Weekend Video – Breadth Continues to Wane, Lower Highs in Some Key ETFs, A Safe-haven ETF with a Bull Flag (Premium)

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The S&P 500 SPDR (SPY) fell five days in a row for the first time since October 2020, scene of the last decent correction in the stock market (see chart below). Signs of a correction continue to build as breadth wanes and key metrics hit their lowest levels since last year. We are also seeing corrections or downtrends in several other groups and September is here. The Composite Breadth Model remains bullish so any decline would be viewed as a correction as long as the model stays bullish. Among the ETFs, we are also seeing lower highs in several ETFs from August to September, and the leading ETFs are quite ripe for a corrective period. I will also discuss the recent trend signals in several high-flying ETFs and show how quantify pullbacks using RSI and the Momentum Composite.

Seasonal Patterns: Monthly and Best/Worst 6 Months (article/video)

Trading Corrections: Identifying and trading the falling wedge.

Exit Strategies: Indicators, riding the trend, using the ATR Trailing Stop.  

Broad Market Notes

  • SPX Breadth Continues to Wane
  • 6 Months Since 5% Decline (10 Based on Close)
  • Broad Market is the Single Biggest Influence
  • Plenty of Corrections Out There
  • Composite Breadth Model Remains Bullish
  • Yield Spreads Remain Low and Flat
  • Fed Balance Sheet Edges to Another New High
  • TLT Trades within Bull Flag
  • GLD and Dollar Hit Moment of truth
  • Oil Challenges Channel Resistance

ETF Highlights

  • New Trend Signals (3 up and 2 down)
  • SPY Takes a Hit with Rising Channel
  • Mid-caps and Small-caps Remain Range Bound
  • XLK, XLY, XLC, XLRE and XLV Remain Extended
  • XLF Holds Breakout Zone
  • XLI, XLB, IFRA, ITB and KBE Form Lower Highs
  • Tech ETFs in Uptrends, but Extended (IGV, SOXX …)
  • Trend Signals in Clean Energy (FAN, QCLN)
  • Metals ETF Surges to New High (DBB)
  • Steel ETF Fails to Bounce (SLX, XME)
  • Momentum Composite is Oversold for DBA
  • ARK ETFs Fall after Breakouts and Trend Signals
  • EV ETFs Form Lower Highs from Aug to Sep
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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