Weekend Video – Correction Concerns vs Signals, Materials Related ETFs Break Out, XLI and XLF Stall at Resistance (Premium)

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SPY and QQQ eked out new highs this week and IWM even bounced. However, IWM is still down over 5% the last twenty weeks and seriously lagging the other two, which are up double digits. Despite continued strength in SPY, there are some concerns brewing under the surface. Yield spreads edged up, S&P 500 breadth is lagging, Treasuries are outperforming junk bonds and SPY, and seasonal patterns are weak in August-September. We will look at these concerns and then show what it would take to trigger a correction signal using three breadth indicators. Elsewhere, gold is holding its short-term breakout, TLT is holding its upswing and the Dollar is hitting resistance. There were breakouts in ETFs related to materials, housing, electronic vehicles and networking.

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

  • SPY and QQQ Tag New Highs
  • IWM Bounces off Range Lows
  • Composite Breadth Model Remains Bullish
  • Yield Curves continue to Widen a Little
  • Fed Balance Sheet Contracts a Fraction
  • From Concerns to Signals
  • Oil Bounces off Breakout Zone
  • TLT Maintains Upswing as 10yr Battles 200-day
  • GLD Still at Make or Break Zone
  • Dollar Hits Resistance as Euro Hits Support

ETF Highlights

  • RSP Goes for Breakout (observational)
  • Bearish Wedge in IWM and Pennant in IWC
  • XLI and XLF Fall Short of Breakouts
  • XLB Breaks Out (strength in materials)
  • Tech-related ETFs Remain Extended
  • IGN Breaks Out of Channel
  • Housing ETFs Follow Thru on Wedge Break
  • Infrastructure ETF Gets Breakout
  • Bank ETFs Fall Short of Breakout
  • IBB and XBI Go their Separate Ways
  • Healthcare Providers ETF Battles Breakout Zone
  • XLE Holds Breakout as XES/FCG Fail to Follow Thru
  • Copper ETFs Break Out
  • Steel and Metals ETFs Break Out
  • Electric Vehicle ETFs Get Breakouts (volatile)
Thanks for tuning in and have a great weekend!

-Arthur Hill, CMT
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