Today’s video starts with a broad market overview by looking at the long-term trends in SPY and QQQ, as well as the recent resurgence in small-caps and mid-caps. We then turn to the bullish breadth models and point out the breadth thrusts seen this past week, as well as the expansion in new highs. Within the ETF chart book, the setups in SPY and QQQ started from a position of strength, but the market leading gains in IWM and MDY started from a position of weakness (ditto for KRE and KBE). ETFs with breakouts from a position of strength are in the trend-monitoring phase after follow through this week. XLF and banks stole the show this week, but they have yet to exceed their August highs and remain laggards on the six to nine month timeframes. GLD is going for a breakout as TLT stalls with three inside days at the 200-day SMA. And finally, I revisit the failed breakout in XME and point out a few podcasts to keep you busy this weekend. PDF links are at the bottom.
ETF ChartNotes for Saturday, 10 October 2020
These notes are also in the ETF ChartBook.
There were several bullish breadth thrusts this week as the 10-day EMA of AD% exceeded +30% for the S&P 500, Nasdaq 100, S&P 100, S&P MidCap 400 and S&P SmallCap 600.
New highs expanded as High-Low Percent exceeded +10% for the S&P 500, Nasdaq 100 and the S&P 100. MID High-Low% finished at +7.5% and SML High-Low% at +5.15%. Positive, but not as strong as the big boys.
There were bullish breadth thrusts in 8 of 10 sectors as the 10-day EMA of AD% exceeded +30% for XLK, XLY, XLF, XLI, XLV, XLP, XLU and XLRE this past week.
Some of the leaders gaining over 5% this week include: XBI, SOXX, KRE, KBE, SKYY, IBB, FINX, IJR, SLV, IHI, XRT and IPAY.
On the losing end, the Aggregate Bond ETF (AGG), US Dollar Index and 20+ Yr Treasury Bond ETF (TLT) lost ground. TLT was down 2% for the week, but firmed with three inside days right at the 200-day SMA. TLT, AGG and LQD have been falling since early August with falling wedges possibly taking shape.
SPY and QQQ advanced four of five days this week for further follow through on the wedge breakouts from 28-Sep. There was a big news-driven down day on Tuesday, but this proved to be noise. Those watching the charts would have seen that the breakouts held.
MDY and IWM are leading the equal-weight, small-cap and mid-cap space because they exceeded their early September highs. After dipping below their 200-day SMAs on 24-Sept and lagging, both broke out of falling channel type pullbacks with market-leading advances the last two weeks.
We are in the monitoring phase for several ETFs. These are ones that hit new highs in early September and are still the longer term leaders. They fell sharply for three days and falling flags/wedges evolved. Subsequent breakouts around 28-Sept ended these corrections to signal a continuation of the bigger uptrend. The breakouts extended this week and it is simply time to monitor the current move. Those already trading at new highs are leading, but I would expect new highs for ETFs that have not hit new highs yet. Why? Because the bigger trends are up and the broad market environment is bullish. ETF with falling flag/wedge breakouts and follow through include: XLK, XLY, XLV, XLP, IGV, SOXX, FDN, SKYY, HACK, IPAY, FINX, XRT, IHI.
The following ETFs are leading since 25-Sept with double digit gains: KRE, KBE, IWM, IJR, SOXX, MDY, IHF, XRT, XBI, XME, KIE. However, the finance-related ETFs have yet to clear their August highs (KRE, KBE, KIE) and are not exactly leading. IWM, MDY and IJR are leading short-term, but have yet to record new 52-week highs in the current cycle (March to October).
XLI exceeded its September highs and this shows short-term leadership.
XLC is lagging with one of the weakest bounces the last two weeks.
XLF closed above its 200-day, the breadth indicators turned net bullish and StochClose (125,5) has been bullish since 21-August. However, the ETF remains stuck in a long triangle and has yet to break the September highs.KBE and KRE broke out of falling wedge patterns that reversed near the 67% retracement lines. Neither has yet to break its falling 200-day or August high. I am not worried about missing the big move over the last two weeks because these ETFs were in no way leading three weeks ago. There were over a dozen other ETFs with better long-term trends and short-term setups.
IBB and XBI extended on their breakouts with strong moves the last two weeks.
GLD recovered after Tuesday’s sharp decline with a surge above the falling wedge line on Friday. RSI bounced off the 30-40 zone and it looks like gold is making