Weekend Video – A 5% Pullback, Rotations within the Stock Market, Watching for the Next Breadth Signal (Premium)

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Large-caps finally pulled back with the S&P 500 SPDR falling around 5% in September. Small-caps held up better with a smaller decline. Overall, there was a rotation underway in September as money moved into banks, energy, airlines and defense. Money moved out of the high-beta ETFs (tech, ARKs), rate sensitive groups (REITs, Utes, Telecom) and the former leaders (XLV, IHI, PHO). A 5% decline is not really a correction. It is more of a pullback and this pullback could evolve into a correction, which means a multi-week decline or consolidation. The Composite Breadth Model remains bullish and yield spreads are low, but the Fed balance sheet contracted and Treasury yields broke out. This could be causing a rethink within the market and prices are adjusting accordingly.

Trading Corrections: Identifying and trading the falling wedge.

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

Broad Market Notes

  • Composite Breadth Model Remains Bullish
  • Yield Spreads Remain Narrow Overall
  • Fed Balance Sheet Contracts by Most Since July 2020
  • SPY Ends its Streak
  • Zweig Breadth Thrust in No Man’s Land
  • Looking for Follow through Breadth Pop
  • TLT Breaks Down
  • GLD Becomes Oversold within Downtrend
  • UUP Breaks out of Range
  • Oil Extends on Channel Breakout
  • SPY Pulls Back within Bigger Uptrend
  • QQQ Barely Bounces
  • Small-caps Holding Up Better than SPY and QQQ

ETF Highlights

  • Ranking and Trend Table Overview
  • Finance and Banks are Leading with Breakouts
  • Energy ETFs Extend on Wedge Breakouts
  • Prior Leaders ST Oversold within Uptrends (XLK, XLC, XLRE, XLV, IHI, PHO)
  • Tech Related ETFs Become Oversold, but Lead lower in September
  • SOXX Hits Channel Line and Becomes Oversold
  • Mortgage Real Estate ETF Holds Breakout
  • Airline ETF Breaks Out after Retracement
  • Food & Beverage ETF and Agribusiness ETF Form Bullish Triangles
  • Biotech ETF Hits Support Zone and Becomes Oversold
  • Lithium ETF Consolidates within Strong Uptrend
  • Strategic Metals ETF Forms Small Falling Wedge within Uptrend
  • Uranium ETF Firms Near 50% Retracement
  • Sports Betting iGaming ETF Forms Bull Flag after Big Surge
  • EV ETFs Remain with Choppy Uptrends
    Pet Care ETF Becomes Oversold for 3 Days


  • Trending Lower Since May (Correction or Downtrend?)
  • Industrials, Infrastructure, Transports, Defense and Infrastructure ETFs
  • Home Construction and Retail ETFs
  • Materials, Metals/Mining, Steel and Copper ETFs
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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