Weekend Video and ChartBook Update

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ETF Chart Notes for Saturday, December 7th

– New Highs this Week: IWM, IJR, USMV, XLF, XLV, XLP, XLC, KBE, IBB, XBI, IHI, EFA, VIG

– This week we are seeing plenty of new highs: small-caps (IWM, IJR), finance and banking (XLF, KBE), Healthcare (XLV, IHI, XBI, IBB), Communication Services (XLC) and the Europe, Australasia and Far East ETF (EFA).

– SPY was hit on Monday and Tuesday, but immediately rebounded and closed with a  small gain for the week. Notice that RSI(10) bounced off the 40-50 zone. The 40-50 zone represents a mild oversold condition and is the first are to expect a bounce.

– RSP fell back to the breakout zone, firmed and bounced the last three days. RSI also bounced off the 40-50 zone. Ditto for MDY.

– IJR and IWM broke out of flags on 25-Nov and then fell back sharply on 2-Dec. Even though the flag breakouts were threatened, the flag lows held and both recovered to new highs this week.

– Even though the market recovered with a strong bounce, we did see an uptick in volatility this week. The 1-day ROC for IJR, IWM, KRE and KBE dipped below -1% on Monday and then exceeded +1% on Friday. The trends are still up, but short-term price action is turning erratic.

– QQQ did not hit a new high on this week’s bounce, but RSI(10) bounced off the 40-50 zone.

– XLY kept its Ascending Triangle alive with a bounce the last three days. The ETF is underperforming because it has yet to exceed its July or September highs and remains stuck in its range. The Bollinger Band breakout is still valid with support marked at 119.

– XLB surged off broken resistance and RSI(10) bounced off the 40-50 zone. The ETF also broke out of a falling flag.

– XLRE broke support in late October and then consolidated. This could be a bearish continuation pattern. XLRE is also underperforming.

– SOXX rebounded and is on the verge of breaking out of a falling flag.

– TAN bounced off its rising 200-day SMA and broke above its November highs.  This looks like a continuation breakout.

– Oil surged 7.3% this week as $WTIC hit at 10-week high and closed near $60 (59.2). Energy-related ETFs remain in downtrends overall, but XLE broke a falling wedge line and XES is challenging the November high.

– Stocks surged the last three days and money moved out of alternatives, namely bonds and gold. GDX failed to break resistance and remains in a downtrend since September. GLD fell back hard. AGG and TLT backed off resistance.

– XME led the market over the last two weeks and broke Double Bottom resistance.

– There is also strength outside of the US. IEMG bounced off broken resistance (turned support) and broke out of a small falling wedge. EFA hit a new high.

Enjoy your weekend!

-Arthur Hill, CMT
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