Market Update 9/9/22

The broad market moved higher, ending near its highs with all eleven S&P SPDR sectors showing gains for the week. Cyclicals (XLY) and Materials (XLB) led, while Consumer Staples (XLP) and Energy showed gains but were the weakest sectors, while the SPDR S&P 500 ETF Trust (SPY) was up +3.66%.

S&P SPDR Sector ETFs Performance Summary

9/2/22 – 9/9/22

090922 Sectors Week

Source: Stockcharts.com

Figure 2: Bonnie’s Mix of ETFs

Performance Summary 9/2/22 – 9/9/22

09922 Week ETFs

Source: Stockcharts.com

Investors were willing to take on risk last week, with Biotechnology and Semiconductors leading the way. It was favorable to see High Yield stop falling and join the advance, which bodes well for equities. However, the international markets remained weak and lagged behind the U.S. market.

 Figure 3: UST 10YR Bond Yields Daily

090922 UST 10 Yr Bond Yields Daily

Source: Stockcharts.com

The 10-Year U.S. Treasury yields rose, closing at 3.321% last week, getting closer to the June highs. Support is at 2.85%, followed by 2.30%. Resistance is at 3.40%.

The major averages closed near their best levels of the week. The Dow was up +2.66%, S&P 500 up +3.65%, and the Nasdaq, the best performer, up +4.14%. The Russell 2000 Index rose +4.04%, while the Value Line Arithmetic Index (a mix of approximately 1700 stocks gained +4.23%.

Weekly market breadth showed improvement after several weeks of poor breadth on the New York Stock Exchange Index (NYSE) and Nasdaq. The NYSE had 2432 advances and 1000 declines, with 76 new highs and 330 new lows. There were 3393 advances and 1766 declines on the Nasdaq, with 219 new highs and 138 new lows. Continued positive market breadth is a positive sign for further gains in the short term.

Positive Development

Market breadth improved last week, and the New York Stock Exchange Index (NYSE) had 90% of the volume on the upside on Friday, a sign of strength.  Consecutive days of 90% volume on the upside would be bullish.

 Figure 4: Nasdaq Advance-Decline Line (Daily)

090722 Nasdaq Daily Ad-Line

Source: Stockcharts.com

There was an improvement in breadth at the end of May and early June after breaking its April downtrend (green line), but not sustainable. Market breadth steadily improved in  July after breaking the January downtrend (brown line), leading to a powerful advance in the Nasdaq in early August before faltering.

Nasdaq closed near its highs for the week on Friday, with the Advance decline line close to penetrating its latest downtrend (orange line). It would be bullish for the near term if and when the downtrend breaks.

On the other hand, a turn down now would imply more time is necessary for a sustainable rally. Time will tell.

Figure 5: CBOE Volatility Index VIX

090922 VIX Daily

Source: Stockcharts.com

The CBOE Volatility Index ($VIX), a measure of fear, has been trading above 20.00 for most of 2022. In January, VIX made a high at 31.96 on 1/26 (brown circle), on 3/1 at 33.32 (red circle), and peaked at 36.95 on 3/7 (blue circle).

VIX fell last week as the major averages rose, closing at 22.79 (pink circle), below 24.00 (brown dotted line), which has been acting as resistance and support.

Intra-day volatility is likely to slow as long as VIX closes below 24.00.

Figure 6: Daily New York Stock Exchange (NYSE) New Lows

090922 NYSE New LOWS Daily

Source: Stockcharts.com

Watching New lows on the New York Stock Exchange is a simple technical tool that helps awareness of the immediate trend’s direction.

New lows warned of a potential sharp pullback, high volatility, and “panic selling” for most of 2022, closing above 150. As the market started to move lower in January 2022, New Lows rose sharply, peaking at 792 on 1/24 and again on 2/24 (red circles), implying an increased risk of further selling pressure. Investors in early May unloaded stocks, and New Lows expanded to 1063 on 5/9 (pink circle), then on 6/16 (purple rectangle), New Lows made a new high of 1092.

After contracting in June and July, New lows began to increase in mid-August, rising above 150 (blue horizontal line), the high-risk zone.

Learn more about the significance of New Lows in my book, Journey to Wealth, published on Amazon.  Here is an excerpt, The market is very strong when the New Lows are below 25 (Very Low Risk, and prices tend to rise). When New Lows are between 25 and 50, the risk is low, and prices tend to rise. So if you would like a preview, get a free chapter here.

New Lows on the New York Stock Exchange Index (NYSE) improved considerably last week, closing at 29 on 9/9 (light blue circle), below 50, where the risk is low, and prices tend to rise. Keep an eye out if new lows continue to contract and fall to below 25.

On the other hand, a warning would occur if New Lows increase to above 150, then expect more weakness and the latest rally to fail.

Figure 7: Daily iShares Russell 2000 (IWM) Price (Top) and 12-26-9 MACD (Middle) and Money Flow (Bottom)

090922 IWM Daily

Source: Stockcharts.com

The top portion of the chart is the daily iShares Russell 2000 Index ETF (IWM), the benchmark for small-cap stocks, with a 50-Day Moving Average (MA) (blue line) and 200-Day Moving Average (MA) that traders watch and use to define trends. At the end of March, IWM failed to break out above resistance at 210.00 (orange circle) and turned down, forming a downtrend (green line). In late July, IWM broke its March downtrend.

IWM closed  at 187.40, up +4.06%. Its positive IWM closed above the 50-Day Moving Average (blue rectangle) after falling below early in the week and below the 200-Day Moving Average (red rectangle).

IWM closed below resistance (between 190.00 and 195.00), below the middle channel, and the August downtrend (green line).   Penetration of the downtrend and the middle channel would confirm the strength and suggest further upside.

Short-term resistance is 190.00, 195.00, and 205.00. Support is at 185.00, 180.00, followed by 175.00. A break below would be concerning.

MACD (middle chart) is on a sell but turned up, close to generating a buy.

Money Flow (lower chart) broke the May uptrend (green line), implying money flowing out of small caps.  However, a shift has occurred. Notice money flow is rising and close to breaking the uptrend indicating investors’ interest in small caps.

Figure 8: Weekly iShares Russell 2000 (IWM) Price (Top) and 12-26-9 MACD (Bottom)

090922 IWM Weekly

Source: Stockcharts.com

The Russell 2000 (IWM) closed above its price downtrend from November 2021 (brown line) but stalled below the 50-Week Moving Average.

Last week IWM closed at its highs on Friday after testing the July breakout and appeared to have been successful. Support is at 175.00, and resistance is at 195.00, 200.00, and 210.00.

MACD (bottom chart) remains on a buy (green circle) along with breaking the downtrend from March 2021 (green line) but so far has failed to get above 0, which is a sign of weakness.

In Sum:

IWM held support, closed at its high for the week, and appears to have successfully tested the June lows, but continued strength in IWM is necessary to confirm.

Figure 9: Daily Invesco QQQ Trust (QQQ) Price (Top) and 12-26-9 MACD (Bottom)

090922 QQQ Daily

Source: Stockcharts.com

The chart shows the daily Invesco QQQ, an exchange-traded fund based on the Nasdaq 100 Index. The two top holdings in QQQ are Apple (AAPL) and Microsoft, with over 20.00%. The direction of both these stocks will impact the direction of QQQ.

QQQ rose by +4.04%, closing at 307.09, slightly under the August downtrend (green line). Support is at 300.00, 295.00, and 290.00.

The bottom chart is MACD (12, 26, 9), a measure of momentum that remains on a sell, but momentum no longer is accelerating to the downside, and with short-term strength, a buy is likely to be generated.

Figure 10: iShares Transportation Average (IYT) Price (Top) and 12-26-9 MACD (Bottom)

090922 IYT Daily

Source: Stockcharts.com

The Transportation Average (IYT) broke its price downtrend from March (green circle) in July and then consolidated near the 50-Day Moving Average before moving higher.

Selling continued early last week in IYT after falling below support (purple line). However, after slight penetration of the 50-day Moving Average, it recovered to close near its high for the week. IYT remains below the 200 – Day MA closing at 235.43, up +3.38%, slightly below the August downtrend (green line). Further strength would be favorable for the near term and likely carry over to the broad market.

Support is 225.00, and resistance is at 240.00 and 245.00.

MACD is on a sell, downside momentum is easing, and a buy is imminent on further strength in IYT.

Follow up on previous speculative buy.

Figure 11: Weekly Invesco Agriculture Fund (DBA) (High Risk) Price (Top) and  12-26-9 MACD (Middle) and Money Flow (Bottom)

090922 DBA Weekly

Source: Stockcharts.com

The Invesco Agricultural Fund (DBA) broke the steep May downtrend (pink line) but stalled and is in a trading range.

DBA rose +1.42% last week, closing at 20.67.

MACD, a measure of momentum, is flattening but no buy yet, but it could occur soon if DBA shows strength, or it will turn down, making a lower low and implying further weakness.

Money flow is rising but remains in a downtrend.

For those of you who did buy, as mentioned on the 8/12 market update to manage risk, continue keeping a tight stop if you invested in DBA and close your position (sell stop) if DBA closes below 19.80. The low was 19.87 on 8/19.

Figure 12: Energy SPDR Daily (XLE)

Source: Stockcharts.com

Energy (XLE), the strongest sector of 2022, rose in early August, forming an uptrend after its pullback from the June highs. The August uptrend was broken, and XLE fell but held above the 50 and 200-Day Moving Averages.

On Friday, the downtrend was penetrated, and another rally attempt is possible. Resistance is at 82.00 and 86.00. Support is at 78.00, 76.00, and 70.00 (brown line), followed by 65.00 (pink line). If you are considering buying Energy, I recommend placing a sell stop on your investment to minimize risk in case investors begin to rotate out of the Energy Sector and into other sectors that have underperformed this year.

 Figure 13: The S&P 500 Index ($SPX) Daily

090922 SPX Daily

Source: Stockcharts.com

The S&P 500 (SPX) rose by +3.65%, closing at 4067.36, remaining below the January downtrend (green line) and the 200-Day Moving Average (red square). However, it’s short-term positive the S&P 500 Index had enough strength to close above its 50 – Day Moving Average and remain in an uptrend from June. Time will tell if the S&P 500 closes above its 200-Day Moving Average, which would attract more buying from institutions and squeeze the shorts.

Support is at 3900.00, followed by 3700.00. It will be favorable if SPX has enough strength to close above 4200.00 and then break the January downtrend of 4300.00.

MACD, lower chart,  is oversold, below 0, and has turned up close to giving a buy in an area where a sustainable rally could occur.

On the other hand, a close below the September low would not be favorable and likely where there are sell stops, and if hit, the decline could resume.

Figure 14: I Shares Hi Yield Corporate Bond (HYG) (Top), and 12-26-9 MACD (Bottom)

090922 HYG Daily

Investors were willing to take on risk last week by buying Hi-Yield Bonds (HYG), which struggled in 2022. It’s a positive sign that the August downtrend in Hi Yield (HYG) broke.

Support is at 75.00 and 73.50. Resistance is at 77.50 and 79.00.

MACD (lower chart) is on a sell and close to a buy signal.  Continued strength in HYG would be bullish for Equities and High Yield bonds.

Aggressive Speculative Buy – Silver

Figure 15: I Shares Silver Trust (SLV)

090922 SLV Daily

Check out the Silver Chart. Notice the Positive Divergence forming – A Lower low in SLV with a higher low in MACD. A MACD Buy will confirm.

Notice how Money Flow is rising sharply after breaking the downtrend from August.

Time will tell if Silver can follow through to the upside. For those who buy, to manage risk, place a sell stop at 16.14, slightly below the 9/01 low.

If you are interested in following this chart and other charts during the week, I invite you to join my FB group Wealth Through Market Charts, where I post updated charts intraday throughout the week.

Summing Up:

A volatile week that had wide intraday swings, with all three major averages closing at their highs. Market breadth improved, and downside momentum has subsided. Daily charts are in position with further gains to break the short-term downtrends, which would be bullish for the short term. A volatile week may be ahead with Triple Witching on Friday, September 16, 2022, where futures and futures options, index options, stock options, and VIX options expire.  For now, it appears the bulls have gained control after what seems to be a successful test of the June lows until proven otherwise.

Remember to manage your risk, and your wealth will grow.

If you liked this article, you will love my Free Grow and Sustain Your Wealth Report. Get it here:

Do you like charts, I invite you to my FB group Wealth Through Market Charts or email me at Bonnie@Bonniegortler.com.

I would love to hear from you. If you have any questions or comments or would like to talk about the market, click here.

Disclaimer: Although the information is made with a sincere effort for accuracy, it is not guaranteed that the information provided is a statement of fact. Nor can we guarantee the results of following any of the recommendations made herein. Readers are encouraged to meet with their own advisors to consider the suitability of investments for their own particular situations and for determination of their own risk levels. Past performance does not

Bonnie S. Gortler

Bonnie Gortler, Consultant, Coach, and Author specializing in Wealth and Well-Being, is a successful stock market expert who has been instrumental in managing multi-million-dollar client portfolios within a top-rated investment firm during her over 35-year corporate career. As the author of “Journey to Wealth,” Bonnie has made it her mission to share the importance of risk management and how to enjoy real financial well-being by applying the technical and mental sides of investing. Bonnie has an M.B.A. and is a certified life coach. It is through her love of coaching, consulting, blogging, and social media that she creates change in the lives of many and inspires people from around the world. Bonnie is fully committed to your personal growth and development as she shares her winning spirit and powerful techniques with you. Visit BonnieGortler.com to gain tips and insights about investing, personal development, and inspiration through her articles on Wealth and Well-Being.
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