Video, ChartBook Update and Chart Notes

ETF Chart Notes for Saturday, November 23rd

– Four to Watch: XLY, FDN, XME and HYG (see notes below or on charts)

– The Ascending Triangle breakout four weeks ago and new high this week are the dominant chart features for the S&P 500 SPDR, and the broader market. This is the stuff of bull markets.

– Volatility remains low for the S&P 500 and this supports the advance. ROC(1) has not dipped below -1% since early October and ATR(2) has been below 30 since mid October.

– SPY fell back on Wednesday, but the daily closes over the last three days were near the intraday highs. SPY won’t back down. Broken resistance, the 50-day

– MDY formed a flat flag just above the breakout zone and held up better than IWM and IJR, which formed falling flags. These flags are bullish continuation patterns.

– IJR fell back the last 13 days and RSI(10) dipped into the 40-50 zone. A dip below 30 creates an ideal oversold condition to prepare for a bounce, but we don’t always get ideal. Sometimes RSI bounces in the 40-50 zone. Watch 81 for a flag breakout.

– QQQ hit a new high this week and then fell back with a small decline. Still strong and still bullish. Broken resistance turns first support in the 195 area, should we get a pullback.

– Momentum continues to outperform minimum volatility. MTUM is up 5.5% over the last 37 days and challenging the prior highs. USMV is up 2.4% and just below its highs.

– The noose is tightening on XLY as the Bollinger Bands narrow and BandWidth hits new lows this week. Watch 123 up and 119 down. AMZN is 22% of ETF so watch this stock for a breakout at 1810.

– XLI and XLF hit new highs in early November and then formed high and tight flags.

– XLC broke out of its 3-month consolidation with a new high last Friday and held above this breakout this week (closing basis).

– XLV continues to lead with a fresh new high on Friday.  

– XLU got an oversold mean-reversion bounce last week and held strong this week. XLU is still lagging overall because it remains well below the October highs.

– XLRE got an oversold bounce and then fell back this week. REITs are lagging overall because XLRE is well below the October highs. Ditto for IYR.

– Tech-related ETFs are getting their mojo back with breakouts. HACK and SKYY on 30-Oct, IPAY on 31-Oct, FINX on 14-Nov and IGV on 11-Nov. SOXX is starting to lag and look vulnerable to a pullback.

– FDN is the only tech-related ETF without a breakout. The ETF bounced the last six days and is poised to challenge consolidation resistance.

– ITB and XHB are lagging a bit the last four weeks with modest declines and consolidations forming. These are still bullish continuation patterns, but money prefers the Tech and Healthcare right now.

– KBE and KRE have falling flags working, but remain just short of breakouts.

– KIE ain’t the most exciting ETF, but it is holding its triangle breakout and remains in an uptrend overall.

– REM broke out of a falling channel in late October and held above this breakout the last three weeks. Staying strong.

– The runs in IBB, XBI and IHF are incredible as they became overbought in late October and pretty much remained overbought the last three weeks.

– The falling wedge declines in GLD and GDX look corrective in nature, but they are still falling and these two are lagging since September.

– XME is 50% steel and industry groups do not get much more cyclical. The ETF is in an downtrend overall, but near resistance and the 200-day with a falling flag taking shape. Interesting…

– REITs, Utes, Preferred’s, Staples, Bonds and Gold are generally shunned when a bull market in stocks broadens. Not because they are bearish, but because stocks usually offer better opportunities. VIG is not listening with a new high again on Monday.

– TLT and other bond ETFs had a heck of a run the last two weeks and now is the moment of truth. The falling wedges look corrective in nature, but the trends are down as long as they fall. Watch the red zones for breakouts.

– HYG has an Ascending Triangle working since June and fell towards support the last four weeks. RSI hit 30 on Wednesday and the ETF bounced on Friday. A mean-reversion bounce is underway and a follow thru breakout.

– UUP is in a long-term uptrend and the midst of a pretty strong mean-reversion bounce, which started in mid October. This is negative for gold.

Enjoy your weekend!

-Arthur Hill, CMT
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