Broad Market Notes

  • Composite Breadth Model Remains Bullish
  • Yield Spreads Widen a Little and Remain Elevated
  • Fed Balance Sheet Surges to New High
  • %Above SMA Indicators Wane, but Remain Bullish
  • 10-day Bearish Breadth Thrusts Loom
  • Advance-Decline Percent Lags for QQQ and QQQJ
  • SPY Consolidates Near New High
  • QQQ Starts to Weaken
  • Follow Through Matters (IWM, QQQJ)
  • 10yr Yield Falls after Fed (that’s weird)
  • GLD Breaks Short-term Resistance (plus SLV)
  • Dollar Drops Along with 10-yr Yield

      ETF Trends, Patterns and Setups:

  • ETF Ranking and Trend Table Review
  • Defensive Sectors Take the Lead (XLU, XLP, XLV, XLRE)
  • Energy, Consumer Discretionary and Finance Pull Back
  • Materials SPDR Holds Breakout
  • ITB and XHB are Strong, but Extended
  • Semies and Water Resources ETFs Consolidate Near Highs
  • The Dip Keeps Dipping for Tech ETFs (CIBR, ROBO, SKYY, IGV)
  • Bank ETFs Stall as 10yr Falls
  • IFRA Sports Uptrend, but Hardly Consistent
  • Oil Holds Firm, but Energy ETFs Extend Pullbacks
  • XME Bounces within Bigger Consolidation
  • LIT and REMX Pull Back and Carry Above Average Risk
  • Copper Remains Short of Breakout, but DBB Breaks Out
  • IBB Stalls at Support, but Remains in Downswing
  • Breaking October Lows (FINX, FDN, XLC, IPAY, XRT, XAR, PAWZ)
  • Testing Spring-Fall Lows: ICLN, PBW
  • Leading the Way Lower since mid November: QCLN, TAN
  • Near 52-week Lows: IBUY, JETS, XBI, FINX
Thanks for tuning in and have a great weekend!

-Arthur Hill, CMT
Choose a Strategy, Develop a Plan and Follow a Process

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