Non-confirmations Show Creeping Correction that Could Expand (Free)

The S&P 500 SPDR hit a new high last week, but it was alone at the top because several other major index ETFs did not confirm. In fact, these non-confirmations have been building since March as fewer groups participated. Of note, several tech-related ETFs peaked in mid February, small-caps peaked in mid March, SMH peaked in early April and QQQ peaked in mid April. 

The chart above shows SPY hitting a new high last week and remaining well above its 50-day SMA. QQQ fell the last few weeks and is one penny above its 50-day SMA. The Semiconductor HOLDRS (SMH) fell the last five weeks and is below its 50-day. The Russell 2000 ETF (IWM) has gone nowhere since its March peak and moved below its 50-day. The Software ETF (IGV) formed a lower high from February to April and moved below its 50-day last week.

Small-caps and techs represent the higher risk end of the stock market and money is moving out of these areas. This shows risk-aversion that could foreshadow a broad market correction. Keep in mind that SPY advanced 31% from the late October low to the early May high. Corrections are normal and can lead to the next opportunity.

I put out a note and video today covering correction targets for SPY, seasonal patterns for May-June, lower highs in tech ETFs, the failed breakout in IWM, the breakouts in IJR and KRE, the inability of bonds to bounce and a bearish setup in Bitcoin. Click here to get immediate access and take your analysis to the next level.

Try our Premium content!

Premium content is geared towards traders and investors
looking for a systematic and objective approach.

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

Scroll to Top