Market/ETF Video – Yields Spreads Continue to Widen, Oversold Bounces within Downtrends, A Handful of ETFs Bounce within Uptrends (Premium)

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Market/ETF Review and Outlook Video

Stocks got a big bounce the last two days, but this is still considered an oversold bounce within a bigger downtrend. SPY, QQQ and IWM fell sharply the last two weeks of September and were ripe for such a bounce. Overall, the Composite Breadth Model remains decidedly bearish and yield spreads continue to widen. Thus, the Market Regime for stocks is bearish. With such conditions, chasing breakouts and big bounces is usually not a good idea. There are a few ETFs still in uptrends and some are getting bounces after pullbacks (clean energy, biotech). Dirty energy ETFs got a bounce as oil bounced in anticipation of an OPEC production cut. Elsewhere, the Trend Composite turned bullish for the Palladium ETF. The DB Agriculture ETF broke wedge support and the Soybean ETF is looking vulnerable after a stall the last few weeks.

Broad Market Notes

  • Composite Breadth Model Remains Bearish
  • All or Nothing Days (End Sept Down, Last 2 Days Up)
  • CCC Spreads Widen to New Highs and BBB Spreads Follow
  • Junk Bond ETF Gets Oversold Bounce after New Low 
  • TLT Stalls within Downtrend as 10yr Yield Pulls Back
  • Oil Gets Oversold Bounce within Downtrend as OPEC Meets
  • Gold Surges as Dollar Pulls Back after Parabolic Move
  • DB Base Metals ETF Bounces after New Low
  • DB Agriculture ETF Breaks Wedge Support

ETF Trends, Patterns and Setups

  • Only Ten ETFs with Uptrends and Vast Majority with StochClose < 50
  • New Uptrend Signal in Palladium ETF (PALL)
  • SPY Gets Oversold Bounce after Becoming Extremely Oversold (plus QQQ)
  • Ignoring Island Reversals in Small and Mid Caps (IWM, IJR, MDY)
  • Big Bounces, but From 52-week Lows (XLK, XLI, XLF, XLC)
  • Tech ETFs Bounce from 52wk Lows (SOXX, IGV, SKYY, IPAY)
  • Housing and Banks Bet on the Fed Put with Breakouts (ITB, KRE)
  • Island Reversals above Summer Lows for Energy (XLE, FCG)
  • Clean Energy ETFs Bounce within Uptrends (TAN, ACES, QCLN)
  • Biotech SPDR Holds Uptrend with Normal Pullback (XBI, IBB)
  • Mean-Reversion Bounces for Healthcare and Utes (XLV, IHF, XLU)
  • DB Commodity and Energy ETFs Bounce after Breakdowns (DBC, DBE)
  • Palladium ETF Hits Multi-Month High (PALL)
  • Coffee ETF Struggles to Hold Breakout (JO)
  • Wheat ETF Grinds Higher as Soybeans Stall (WEAT, SOYB)
Thanks for tuning in and have a great day!

-Arthur Hill, CMT
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