Market/ETF Video – Breadth Becomes Overbought in Downtrend, Healthcare, Energy and Defense Lead, Ag and Industrial Metals Stall Out (Premium)

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Market/ETF Review and Outlook Video

The Composite Breadth Model remains bearish, yield spreads are elevated and the overall environment for stocks is bearish. SPY became quite oversold in late September and early October, and then turned choppy in October. The latest October swing is up, but this is considered a counter-trend bounce and a short-term breadth indicator became overbought. QQQ and techs were lagging into early October and continue to lag. Energy, Healthcare and Defense are showing relative strength and have short-term breakouts working. Oil is attempting a short-term reversal after a normal pullback and gasoline is moving higher.

Broad Market Notes

  • Composite Breadth Model Remains Bearish
  • %Above 20-day SMA Becomes Overbought
  • Fed Balance Sheet Contracts Further
  • CCC and BBB Spreads Remain Elevated
  • SPY Gets Oversold Bounce within Downtrend
  • QQQ and XLK Are Lagging
  • Yearend Seasonality vs Volatile October
  • TLT Bounces after New Low (10yr > 4%)
  • Dollar Bullish ETF Stalls within Uptrend
  • Gold Bounces off September Low as Dollar Weakens

ETF Trends, Patterns and Setups

  • Uptrends Expand as Energy ETFs Trigger
  • Biotech SPDR Holds Up, but Palladium Breaks Bearish
  • Energy SPDR Leads Sectors with Move above August High (XLE)
  • Healthcare SPDR is the Second Strongest Sector (XLV)
  • Aerospace & Defense ETF Extends on Breakout (PPA)
  • Healthcare Providers ETF Reverses Downswing (IHF)
  • Biotech iShares Breaks Out (IBB, plus XBI and SBIO)
  • Networking ETF is the Only Tech-Based ETF above 200-day (IGN)
  • Oil Keeps Short-term Breakout Attempt Alive (CL1!, plus DBE)
  • Oil & Gas Equipment & Services ETF Leads Energy Surge (XES, XOP, FCG)
  • Banks, Home Construction and Water Sound the Siren Song (ITB, KRE, PHO)
  • DB Base Metals ETF Channels China (DBB)
  • Consolidation Narrows for Copper Miners ETF  (COPX, CPER)
  • Palladium ETF Breaks August-September Lows (PALL)
  • DB Agriculture ETF Shows No Upside Traction (DBA)
  • Wheat and Soybeans Test Support as Corn Holds (WEAT, SOYN, CORN)
  • Livestock ETF Extends on Breakout (COW)
Thanks for tuning in and have a great day!

-Arthur Hill, CMT
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