We started providing this content with our weekly watch list
around mid November 2010, but committed them to this website
starting 2011/01/02, there is no history at this time.
The most recent information is at the top and progresses into the
past as you scroll down.
Last weekend we visited the Iron Ducks where we discussed using
the TOS Risk Analysis tab for Beta-Weighted Portfolio Risk
Analysis. While there was not really time to go into all the
features of the tab, it is our hope the seeds were planted to show
how helpful it can be, and now much this sort of planning can help
manage not only individual trades, but a whole portfolio.
We also looked ever so briefly at the volume profile for the
S&P 500 e-mini futures. Last month we mostly rested at
or above the point of control on the 6-month chart... After
the little run to a slightly lower high we had broken the point of
control and were not able to get back above it... As the
last few days have demonstrated. We found support around
1310, 1250, and 1220 on the 6-Month chart... Using a years
worth of trading volume, though, the result may be a little more
clouded... Around 1315 there may be support, then 1280 or
so, then 1200... The 9-Month chart is a bit more clear than
this, and pretty much the same as the 6 month chart.
My sense is that the small volume spike around 1310 will not support the market if it is determined to decline - and only will if it really does not want to drop much farther than it already has.
Major Market ETFs
MDY IJR IWM ONEQ QQQ VTI IWB IWV SPY OEF DIA
Sectors and Industry Groups
XBI IBB XLU XSD XLV XHB XPH XLP SMH $MID $RUT $SML XRT $NDX $SPX
XLK $OEX XLI XLY IYW $DJI XES XLF XME XLB XLE XOP
Still slightly bullish trend
XHB XLP XLV XPH IBB XBI
Basically flat for 3 months
DIA QQQ ONEQ OEF SPY MDY IJR IWB IVV IWM VTI XLU
Lower Lows at 3 month support
XLF XRT XLY
Broken 3 Month Support
SMH XLK XLB XLI XSD IYW XLE XOP XES XME
We are back at the same support from a couple weeks ago.
Not many of the ETFs we watch have really broken support, and some
have made new highs, but by far most are simply in the same range
they have been in for months.
In recent market action we look at the Friday close and expect a
bounce for a couple days. So continued down action, or even
a quick rollover after a short bounce, would put us on a path for
the next levels of support.
But even a bullish bounce would only put us on a path for the
recent highs in the broad market.
One way or another, we need to break out of this narrow range
before directional strategies will pay off in trades longer than
just a couple days.
Major Market ETFs
DIA OEF SPY IWB VTI IWV IJR MDY ONEQ IWM QQQ
Sectors and Industry Groups
XLU XLP XHB $DJI XLV XRT XPH XLY XLI $OEX XLF $SPX XLK IYW $SML
XSD XLB $RUT $MID $NDX SMH IBB XLE XBI XME XES XOP
Recent New Highs
XHB XLY XPH IBB
Sideways
XLF XRT XLP SMH XLK XLB XLI IYW XLU XLV XBI DIA QQQ ONEQ OEF SPY
MDY IJR IWB IWV IWM VTI
Recent New Lows
XME XSD XLE XOP XE
Essentially everything is showing signs of a support
bounce. While small caps have accelerated fastest, they are
still furthest from resistance. They could allow larger
issues to reach new highs and still hold off themselves.
Without small caps, economic growth is emminently questionable.
Consumer Discretionary, Pharma, and Biotech have made nominal new
highs, but mining and metals and materials are pretty weak, also
calling a continued growth cycle into question.
Watching for bounces or breakouts is all we can do for evidence,
for now.
Major Market ETFs
IWM IJR QQQ ONEQ MDY VTI IWV IWB OEF SPY DIA
Sectors and Industry Groups
XOP XHB XBI XPH IBB XES XRT $SML $RUT SMH XSD XLE $NDX IYW XLK XLY
$MID XLF XME $SPX $OEX XLB XLI XLU $DJI XLV XLP
Did not take the time for this this week...
I was too busy this week and did not get this done. Still, while things seemed rather dark, support is not broken.
There are a few areas in the market which are in short term down
trends now, but many at some kind of support. It is now
Spain which will dominate our financial stability. Early
Thursday Morning will be the big Spanish Bond auction which will
likely be the most important news of the week. There is the
potential for a great deal of volatility until we know if the
Spanish Flu will persist for a while.
Small caps are at old support, making a second test of the
January breakout. If small caps do not head up they will be
a drag on everything and a source of increased volatility.
Caution is clearly due, no matter what strategies you use.
Major Market ETFs
DIA MDY IJR VTI ONEQ IWB IWM IWV SPY OEF QQQ
Sectors and Industry Groups
XME XLB XHB XLY XLI SMH XRT $MID XES $DJI XLE XLP XLU XOP XSD $SML
$RUT $SPX $OEX XLK $NDX IYW XLV XLF XPH IBB XBI
Possible Bull Flag Bounce
XRT XLP XLY SMH XLK IYW DIA QQQ ONEQ
Testing Support at Breakout
XLF XHB XLP XLV XPH IBB XBI OEF SPY MDY IJR IWB IWV IWM VTI
Sideways, Extending Range Lower
XLU
Possible Resistance Bounce
XLB XLI XME XSD XLE XOP XES
The areas of the market which are usually strong in growth
periods are certainly showing more weakness now. For the
first time in a long time the strongest charts are in potential
bull flags, the consistent brutality of a straight run to the moon
is finally over - at least for a day or two. Anyone watching
the futures expected todays gap down, so there should be no factor
of stun in this. But I certainly would not call today a
strong follow-through in any sense of the word.
Remember that it is news which makes technical analysis
work. Bull Flags happen generally because of news events
which cause some people to sell, or buyers to stand back for a
moment, before the buyers decide they have the value they want and
step back in... Then the shorts get squeezed and we get new
highs. This is what drives a trend.
One news event is not going to change a trend, so we need to see
how the market reacts to the next few economic indicators.
The predictions of these indicators also move in cycles. It
usually seems that expectations are based on a straight-line
extrapolation from the last few news releases. So when
nature does not continue the straight line, the markets seem to
get all flustered. This usually creates opportunity.
It is certain that we have approached resistance and bounced at
least a little bit from it. It is possible that the trend
will even change a bit. Last year the trend slowed in March,
but was still tradeable until July, but it is a time to protect
gains and evaluate new strategies if the market changes for us.
This may be a time when studies like On Balance Volume and
Accumulation/Distribution are useful, as well as the Positive and
Negative Value Index studies. Studies which depend on volume
can start to show subtle changes and provide some early warning
for shifts in the thinking of big money.
Major Market ETFs
DIA QQQ IWB OEF SPY IWV VTI MDY ONEQ IJR IWM
Sectors and Industry Groups
XLU XPH XLY XLP XBI XLV IBB XLE $NDX XLI XLK XES $DJI $SPX $OEX
IYW XRT XLB $MID XOP XHB $RUT SMH $SML XLF XME XSD
Possible Bull Flag
XLP XLY XLK IYW XLV XPH
Testing Breakout Support
DIA QQQ ONEQ OEF SPY IWB IWV VTI XLF XHB XRT IBB
Sideways around Support
MDY IJR IWM SMH XLB XLI XME XSD XLU XLE XOP XES XBI
Note that there is no strong evidence of a change in the
trend... When there is more than one down day in a row the
news sure wants to make it feel like the run is over, though.
With such a stellar quarter we can imagine there was a lot of window dressing going into the close - Money Managers who missed the moves buying at the end so their holdings look stellar. This might result in a bit of 'hot potato' going into the next quarter.
We also can imagine that a lot of folks may be giving
instructions to move more of their 401K investments into
stocks. This could continue the rally.
Someone I work with, I'll just call him TC here, moved a bit of his 401K from cash to stock mutual funds about a month ago. I was debating if this, timed with a breakout of NDX and SPX was actually buying a breakout, or setting a top. Last Year, you see, TC was expecting a correction, and when it bottomed he was going to move about 25% in... Then July and August happened, and October tested the low, and there was a Thanskgiving bounce... And TC is still waiting for REAL the correction... OK, not really a technical trader there.
Come to think of it, though, our neighbor still isn't in. So it can't be the top yet.
So considering all of these things, and the incredible rally on NDX, along with the small caps (RUT) seeming to be stalling out even after trying to break new highs, this could be an excuse for a retrace.
There is a lot of discretion in how you choose to place the Fibonacci 'ruler' on your chart. I tend to like to go with the most touches with opens and closes rather than the extreme price. This usually leads to more conservative targets... So I look at SPX over the last year or so and I see we are right at the 127.2% retrace of the 2011 correction. We have a conservative 1 year target of about 1570 - though I would wager on the round number 1600.
But if we are getting a real retracement, finally, a 38% retracement would be about 1340, and the nice round number 1300 is right in the ambush zone between 50% and 62%. But this trend has been too strong during Q1 for a retracement.
I have added to our website a page on the theory of use for our trending indicators. We are
back testing them as a method for selection of securities, using
ETFs, from late 2006 to the present. We don't plan to use
these for entry and exit, but to measure on a normalized scale
which are trending, which are accelerating in a trend, and which
are losing steam.
For example the India ETF INP has been on a real tear for most of
Q1. Certainly a profitable one if you got in on it.
But right now the long term indicator bias is just reaching 0 and
the acceleration has dropped to 0; in theory this is showing that
the longer term down trend is just at the cusp of changing.
At the same time the intermediate term indicator bias is returning
to 0 and the acceleration has been down; in theory suggesting that
the intermediate trend is weakening. The short term is all
around zero showing that it could go either way. If we had
been in this for the first part of the quarter, we would have
collared it around the begging of March to preserve gains.
We would still be waiting for a sign to exit or hold, but our
discovery of the Cotterill oscillator may be the tipping vote for
now, as it is starting to drop off the longer term bias.
Last year SPX did that around March; while there was still good
trading upward, it showed a subtle change in the trend to that
point and suggested caution going into the summer. For INP,
now, we would be quite cautious, possibly buying longer term puts
and selling shorter term calls - is that a collindar?
I think I have a combination of studies which produce a pleasing
assessment of trend over different timeframes. If there is
time I will be adding the scripts to that page in the next couple
weeks.
Both these lists are ranked based on their acceleration along a
short term trend. This is different from last week when I
introduced the trending indicators without much planning.
Looking at the charts I found this a little more pleasing for this
list as it reflects a little more of the sense of how things went
for the previous week.
Major Market ETFs
DIA SPY IWB IWV VTI OEF MDY ONEQ IJR IWM QQQ
Sectors and Industry Groups
XLU XLV XME XLE XBI XLP $DJI XLI XES XPH IBB XLB $SPX SMH $OEX XLY
$MID XSD $SML $RUT XLK IYW $NDX XLF XOP XRT XHB
Continuing New Highs
XLV XLP
Possible Bull Flag
QQQ ONEQ IJR DIA SPY IWM OEF IWB IWV VTI MDY XPH XLY XLK IYW XLF
XRT
Ascending Channel
XHB XOP XSD SMH IBB XLI XBI
Flat Channel
XLU XME XLE XES XLB
I have been forced to start using a new method for sorting the
lists. The intent is to use a combination of studies to rank
them by the strength of their intermediate term trend. I
apologize for this because I was really not prepared to start
using this yet - but the TOS platform is so unstable right now
with memory leaks, I cannot use the methods I have been using for
years...
Following the breakout of NDX and SPX a couple weeks ago we have
observed an expected bull flag, but no real evidence of
weakness. We are still waiting to see /TF close above broken
resistance, but RUT had done so on 3/18 and the flag last week
seems only to have tested the support seen for most of the last
couple months.
Both these lists are ranked based on their acceleration along an
intermediate term trend.
Major Market ETFs
QQQ OEF ONEQ VTI IJR IWB SPY IWV IWM DIA MDY
Sectors and Industry Groups
XLF SMH $NDX IYW XHB XLK XLP $OEX XLY $SPX XSD XRT $RUT $SML XPH
XLV IBB $DJI XBI XME $MID XLB XLU XLI XOP XLE XES
Continuing Up Trend
XLY XRT QQQ
Possible Bull Flag
XLF XHB XLP XLV XLI OEF ONEQ VTI IJR IWB SPY IWV DIA MDY
Stalled around Resistance
SMH IYW XLK XPH IBB XLB XOP
Sideways
XSD XBI XLU XLE XES IWM
Stalled around Support
XME
From last week, XLF, XLI, and MDY have broken previous resistance; also, not much has backed off resistance. The market remains strongly bullish with just a few holdouts at resistance. SMH IBB MDY IJR IWM are still worth watching for breakout or bounce. XLF XLB XLI each broke resistance, though XLB still has not broken to new highs. The sideways issues are also worth watching if the market shows weakness.
SPX and NDX bounced from their minor flags and have broken to new
highs, while RUT has risen to previous resistance and will now
either break out or bounce down. Of course, after a breakout
it is reasonable to expect a flag to retest support at the broken
resistance. Midcaps have broken out, so I would expect small
caps may as well, and confirm the continuation of a broad rally.
From DOW Theory we see that the composit index has broken out,
while the transports remain right at previous resistance, like
small caps. Dow Theory sees a strong market when the
transport and composit indices are both strong.
Major Market ETFs
+5% QQQ ONEQ OEF SPY IWB IWV VTI DIA MDY IWM IJR 0%
Sectors and Industry Groups
+7.3% XHB XLF XLK $NDX IYW XRT $OEX XLY XPH $SPX XLI $DJI XLV XLP
IBB $MID SMH XOP XLE XLU $RUT $SML XES XBI XLB XSD XME -3.7%
Merciless Up Trend
XLF IYW DIA ONEQ OEF SPY IWB IWV VTI
Possible Bull Flag
XHB XRT XLP XLY XLK XLV QQQ
Broken Previous Resistance
XLI MDY
Around Previous Resistance
SMH XPH IBB IJR IWM
Sideways
XLB XME XSD XLU XLE XOP XES XBI
Alright Bears: Read 'em and weep... Retail, Staples,
and Discretionary all bearly flagged and broke into new
highs - this market is not displaying a great deal of
caution. Most sectors and broad markets are already around
their previous highs and poised to break out as well, but let's
look at the weakest areas for a few clues:
Small caps and Mining have bounced most strongly amog those
issues which did pull back more severely. While not yet
quite challenging their previous highs, which are also more
significant resistance, this is not a significant sign of
weakness. PFF and PGF (Preferred Stock ETFs) are grouped
with the strongest steady gainers in the last month - that is not
a great sign, but not uncommon in a minor pull back, either.
Utilities are about as flat as Kansas, which is a good sign -
they are usually very steady in a strong market. We will be
watching for a breakout to new 3-month highs in IWM, XLB, and XME
(in particular) as the principle signs of strength, but some
sectors and groups have already broken into new highs above
resistance they have recently held: XHB and XLV.
My 1 Month Strongest for the week are: XRT XLY XLP XLK IGM
IYW - essentially Tech and Consumer. These have been strong
and steady, barely faltering, during the last month. QQQ is
grouped in the middle of these and makes a simple choice for where
to put a core investment position - or to add to one. Since
few ETFs (foreign or domestic) are doing bettern than the NASDAQ
100, why not just use the QQQ...
Now, that covers the strong and steady - but the higher beta
issues have dropped off the Watch List. So, go to the Watch
List tab, look at the symbols from this week and those from a
month ago (the last list) and check out the charts of those which
dropped off the list. If the rally continues many of them
will come back strong - and are candidates for swing trades on the
support bounce of the chart looks like a bull flag or channel
bounce...
If small caps break to new highs we could have quite a nice run
into the Summer... If there is a resistance bounce, though,
we have a potential double-top with a target price dipping twice
as far as the last pull back. The volume profile, trend
lines, and other techniques will help identify potential areas of
support. For some issues support was hard to identify in
this recent pull back because many issues did not retrace much of
their recent run at all.
Major Market ETFs
+3.15% QQQ ONEQ OEF SPY IWB VTI IWV MDY DIA IWW IJR -1.15%
Sectors and Industry Groups
+5.5% XRT XLK XPH XLY $NDX IYW IGM XOP XLP $OEX $SPX XLF XHB XLU
$MID XLV XES XLE $DJI $RUT XLI $SML XLB IBB XSD XBI XME -5.25%
Russell has a bit more company at resistance now, but IWM and XME
are clearly rolling over with some company from Semiconductors and
Biotech... From the standpoint of awaiting a bull flag, this
is encouraging, but the more broad market is stilll pretty
strongly up trending without a break. So is the fact that
Midcaps are below Utilities with Small Caps. So, the big
companies are still strong, but profit taking is finding its way
into the higher beta issues.
This is the time we start looking for setups. We don't want
to jump too soon, but we don't want to jump out of trades too
soon, either. This is where hedging trades can come into
play. We have, for example, collared IWM and XME in our core
positions - I figured that would ensure an upside breakout, but so
far this is working OK. We have protective puts on the QQQ,
but they have been bleeding away as the Nasdaq 100 continues to
climb.
Remember how the phrase "I think" is a bad way to start a
trade. Our protective puts are in that category... The
mid-February through mid-March time frame has often had some sharp
pull backs with "China Surprise" often being the cause...
However, you can expect hedge trades to lose money in a strong
trend. You should never completely negate a positive delta
in this... Hedge trades are to ease the pain of a sharp pull
back, not necessarily to profit from the down side. The
trend is still up, and the hedge is a counter-trend trade - albeit
a good way to start if there is a trend change... Normally
the trend resumes and the hedges end up with small losses to small
gains.
If there is going to be a rollover we should begin to see some
greater volatility. Not just the VIX, but more rapid runs
between highs and lows intra-day in the futures. Beware the
buyers, based on the trend, they should be hidden just below where
most people set their stops for intermediate term trades...
Major Market ETFs
4.5% QQQ ONEQ OEF SPY IWB VTI IWV DIA MDY RUT IJR -3%
Sectors and Industry Groups
+5% XLK IYW $NDX XRT XPH XOP XLY XLP $OEX $SPX XLE XLF XES $DJI
XLV XLU $MID SMH XLI XLB IBB XHB XSD $RUT $SML XBI XME -9%
Up Trend
XLF XRT XLP XLY XLK IYW XPH DIA QQQ ONEQ OEF SPY IWB IWV VTI
Possible Bull Flag
XLE XOP XES
Sideways
XLU
At Resistance
XHB SMH XLB XLI XLV IBB MDY
Possible Broken Support/Rolling Over
XME XSD XBI IJR IWM
Looking at the Russel 2000 futures /TF, it is stunning to see how
truly narrow the trading range is recently. At 836 there are
dedicated sellers just 25 points short of the 2007 high, and at
811 there are equally dedicated buyers who just won't let the
price retreat for more than about a 23% retracement of the rally
following the breakout on 1/10. The whole market seems to
hang on which way this will go.
And that is always our question with technical analysis:
Will we run out of sellers or buyers? And then there are the
strategies - Buyers often make a tactical retreat for a few days,
allowing prices to fall a bit (in flags), and then jumping back in
with force, squeezing the shorts out and running the market even
higher... But we have not really seen any of those
flags. The buyers have been pretty relentless for some time.
Only the small caps and some commodity related issues show any
signs of being really tired in this rally - larger cap issues are
just running strong. This kind of non confirmation gives us
pause in taking on new positions. When everything is running
together is one thing, when everything HAS BEEN but now is not, we
have to wonder if things might be about to change - even a
little. So we have to wait for more evidence. Until
then, all this amounts to is non confirmation.
Major Market ETFs
+6.25% QQQ ONEQ MDY IWM VTI IWV IWB IJR SPY OEF DIA +2.3%
Sectors and Industry Groups
+11.9% XES XOP IYW XLK IGM XLE $NDX XPH XRT XBI $MID $RUT XLF IBB
$SML XSD $SPX $OEX XLY XHB XLI $DJI XLP XLB XLV XLU XME -2.2%
Merciless Up Trend
DIA QQQ ONEQ OEF SPY IWB IWV VTI XLY IGM XLK IYW XPH XLE XOP XES
Possible Resistance
MDY IJR IWM XLF XHB XRT XLP XLB XLI XSD XLV IBB XBI
Sideways
XME XLU
We pause on the brink of another Greek Trajedy, but the
volatility is still quite low.
Note in the trends and patterns and relative strength of
everythig below, small caps and mining/materials are relatively
weak. This could be a hint of weakness, or just catching
their breath while the rest of the market catches up.
These are basically non-confirmations, while everything else is
either continuing up or making a minor flag, only a couple
sectors/groups are actually still sideways with utilities.
Remember that with any real flag or pull back we can expect up to
a 62% trace of the recent run without breaking the trend, yet the
market seems unable to sustain even that much of a sell off for
now.
Any time now we may see a pause in the buying - but unless news
has really changed expectations it is just a tactical retreat -
watch for the bounce on a pull back. As technical traders we
can't really get bearish until we see a lower high following a
lowere low which broke support... Not seeing it yet...
Major Market ETFs
+6.2% QQQ ONEQ MID IWM IJR VTI IWV IWB SPY OEF DIA +2%
Sectors and Industry Groups
+29% XBI XHB IBB XLF XSD $SML $RUT XOP $NDX IYW XLI XRT $MID XLY
XLK IGM XLB XPH $OEX $SPX XLV XES XLE $DJI XLP XME XLU +3.6
Merciless Up Trend
XRT XLP XLY IGM XLK IYW XPH XOP DIA QQQ ONEQ OEF SPY MDY IWV IWB
Possible Bull Flag
XLB
Possible Resistance Break
XSD XLE XES VTI
Possible Resistance
XLF XHB XLI XLV IBB XBI IJR IWM
Sideways
XME XLU
We will start updating our ETF watch list now (Click the Watch TAB above). Given world
economic conditions, we consider the US to be generally safer, but
some issues (notably India, for example) are outperforming and may
be worth some segment of your portfolio. In the watch tab
pages we also have notes about how we make our watch list and how
to make use of it. The issues are sorted in order of the
volume they trade. These are all high beta ETF and
performing as well as or better than the strongest US groups and
sectors for the last month.
While everything pulled back a bit on Friday, only the small caps
in the major markets really seemed to break the low of the high
day in a meaningful way. We'll need to look for follow
through. By no means does this mean it's time to get
bearish. Based on current market action we must expect a
bull flag which will present an entry point for new short-term
trades or an add point for running trades. Of course we have
to be prepared for anything to happen and adjust our strategies
accordingly. For now, though, big money is buying and we
have a responsibility to follow in their wake as technical
traders.
With midcaps, smallcaps, and tech generally leading the market
this has all the signs of the begging of a growth period. We
have needed the participation, not the leadership, of financials,
and we have had it recently.
NDX, following its breakout of 1/18 around 2400 has a short term
target around 2600 which we are very near, this also marks the
127.2% bounce form the March 2009 low off the 2007 high.
This area could easily become a bit of a resting place given the
tear the index has been on... However, counting the breakout
from the 2011 low instead of the recent nominal low, the target is
around 2750, though it could take a year to get there.
RUT is a little more complicated, we are ignoring the high from
10/27/2011 and using a breakout high around 757. It has
already exceeded its short term target and has a nominal breakout
target around 860 which is around the 2011 highs and the 100%
bounce from the March 2009 lows off the 2007 high. A break
above 860 or so has a 1-year price target of around 1050 -- what a
really great place to get to!!!
SPX is finding resistance around the 2011 highs now. It has
already exceeded its short-term breakout target, but the nominal
target for the breakout from the 2011 lows is around 1425.
However, the breakout from the 2011 low to high is in the stunning
neighborhood of 1600, which would be a 100% recovery off the March
2009 low from the 2007 high. The view will be pretty good
from up there - if we can all keep our gains...
Bear in mind we have been sideways now for over a year, and THAT
is the larger trend. We have yet to see which of SPX or RUT
reach their 2007 highs first, but we are finally in the economic
place where we just might begin to see an improvement in the
employment situation if the economy continues its slow
recovery. Also remember that we are still de-leveraging lots
of bad investment including housing, for example, which will all
continue to drag on the market.
The larger trend still has an upward bias, suggesting that while
we may not see the best breakout targets in a direct run, we
should probably expect to eventually break higher and ultimately
reach those targets. This is all still consistent witht the
general form of the extended economic cycle and long periods of
little real growth; a kind of supercycle which still suggests
another leg down in 2-5 years which should be followed by the next
really big growth cycle. History does not have to repeat
itself, but as Sam Clemens said: It often rhymes...
Major Market ETFs
+3.4% QQQ ONEQ MDY RUT IJR VTI IWV IWB SPY OEF DIA +1.3%
Sectors and Industry Groups
+10% XSD IYW XRT IGM XOP $NDX XHB XLK XBI XES IBB $MID $RUT $SML
XLE XLF XLY $SPX $OEX XLI $DJI XLB XLP XLV XPH XME XLU -0.3%
Up Trend
XLF XHB XRT XLY SMH XLK XLB XLI XSD IYW XLV XPH XLE XOP XES IBB
XBI
DIA QQQ ONEQ OEF SPY MDY IJR IWB IWV IWM VTI
Sideways
XLP XME XLU
Tom says "The risk is to the down side" meaning the market has run up and is likely to pull back, at least a little.
Dave would probably say he agrees completely, and then go into many reasons the market is likely to continue up.
The apparent confilct here takes some experience to listen to. Tom is not simply long or short of the market, he is trading pairs and part of his trade benefits from an up market and part from the down. He does not necessarily expect the market to reverse, but he knows it must breathe a bit. Dave is expecting a flag which will pull back to a higher low and then continue the current trend.
Don't get confused and start making bearish trades just because you hear someone being bearish apart from CNBC. As technical traders the charts will provide us the evidence of how we need to be trading.
Our plans should be prepared a couple moves ahead of the
market. We should know how to manage all our trades as the
market makes a resistance bounce, pulls back, and then bounces off
support. In the current market conditions we expect a bull
flag.
I didn't have time to make the target projections, but we should all know that when we break through resistance we will go to the next level of resistance. We also know that breaking out of a horizontal range will typically have us run the height of that range and find resistance, other resistance may lie below or above that price pattern target.
Major Market ETFs
+10.6% IWM IJR MDY ONEQ QQQ IWV VTI IWB SPY OEF DIA +3.6%
Sectors and Industry Groups
+27% XBI IBB XHB $SML $RUT XPH XLI XLF XLV XLY $MID XLB XRT XSD
$OEX $NDX IYW $SPX $DJI XLK IGM XLP XES XLE XLU XME XOP -1.6%
Up Trend Gap
XLF XHB XRT SMH XLK XLI XSD IYW
Up Trend
XLY XLB XME XLV XPH IBB XBY
Sideways
XLP XLU XLE XOP XES
I don't know if anyone noticed that the major markets are heading
back for the 10/40 Week EMA crossover, which is histicorally a
fairly bullish indicator.
I've just felt swamped with extra work the last couple weeks.
It seems funny that I get asked how I can be so bullish with all
the news as things are... Excuse me, I am being
bullish? I simply don't have the billions at my disposal to
push the charts up. All I am doing is looking at the charts
and seeing the obvious things that any 8 year old could see.
Someone else is being bullish - I am just riding on their coat
tails like any other technical trader.
The news may still seem confusing to folks, but the charts are
getting simpler and simpler. The only really confusing thing
is: Where are the flags so we can add new trades.
Major Market ETFs
Not done this week...
Sectors and Industry Groups
17.3% XBI XME XSD IBB XHB XLB XLF IYW XLI IGM XRT XOP XLY XLK XES
XLE XLV XPH XLP XLU -4.2%
Chart Analysis not done this week
My apologies, but with all the extra hours at work I realized that I had to file my payroll tax W3/W2 for Q1-3 2011 and verifying all the data took all my time.
Major Market ETFs
Not done this week...
Sectors and Industry Groups
17.3% XSD XBI XLF XLB IBB XHB IYW IGM XLI XLK XLY XME XLV XLE XES
XRT XOP XPH XLP XLU -2.5%
Chart Analysis not done this week
Notably there are no down trends in any major markets or sectors
and groups. About half the symbols we watch have broken
resistance and are in an uptrend. Most of the rest are
around resistance, either the late October highs or the resistance
line of an ascending triangle. The weakest seem to be XME
and XSD which are apparently converging in pennant-like
formations.
So, we rolled our covered calls up and made them bull call
spreads. It will take a couple months to make up the draw
down of the covered calls with spreads. But the spreads
still provide some protection, on stand-by:
Major Market ETFs
7.3% MDY IWM IJR QQQ ONEQ VTI IWV IWB SPY OEF DIA 4.8%
Sectors and Industry Groups
18.7% XBI XHB IBB XLB XLF XSD XLI SMH XOP XME $MID XES $RUT $SML
XLY $NDX XLE $SPX $OEX XLV XPH IYW XLK $DJI XRT XLP XLU 0.7%
Possible Bull Flag
XHB XLP XLY XLI XLU XLV XPH IBB XBI DIA OEF ONEQ IJR IWV VTI
Around Previous Resistance
XLF SMH XLB QQQ SPY MDY IWB IWM
Possible Ascending Triangle
XRT XLK IYW XLE XOP XES
Possible Pennant
XME XSD
I look at the charts and have been seeing for the last few weeks
a "one of these things is not like the others" thing with
XME. Others are in ascending triangles, horizontal channels,
or even a few uptrends... But XME has been trading in what
would be a descending triangle - would be except that it is not
following a down trend, so we can't call it that - but whatever
you call it, it has the same meaning, similar lows, lower highs.
Being an oddball, we watch it as simply being an outliar for the
moment. There is no way to tell if it is showing a tell on
the future, or just being a lagger, so not much to bet on with
this yet.
Normally I at least get through the charts by Sunday, but I was
very busy this weekend and didn't get there. But since I am
late, I note we are at resistance with 5 doji days on /ES while
/TF has been a little stronger. /NQ seems to have been
playing catch up and shown relative strength recently.
Major Market ETFs
4.7% IJR OEF IWM SPY IWV VTI IWB QQQ DIA MDY ONEQ 3.2%
Sectors and Industry Groups
10.5% XBI IBB XHB XLV XPH XLF XLI XLB $OEX SMH XSD XLY $SPX $DJI
$SML XLP XLU $NDX XLE $MID $RUT XLK IYW XOP XRT XES XME -4.3%
Not much has changed since last week, and I am late in getting
this done so I will skip it...
The uptrends are Utilities, Pharma, and Health Care... This
is not terribly encouraging. To have a sustainable up trend
we really want to see strength in Financials (not leadership, but
walking around the ward instead of layed out in the Critical Care
unit), and Technology. However, technology has been
consistently weak.
In growth, small caps are strong along with commodity stocks, but
they are also being weak, with XME being the weakest group over
the last 30 days.
Most of the symbols we are watching, below, are near
resistance. XME is notably different, being near
support. Most of the pennant-like formations are near their
convergence area, so something has to give soon. Much of
this looks like consolidation waiting for an excuse to break
updwards, but that just does not feel right.
It takes discipline to follow entry signals and stick to rules no
matter what. However, a good rule can be to reduce position
size when we have volatile markets. Also not making
directional trades, but using time and volatility for option
trades.
This year we plan to not try so hard for directional trades and
being agile - unless the market provides an appropriate
environment for that. We will use more time-related
strategies, selling options more while the market swings about.
Major Market ETFs
+1.8% DIA IJR OEF SPY VTI IWV IWB IWM MDY ONEQ QQQ -1%
Sectors and Industry Groups
+4.7% XLU XLV XLP XPH IBB XHB XBI $DJI $OEX $SML XLF $SPX $RUT XLI
XLY XRT $MID SMH XLK XLB $NDX XLE IYW XSD XES XOP XME -8%
Up Trend
XLP XLU XLV XPH IBB
Possible Ascending Triangle
DIA OEF SPY IJR IWB IEV IWM VTI XHB XRT XLY XLI XBI
Possible Pennant/Symmetric Triangle
QQQ ONEQ MDY XLF SMH XLK XLB XME XSD IYW XLE XOP XES