Weekend Video and Chartbook – Breakouts Extend and Multiply, Checking in on Greed, Silver Outperforms Gold and TIP outperforms TLT

The weight of the evidence is clearly bullish and we are seeing some fresh breakouts this week. SPY started the breakout party four weeks ago, QQQ joined in two weeks ago and two tech-related ETFs are making attempts this week. The breadth models reflect broad participation in the current advance. Even though some indicators are getting stretched, the CNN Fear & Greed index shows that sometimes greed is good. We will then to the new StochClose signals and two mean-reversion setups to watch next week. There are also six ETFs with breakouts from short-term bullish continuation patterns. And finally, the Inflation Indexed Bond ETF is outperforming the 20+ Yr Treasury Bond ETF and the Silver ETF is starting to outperform the Gold SPDR.

ETF ChartNotes
Saturday, 5 December 2020

StochClose Signals and Oversold Setups

The image below shows ETFs with StochClose signals over the last three weeks. There were six bullish signals (AMLP, URA, FCG, XES, MJ and ITA) and three bearish signals (SIL, GLD, GDX). Keep in mind that these are trend following signals and the win rate is around 40%, which is typical for trend-following strategies. See part 3 (here) of the 6 part series on the StochClose strategy for more details.

The next image shows ETFs with bullish StochClose signals and oversold conditions. This means they are in uptrends and oversold (mean-reversion setup). There are just two: the Home Construction ETF (ITB) and Utilities SPDR (XLU).

Breakouts and Patterns

This PDF file (here) contains all charts for the ETFs listed below. Some charts are shown below, but check the PDF for all. 🙂

XLV, XLP, XLRE, REZ, IHI and IHF had short-term bullish continuation patterns working and broke out this week. Short-term bullish continuation patterns include flags, pennants and short-term falling wedges.

The Internet ETF (FDN) and Software ETF (IGV) are breaking out of medium-term bullish continuation patterns (Ascending Triangles).

The Home Construction ETF (ITB) is also high on the alert list because it is consolidating within a bigger uptrend. In fact, ITB has turned downright boring the last few weeks as volatility contracted. The ETF popped on Thursday and I am on alert for a follow through move.

The Utilities SPDR (XLU) is short-term oversold with a short-term falling wedge forming over the last few weeks. This is mean-reversion setup puts XLU on alert for a short-term bullish catalyst (breakout).

The Silver ETF (SLV) is outperforming the Gold SPDR (GLD) since November. Note that SLV is up 2.2% since October 30th and GLD is down 2.2%. SLV formed a medium-term bullish continuation pattern over the last few months and I am on alert for a breakout. Note that Natural Gas is known as the widow maker in the futures markets because of its volatility. I would put silver a close second.

Oil is also acting well as the DB Energy ETF (DBE) broke out of a small flag the last two days. The DB Agriculture ETF (DBA) formed a small bullish continuation pattern last week (pennant).

The ATR Trailing Stop will be added to the TIP Indicator Edge Plugin on StockChart ACP next week!. Here is a link to an article and video explaining the ATR Trailing Stop and how to chart it on TradingView.

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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