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Historically September has not been favorable for stocks, with the S&P 500 declining a majority of the time. But surprisingly this September the major averages are near or at new highs, positive for the month. The major averages didn’t give up much ground after the Fed meeting and political concerns overseas.  The Federal Reserve left interest rates unchanged but implied they would increase interest rates one more time by year-end, despite low inflation. There was a noticeable shift that took place as investors took profits rotating out of some of the leading sectors this year such as Technology and Utilities, and moved into sectors that were lagging.  Energy, Industrials, and Financials were the big winners.

The bullish case remains for the overall market. Our equity timing models remain overall on a “hold” suggesting further gains are likely with risk contained.   The advance decline line of the New York Stock Exchange Index and Transportation average has confirmed the major average highs suggesting a market top is unlikely.  The iShares Russell 2000 Index (IWM) ETF is trending higher leading the advance, a healthy sign for the market. However, there are some sectors showing a loss of upside momentum, which means stock and sector selection will be more important going into the fourth quarter and early next year.

 Health Care (XLV), a leader so far this year might have hit its peak.

  Figure: Health Care Select Sector SPDR ETF (XLV, top and MACD 12-26-9 (bottom)

The top portion of the chart above is the weekly Health Care SPDR (XLV) that is comprised of companies from industry groups including pharmaceuticals; health care providers & services; health care equipment & supplies; biotechnology; life sciences tools & services; and health care technology.  As of 09/25/17, the top 5 holdings in the XLV were Johnson and Johnson (JNJ) 11.26%, Pfizer (PFE) 6.78%, United Health Group (UNH) 5.98%, Merck (MRK) 5.70%, and AbbVie Inc. (ABBV) 4.41%, totaling 34.13%. Except for a few short term declines, Healthcare (XLV) in 2017 has trended higher and is up 18.00% through 09/26/17, outperforming the S&P 500.

The biggest holding, Johnson and Johnson (JNJ) has been trending down. MACD is on a sell along with a bearish negative divergence. JNJ has broken its uptrend from January 2017 (chart not shown).

Notice in the top chart, how the XLV made a new high in July, breaking through its old high, but stalled immediately.   A few weeks later the XLV pulled back to 77.82 (red circle) successfully testing its breakout then rising for three weeks to make a new high at 83.41.  It’s encouraging the XLV uptrend remains in effect from February 2017.  However, in the last two weeks, investors have shifted away from healthcare and some short term selling pressure has begun.

The bottom half of the chart shows MACD, a measure of momentum.  MACD is on a sell and the MACD pattern is suggesting a possible peak for the short term in healthcare (XLV).  MACD is above 0, rolling over with a double top, forming a negative divergence (a higher high in price but a lower high in MACD, (green circles).

The moment of truth is here. There are two significant uptrend lines in jeopardy if the XLV continues to decline.  The uptrend from 02/08/17 would be broken (pink line) on any further weakness. However, the longer term uptrend in MACD from 12/5/16 remains intact (orange line).

In Sum: Healthcare has had a substantial rise.  Declining momentum patterns are appearing signaling some weakness might lie ahead. Keep an eye if the XLV breaks below support at 77.82 on a weekly close.  Now is not a good time to be over invested in health care.  Caution is warranted, the party could be coming to an end soon.

More evidence: A potential shift away from Health Care (XLV) in the short term.

Figure: Daily (XLV) / (SPY) Ratio (Top); MACD of XLV/SPY Ratio (Bottom)

The chart above is the daily Health Care Select Sector SPDR ETF/ S&P 500 ratio XLV/SPY.  A rising line means the XLV is stronger, and if falling, the S&P 500 is stronger.  The XLV/SPY ratio has been in an uptrend since January 2017.  Since the peak on September 8, 2017, the XLV/SPY ratio has turned down, giving a warning of deteriorating momentum in comparison to the S&P 500 (SPY). The uptrend was broken today.

The bottom half of the chart shows the 12-26-9 MACD, on the XLV/SPY ratio. MACD recently generated a sell, turning down from an overbought condition.  Notice the negative divergence in the MACD pattern.  MACD formed a lower high than the peak in June (green circles) while the XLV/SPY ratio in the top chart made a high, (red circles) suggesting a shift in trend has started and more weakness in XLV is expected compared to S&P 500.

I am recommending you review your holdings, making sure you are not over weight in health care.

Summing Up:

The stock market advance continued through September, one of the weakest months historically. Investors appear to be rotating out of some of the leading sectors starting with Nasdaq early in September.  Health care, (XLV)  one of the strongest sectors of the market this year, is giving warning signals of weakening momentum compared to the S&P 500 (SPY),  suggesting it too might hit a bump in the road.  I recommend reviewing your portfolio and reducing your healthcare exposure.  If Healthcare (XLV) breaks below 77.82, on a weekly close this would trigger further selling.

I would love to hear from you. Please call me at 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.

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*******Article published by Bonnie Gortler in Systems and Forecasts September 28, 2017

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 guarantee any future results.

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The market remains very resilient.   The bulls appear to be in control again after the bears were unable to take the market down.  Major averages are only a few percent away from their highs after the recent short term decline.   Investors continue to be enamored with technology stocks.   Apple is (APPL) leading the way, making new all-time highs this past week. However, intermediate momentum patterns are weakening.

The good news is the market is oversold on a short term basis, suggesting more gains in the early part of the month are a good possibility. However, keep in mind September is not a favorable month historically.  Also, intermediate and long term chart patterns are not in favorable position. Many have potential negative divergences that could cause the rally to fizzle if the buyers turn to sellers.

Our models remain overall neutral-positive for the intermediate term (weeks-months).  If there is a decline, it should be limited.

Keep an eye on Technology for leadership or trouble ahead.

PowerShares QQQ ETF (Nasdaq 100 Index) Weekly Price and Trend Channels (Top), and MACD 12-26-9 (Bottom)

The top part of the chart shows the weekly Power Shares 100 (QQQ), an exchange-traded fund based on the Nasdaq 100 Index and its operative trend channel. The QQQ includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq stock market based on market capitalization. As of 08/30/17, Apple, (AAPL) is the largest holding comprising 12.51%, Microsoft Corp (MSFT) 8.40%, Amazon.com, Inc. (AMZN) 6.80%, Facebook, Inc. Class A (FB) 5.90%, Alphabet Inc. Class C (GOOG) 4.74%, and Alphabet Inc. Class A (GOOGL), 4.13 % totaling 42.48%.

The QQQ breached the middle channel after a 9-week consolidation (red circle) on 04/24/17.  Buyers stepped in and the QQQ rallied for several weeks. However, the rally was not strong enough to reach the upper channel.  At the present time, the QQQ has successfully pulled back for the second time, testing the breakout from June, as of this writing at 145.48.  The intermediate trend remains up as long as the QQQ remains above its trend line (see the orange line).  As long as the QQQ remains above key support at 139.00, the QQQ could work its way higher, potentially to the upside channel objective at 161.00.

The bottom half of the chart is MACD (12, 26, 9), a measure of momentum. MACD is giving a different message than price.  In June, MACD confirmed the price high suggesting further gains ahead and any decline would be short lived and contained.  This is not what MACD is saying now.  MACD has given a sell. Notice the clear negative divergence in MACD (green circles).  Price made a high that wasn’t confirmed by MACD.  The sell might be a bit early, however tops take a longer time to form than bottoms.  I recommend keeping an eye on the top holdings in the QQQ over the next several weeks for when and if they start to decline and causing pressure on the QQQ, giving an advanced warning of a trend change.

 

Weekly Price of Microsoft (MSFT), Amazon (AMZN), Alphabet Inc Class A (GOOGL), and Facebook, (FB) and MACD 12-26-9

Microsoft (MSFT), Amazon (AMZN), Alphabet Inc Class A (GOOGL), and Facebook, (FB) are all top holdings of the QQQ, and are in weekly price uptrends (orange line). MACD in all four stocks is overbought. Alphabet Inc A (GOOGL) and Amazon (AMZN) remain in an uptrend based on price similar to the QQQ.  Both stocks are on a MACD sell with the uptrend broken, not a favorable pattern. The risk is high at this time.  Microsoft (MSFT) is at key price support, MACD has stopped rising, and threatening to break it’s up trend. Facebook, (FB) is under its all-time high and looks to be the strongest of the four stocks.  MACD has made higher highs confirming the strength of the stock.  As long as these stocks remain firm, the QQQ should continue higher towards the upside objective of 161.00.

Summing Up:

Our models remain overall neutral-positive for the intermediate term which means upside potential remains greater than downside risk. Investors continue to find joy in technology stocks that are leading the latest advance.  The intermediate uptrend in the Nasdaq 100 (QQQ) price and four of its top holdings, Microsoft (MSFT), Amazon (AMZN), Alphabet INC A (GOOGL), and Facebook, (FB) are all intact which is bullish.  As long as the QQQ remains above its key support of 139.00, the QQQ could work its way higher to the upside channel objective at 161.00.  If the QQQ falls below 139.00 on a weekly close, the risk would increase, as the intermediate trend would change from up to down implying weakness could occur, towards the lower channel at 113.00.  The rally has come to life. However, intermediate momentum patterns say it could be short lived and fizzle.

I would love to hear from you. Please call me at 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.

*******Article published by Bonnie Gortler in Systems and Forecasts September 01, 2017

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New record highs in price on the major averages such as the S&P 500 Index, Nasdaq Composite Index and Russell 2000 occurred in late July. The Dow Jones Industrial Average (DJIA) penetrated another round number, the 22,000 level. However, what is disturbing are technical indicators measuring momentum, such as MACD didn’t surpass its momentum highs from June. Fear has been on the rise as the CBOE Volatility Index (VIX), the stock market’s fear measure, spiked on the recent short term decline in August after many days of low volatility.

Our models remain overall neutral-positive, suggesting further gains are expected with downside risk remaining modest. Investors remain focused on many items including economic data for a possible December rate hike, a potential decrease in taxes, new health reform, and world events.  Some investors remain on the sidelines waiting for more clarity, or on vacation taking some time off like me.  The market was very quiet for over two weeks while I was gone and then last week, the tone of the market seemed to have changed.  The market no longer was in a consolidation pattern. The S&P 500 index fell 1.4%, its worst week since March, while the Nasdaq lost 1.5%.  The leader of the decline was small-cap stocks.  The Russell 2000 index (IWM) fell last week 2.7%, its biggest one week decline since February 2016.  It’s not a healthy sign when small caps are weaker than the overall market.

Watch the Movement Now of Small Caps Closely- iShares Russell 2000 ETF (IWM) Weekly Price (Top), and 12-26-9 Week MACD (Bottom)

The top portion of the chart shows the weekly iShares Russell 2000 Index ETF (IWM) which is made up of companies with a market capitalization of between $300 million and $2 billion. The IWM made a high of 138.82 on 12/08/16 stopping at its upper channel.  The IWM went sideways for about 8 weeks, not giving up much ground.  The pattern of slightly higher highs continued followed by small pullbacks (purple circles).  None of the pullbacks that occurred penetrated the uptrend that was in effect.  This latest peak in July (red circle) failed again to penetrate the channel, and the uptrend is in jeopardy of being broken.

The lower portion of the chart is MACD, a technical indicator that measures momentum. MACD has an ugly looking pattern. Initially, MACD confirmed the price high in December 2016. On the following advances to new highs, MACD failed to confirm. Now momentum is clearly weakening and the formation is spread over 29 weeks. Usually, a divergence spread over time is a sign that the price may be reversing. Weakness in the Russell 2000 (IWM) below the low made on 08/07/17 at 135.77, would suggest last week’s decline may continue. If violated on a closing basis expect the IWM to fall to the next support level at 132.40 the 03/27/17 low and potentially to the weekly channel objective at 124.00.


Summing Up:

The market remains very resilient in 2017 with major averages continuing to make new all-time highs. Small caps have been unable to break out through its upper channel and on the latest decline, they led the market lower, not a healthy sign for the market. Pullbacks have been rare this year, turning into buying opportunities. With the IWM intermediate momentum pattern clearly weakening, forming a negative divergence spread over 29 weeks, now is not the time to take on additional risk in small caps bottom fishing on any pullback.

 

*******Article published by Bonnie Gortler in Systems and Forecasts August 17, 2017

 

 

 

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Equity market overview – The bulls remain in control for now

The stock market continues its winning ways.  In 2017, any decline that has occurred has been contained to only a few percent because the bulls quickly stepped in to buy and the market rebounded.   Major averages are at or near their all-time highs.  The New York Stock Exchange Index cumulative advance decline line has likewise made a new all-time high.  Overseas markets are rising, especially emerging markets.  The transportation average recently confirmed the Dow Jones high.  (However, the Transports have pulled back this week.  The significance of this divergence from the Industrials is unclear at this early stage.)  VIX, a measure of fear, is at 9.79 on 07/18/17, historically a very low level.   All of these factors are supporting our market.   At this time only a few warning signs exist, such as unfavorable seasonality and some weakening momentum patterns appearing on some of the intermediate and long term charts.

The positives far outweigh the few warning signs that don’t seem to be deterring the bulls from moving the market higher. There is no evidence of a change in the prevailing uptrend.  Our U.S. equity models remain overall neutral-bullish suggesting higher prices are likely over the next several months.  Any pullback, if it were to occur is likely to be contained, rather than a larger decline of more than 20%.

ETF Corner

Let’s turn now away from US equities to review the position of Gold (GLD) since my article in the June 8, 2017 Systems and Forecasts newsletter “Gold Appears Ready to Shine”.   As a reminder, you can trade gold bullion with the SPDR Gold Shares ETF (GLD).  Purchasing the ETF (GLD) is an easy way to participate without holding the physical commodity.   GLD tends to be trendy, once it establishes its direction.

The top portion of the GLD chart above shows the weekly active trend channel in effect (blue lines).

Gold (GLD) bottomed at 107.00 on 12/15/16.  GLD penetrated the high on 04/17/17 at 123.07, slightly breaking the downtrend from its peak (orange line) on 07/05/16 , which appeared to be a breakout at the time. Instead, the breakout was false as GLD stalled at the middle channel, not powering through.    GLD fell for five weeks to a low of 114.80 then turned up, holding well above the lower channel at 111.00 and above the low at 114.80.  If GLD closes above the high at 123.07 (green circle) this time, GLD would likely be a true breakout. The potential upside target is 139.00.   A close below the lower channel support at 111.00 would negate my bullish outlook.

The lower portion of the chart is the 12-26-9 MACD, a momentum indicator.  MACD gave a buy from an extreme oversold condition as GLD rose.  On the latest pullback MACD penetrated 0 and has now turned slightly below 0.    Any short term rise in price now would turn MACD up and form a positive double bottom formation.  This would imply further gains over the intermediate term (weeks-months).

SPDR GOLD TRUST ETF (GLD) Daily and 12-26-9 MACD  

The top portion of the GLD chart above is the daily price with a 200-Day Simple Moving Average (blue line).  The 200-day moving average is a common technical indicator which investors use to evaluate the price trend. Very simply put, it’s the average of GLD closing price over the last 200 days.  If the price of the security is above the moving average it’s bullish (green circles).  If the price is below the moving average, it’s bearish (red circles).  Notice how on 07/18/17 GLD is above its 200-day moving average. In addition, Gold (GLD) has penetrated the down trend (black line) suggesting further gains are likely in the near term.

The lower portion of the chart is the 12-26-9 MACD, a momentum indicator.  MACD has generated a fresh buy together with a downside trend line break. This is a favorable development for GLD.

In Sum: 

U.S. equities continue their winning ways with the bulls remaining in control until proven otherwise. Our U.S. equity models remain overall neutral-bullish suggesting higher prices are likely over the next several months.  Another buying opportunity for the gold bullion ETF (GLD) is here.  Gold (GLD) is above its 200-day simple moving average and has successfully tested it weekly low.  As long as Gold (GLD) is above 111.00, look for Gold (GLD) to trend higher.

I would love to hear from you. Please call 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.

*******Article published by Bonnie Gortler in Systems and Forecasts July 20, 2017

 

 

 

 

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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 guarantee any future results

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The Dow, S&P 500, and Nasdaq have completed one of the best January through June periods since 2009. The Nasdaq Composite was the strongest of the three averages.  However, during the last few weeks, technology was under more selling pressure than the other major averages. Intermittent rallies have been suspect.

Up until now, most price uptrends remain intact as declines have been contained.  When a decline has occurred, buyers have stepped in to stabilize the market. Key support levels have held. In the past, when the first half of the year was positive, the odds favored further gains for the remainder of the year. However, this may not be the case this year.  The second half of this year could be a bumpier ride, along with increased volatility and sector rotation.

Other sectors in addition to the Nasdaq have clear negative momentum patterns for the short, intermediate, and long term.  Clear negative divergences are showing up in MACD.  So far price trends remain up on most the major averages. However if more uptrends are broken, a more serious decline could begin. I am recommending review your portfolio, have an exit strategy ready to put into action in case further short term selling continues.  Caution is warranted until the tape action improves.

 

Intermediate-term charts suggest caution: Momentum is undoubtedly weakening.

SPDR S&P 500 (SPY) Weekly ETF (Top) and 12-26-29 MACD (Bottom)

The top portion of the chart is the weekly SPDR S&P 500 ETF (SPY) that is comprised of 500 stocks of the largest companies in the U.S.   The S&P 500 (SPY) has been in a weekly uptrend since 2016. The SPY stalled early in late February at 240.32, failing to reach the upside channel. The SPY then pulled back to 3.62% to 231.61 before proceeding to make another higher high on June 5, 2017.  Once again the SPY failed to reach the upper channel.  When the top of a trading channel is not reached on the second attempt, it’s normally not a good sign. A break below 234.50 on closing basis would break the uptrend.

More time is needed before another rally attempt or a decline begins. The encouraging sign is the uptrend remains in effect (black line) from January 2016. If the SPY turns higher and can get through the old highs, then a rally attempt towards the upper channel objective 256.00 would be possible.

The lower portion of the chart is the 12-26-9 MACD, a measure of momentum.  MACD confirmed the price high of the S&P 500 (SPY) in March, suggesting another rally attempt would occur. After a short pullback the SPY did indeed rally to make a new high. However, MACD was unable to confirm the high (red circles), and MACD has also broken its uptrend from January 2016 (black line).  This is a clear warning sign risk is increasing.

ETF Corner: Negative Divergences Have Formed on Weekly Charts

Weekly Price – Utilities SPDR (XLU), SPDR S&P MidCap 400 (MDY), iShares Russell 2000 Index (IWM), Consumer Staples Select Sector SPDR (XLP), (top of charts) and MACD 12-26-9  (bottom of charts).

 

Similar to the Nasdaq and the S&P 500 (SPY), prices have made a higher high (green circles) during the latest rally in the broad market. Notice the top chart of iShares Russell 2000 (IWM) and SPDR S&P Mid Cap 400 (MDY) above.  Price has also made a higher high in the following defensive sectors. See the top chart of the Utilities SPDR (XLU), and Consumer Staples Select Sector SPDR (XLP) above (green circles).

However, notice the weakening momentum patterns forming. MACD in all four ETF’s have failed to confirm their price highs (red circles).   A clear negative divergence has formed. Weekly MACD suggests further price gains could be limited and these sectors could continue to struggle as investors rotate into other areas of the market.

The Consumer Staples (XLP) and Utilities (XLU) weekly price uptrend have also been broken (black line).   The weekly/intermediate trend is now down, increasing the odds of a more serious decline.

The Russell 2000 (IWM) and S&P Mid Cap 400 (MDY) remain in price uptrends, positive for now.  However, I recommend watching carefully if they also break their intermediate price uptrend. If this happens, expect more selling pressure to occur on the overall market.  Key support on IWM is 137.00. A break below on a closing basis would mean potential trouble ahead.  New buying is not advised at this time.

The SPDR S&P 500 (SPY) Daily Price And Key Uptrend Line

The S&P 500 (SPY) has been in a very strong daily uptrend since December 2016 and has been up for 8 months in a row.  Yet, the SPY is now very close to breaking the daily uptrend. Key support is at 239.00. Any daily close below 239.00 for two days would suggest the decline could accelerate further.

MACD has worked off its overbought condition without the SPY giving up much ground. It will still take a few days of sideways action, or a decline in the SPY for the MACD to be oversold and move into favorable position to support a rally.

Summing Up:

Technology has been the leader of the major averages this year. However, during the last few weeks technology has been under more selling pressure than the other major averages. Now other sectors of the market such as SPY, XLU, XLP, IWM and MDY ETFs are also looking suspect, because of bearish negative divergences in MACD that have formed. The Consumer Staples (XLP) and Utilities (XLU) weekly price uptrends have been broken.  The Russell 2000 (IWM) and S&P Mid Cap 400 (MDY) remain in price uptrends, positive for now.  A break below key support at 137.00 on the Russell 2000 (IWM) on the close would mean trouble ahead.  In addition any daily close below 239.00 on the SPY for two days would suggest the decline could accelerate further.  New buying is not advised at this time.  Caution is recommended until the tape improves.

I would love to hear from you. Please call me at 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.

*******Article published by Bonnie Gortler in Systems and Forecasts July 7, 2017

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 guarantee any future results

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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 guarantee any future results.

 

 

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For the first time this year, the Nasdaq hit a bump in the road. Investors took profits and rotated out of big cap tech stocks. No major damage occurred during the sell-off, but the enthusiasm quieted. Investors used the sell-off as a short term buying opportunity. The trend remains up. Short term support levels are intact. Our models remain overall neutral-positive for the intermediate term (weeks-months). The bulls remain in control for now.

Technology has higher projections. Top Holdings in QQQ remain in an uptrend.

PowerShares QQQ ETF (Nasdaq 100 Index) Weekly Price and
Trend Channels (Top), and MACD 12-26-9 (Bottom)

 

 

The top part of the chart shows the weekly Power Shares 100 (QQQ), an exchange-traded fund based on the Nasdaq 100 Index and its operative trend channel.  The QQQ includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq stock market based on market capitalization.  As of 06/20/17, Apple, (AAPL) is the largest holding comprising 11.49%, Microsoft Corp (MSFT) 8.20%, Amazon.com, Inc. (AMZN) 7.20%, Facebook, Inc. Class A (FB) 5.47%, Alphabet Inc. Class C (GOOG) 5.01%, and Alphabet Inc. Class A (GOOGL), 4.38% totaling 41.75%.

The QQQ penetrated the middle channel after a 9-week consolidation trading between 129.38 and 134.00 (the red circle) on 04/24/17.  The upside target is 158.00, an 11.2% gain from present levels, now trading at 140.33 as of 06/21/17 intraday.  The intermediate trend remains up as long as the QQQ remains above the trendline (see the orange line).  Notice how the middle channel and the trend line are very near one another, increasing the significance of key support at 129.00.  If the QQQ falls below 129.00, on a weekly close, this would change the trend from up to down and more caution would be warranted.

The bottom half of the chart is MACD (12, 26, 9), a measure of momentum.  MACD has confirmed the price high in the QQQ.  The uptrend remains in effect (green line).  Over the next several weeks watch to see if MACD breaks the uptrend, giving a warning of a trend change and potentially more selling could occur in the QQQ, or if MACD turns up again making another new high which would be bullish.

Weekly Price of Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL) and Facebook, (FB) and MACD 12-26-9

 


Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL) and Facebook, (FB) are top holdings of the QQQ and are in weekly uptrends (orange line).  MACD in all four stocks has made highs, confirming their price high which is bullish.   As long as these stocks remain in uptrends the QQQ should continue higher towards the upside objective of 158.00.

Apple (APPL) Weekly Price and Trend Channels (Top),
and MACD 12-26-9 (Bottom)

 


The top part of the chart shows the weekly price of Apple’s active trading channel (purple lines), projecting the upside objective at 175.00.  Apple had a false breakout peaking on 05/08/17 (red circle), then retreated from 156.42 to 142.20, a pullback of 9.1%, more than the 2-3% I expected.   Even with the recent decline, the intermediate uptrend (black line) remains in effect.  Another test of the high is possible. 

The bottom half of the chart is MACD (12-26-9), a technical indicator that measures momentum. MACD did go on a sell after Apple’s (APPL) large rise. Even with the MACD sell, I remain optimistic another test of the highs is likely because MACD confirmed Apple’s price high (green circle) and MACD uptrend remains intact.  These confirmations are positive signs another rally attempt is likely.  If either trend is broken to the downside, my bullish outlook would be negated.

In Sum: 

Our models remain overall neutral-positive for the intermediate term which means upside potential remains greater than downside risk.  Technology stocks continue to lead the market higher despite last week’s weakness.  The intermediate uptrend in Nasdaq 100 (QQQ) price, MACD, Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL) and Facebook, (FB) are all intact which is bullish. Apple is the only stock to have generated an MACD sell.  If the QQQ falls below 129.00, on a weekly close, this would change the trend from up to down. If the uptrend is broken on either price or MACD on the QQQ more caution will be necessary.   For now give the bulls the benefit of the doubt.  

I would love to hear from you. Please call me at 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.

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*******Article published by Bonnie Gortler in Systems and Forecasts June 22, 2017

 

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 guarantee any future results.

 

 

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No one really knows if the old adage sell and go away in May will hold true for 2017. What is known is May has begun quietly as the S&P 500 remains in a narrow trading range on less than inspiring momentum. However, the present tape action is a far cry from bear market action.

The technology sector continues to soar to new highs. In the 02/16/17/ Issue of Systems and Forecasts I brought attention to the possibility of another leg up for Technology, revisiting the article on 01/13/17 “Breakout in Technology Looms”, QQQ looked poised for a breakout. This indeed has occurred. The QQQ original objective was 130.00, followed by 139.00.  On 05/09/17 the QQQ made an intra-day high of 138.93, meeting the upside objective.

 

The Tape Remains Mostly Bullish


PowerShares QQQ ETF (Nasdaq 100 Index)
Weekly Price and Trend Channels
(Top), and MACD 12-26-9 (Bottom)

 

The top part of the chart shows the weekly Power Shares 100 (QQQ), an exchange-traded fund based on the Nasdaq 100 Index and its operative trend channel.  The QQQ includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq stock market based on market capitalization.  The top holdings are Apple, (AAPL), Microsoft Corp (MSFT), Amazon.com, Inc. (AMZN), Facebook, (FB) and Alphabet Inc. (GOOG) and all have been climbing.

The Nasdaq 100 (QQQ), led by Apple is red-hot and looks as if there is more room to the upside.  In the latest issue, I pointed out it’s necessary to watch and see if MACD made a higher high or if MACD turns down. Notice the lower chart.  MACD made a new high confirming the high made by QQQ. This confirmation suggests the odds favor an extension of the rise and has bullish implications going forward over the next several weeks to months.  Any weakness now should be contained and only be temporary before another rally attempt would occur.

If the QQQ falls below support at 129.00, just under where the QQQ consolidated early this year, much more caution is necessary.


In Sum:

The QQQ intermediate uptrend remains in effect (orange line). The upside target for the QQQ is 157.00.  The breakout is in process. Time is now on the side of the bulls.


Apple Charges Ahead Leading the Technology Sector Higher

The top half is a price chart showing the weekly high-low-close of Apple since April 2014.  Apple was out of favor in 2015, until June 2016 when investors selling turned into buying.  A clear uptrend is in effect (black line). As long as Apple is above the trend line, the intermediate trend is up.

Apple has had explosive momentum in 2017, going from 117.91 to 154.08, a gain of 30.68 %. Notice how Apple this week has penetrated the upper channel. This is a bullish breakout giving a new channel upside objective to 175.00 (orange line).  A test of the breakout could occur in the near term, amounting to only 2.00% – 3.00%.  However the recent thrust suggests the advance will continue and declines would be very minor.

The bottom half of the chart is MACD (12-26-9), a technical indicator that measures momentum. MACD has confirmed the Apple’s price high (green circle) similar to the QQQ.  A solid uptrend remains intact.


Summing Up:

Our equity models remain overall neutral–bullish, a potentially favorable market climate, although there has been an increase in risk. Technology stocks remain the leader supporting the overall market.  MACD on the Nasdaq 100 (QQQ) and Apple (AAPL) has confirmed the recent price highs. The intermediate uptrend in Nasdaq (QQQ) and Apple (AAPL) are solidly intact.  The Nasdaq 100 (QQQ) has an upside target of 157.00 and Apple has an upside target to 175.00.  This could be the year where you don’t want to go away and sell in May.

I would love to hear from you. Please call me at 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.

If you like this article, then you will love this! Free Instant Access to Grow Your Wealth and Well-Being E-Book HERE

 

*******Article published by Bonnie Gortler in Systems and Forecasts May 11, 2017

 

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 guarantee any future results.

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The short-term decline in April has ended.  The Nasdaq, S&P 500 and Russell 2000 all successfully tested key support levels this past week.  The recent news of possible tax cuts sooner rather than later, an optimistic perceived outcome to the election in Europe, and a good start to the earning season has spurred a potential new leg of the advance.   Overhead resistance on some indices exists.   However, the Nasdaq 100 (QQQ) has made a new high, has broken through resistance giving new upside projections, which could carry the overall market higher for the next several months.   More time is needed to know if other averages will follow suit or if the present rally will fizzle.   However my prediction is there is more room to the upside.

Technology leads the way.

PowerShares QQQ ETF (Nasdaq 100 Index) Weekly Price and Trend Channels (Top), and MACD 12-26-9 (Bottom)

The top part of the chart shows the weekly Power Shares 100 (QQQ), an exchange-traded fund based on the Nasdaq 100 Index and its operative trend channel.  The QQQ includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq stock market based on market capitalization.  As of 04/24/17, Apple, (AAPL) is the largest holding comprising 11.84%, Microsoft Corp (MSFT) 8.20%, Amazon.com, Inc. (AMZN) 6.80%, Facebook, Inc. Class A (FB) 5.38%, Alphabet Inc. Class C (GOOG) 4.70%, and Alphabet Inc. Class A (GOOGL), 4.10% totaling 41.02%

The QQQ has been rock solid this year, leading in relative strength vs. the S&P 500, and up almost twice the gains of the S&P 500.  The QQQ has slightly penetrated the middle channel after a 9-week consolidation, where the QQQ traded between 129.38 and 134.00 (the red circle), now trading at 135.14.  The bullish outcome is not a surprise.  (See my article in the 03/15/17 Systems and Forecasts: Weekly MACD confirms the advance: Higher prices anticipated).  The next upside target is 157.00, a 16.2% gain from present levels. The intermediate trend remains up as long as the QQQ remains above the up trendline line (orange).

Because the initial upside thrust since the election was so strong, the expectation the first decline wouldn’t be significant is exactly what has occurred.  The present breakout needs to be watched closer.  Keep an eye on how Apple (AAPL) performs, the largest holding of QQQ.  If the Nasdaq continues to show leadership, making new highs, then it could support the market and help the technology sector over the next several months.  

On the other hand, if the QQQ falls below 129.00, retracing its recent gains, a warning sign of a potential change of trend would be given.  If the QQQ falls below 125.00 breaking the uptrend, (orange line) more caution would be warranted with possibly a larger correction on the horizon than the decline in April.

The bottom half of the chart is MACD (12, 26, 9), a measure of momentum.  It was a bullish MACD pattern that confirmed the price high made in QQQ in February 2017, before the recent consolidation.  The uptrend remains in effect (pink-line).  The QQQ has made a new high.  If MACD turns down failing to make a new high, a negative divergence would occur.  Over the next several weeks watch to see if MACD makes a higher high.  This would be bullish.  If MACD turns down, this would complete the negative divergence pattern and would be considered bearish. 

Summing Up:

Our models remain overall neutral-positive for the intermediate term which means upside potential remains greater than downside risk.  Technology stocks continue to lead the market higher.  After many weeks of consolidation and weakening momentum, the Nasdaq 100 (QQQ) has broken through resistance giving new upside projections to 157.00 which could carry the overall market higher for the next several months.  The advance seems to be broadening.  Market breadth is improving, financials and small caps have come to life again gaining in relative strength. These are all signs of a healthy market.  The intermediate uptrend in Nasdaq (QQQ) price and in MACD is intact.  If the uptrend is broken on either price or MACD more caution will be necessary, as the odds would increase the advance will fizzle and no longer sizzle. For now, the bulls remain in control, continue to enjoy the ride. 

I would love to hear from you. Please call me at 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.

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*******Article published by Bonnie Gortler in Systems and Forecasts April 27, 2017

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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 guarantee any future results.

 

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During the past five weeks the stock market held its own, holding key support levels and avoiding any major losses. The S&P 500 remains near its highs, holding above key support as it has been consolidating within a narrow trading range. Nonetheless, bullish momentum slowed down in US equities during March. This is normal considering the huge upside thrust that occurred in January and February. The Nasdaq Composite continues to lead the S&P 500 in relative strength, a bullish sign.

Fewer stocks have made new highs during the advance because of the decrease in momentum. Financials and small caps were the leaders of the advance in the aftermath of the election. However, they have weakened considerably in the past month. Continue to give the benefit of the doubt to the bulls. On any weakness look for buying opportunities with the expectation of another rally attempt taking place sooner rather than later.

Buying Opportunity in Energy

One of the worst performing sectors in the first quarter was energy. But that might be about to change. The short and intermediate term has shifted from down to up. This could present an opportunity to buy low rather than chasing a rally.

Energy Select Sector SPDR ETF XLE Daily (TOP) and MACD 12-26-9 (Bottom

The top chart is the Energy Select Sector SPDR (XLE) that tracks the Energy Sector Index, investing in common stocks in the Oil, Natural Gas, and Oil & Gas Drilling & Exploration industries.  As of 04/7/17 its top 4 holdings are Exxon Mobil Corp (XOM) 23.11%, Chevron (CVX) 15.47%, Schlumberger Ltd (SLB) 8.23%, and Conoco Phillips (CON) 4.66%, totaling 51.47%. Be aware the XLE is an aggressive investment vehicle.  The XLE 90-day volatility is 1.72 compared to the S&P 500 of 1.00.

The XLE peaked on 12/16/2016 at 78.45 and steadily declined through the first quarter of 2017, making lower highs and lower lows forming a down trend. The XLE bottomed 03/27/17 at 67.86. The downtrend was broken on 04/05/17.   However, the XLE reversed to close near its lows suggesting the breakout could be false.   There was no follow through to the downside so investors stepped in to buy.  On 04/10/17 the XLE closed clearly above the downtrend line and is in the process of testing the breakout.  Short term support is at 70.00, resistance is at 73.00.

The bottom half of the chart shows the 12-26-9 MACD, a technical indicator that shows you  changes in direction, momentum, and strength of the stock’s price. MACD generated a buy in late March from an oversold condition below 0, is gaining momentum, and has broken its downtrend from its December 2016 peak after moving sideways since February.  This suggests the downside risk should be contained in the near term.

Energy Select Sector SPDR ETF XLE Weekly (TOP) and MACD 12-26-9 (Bottom)

The top portion shows the weekly SPDR S&P Energy Select SPDR ETF (XLE).  The XLE was trending higher for 2016, peaking at 78.45.  This year the XLE has been the opposite, out of favor by investors, much weaker than other sectors to start the year.  The XLE this past week broke the weekly downtrend (purple line), shifting the intermediate trend to up.  Resistance is at 76.00.  A break below the recent low at 67.86 would negate my near term bullish outlook and increase the odds of a further decline.

The bottom half of the chart is MACD (12, 26, 9) a technical indicator that measures momentum. MACD gave a sell in January. However, MACD has now reset, falling to below 0.  Downside momentum has subsided.  If the XLE turns up now, MACD would generate a fresh buy signal supporting the bullish case the XLE is ready to resume its bullish trend from 2016.

In Sum:

The market continues to be resilient.  The S&P 500 is holding above key support consolidating within a narrow trading range.   Another rally attempt toward new highs is possible sooner rather than later. Continue to give the benefit of the doubt to the bulls on any weakness looking for buying opportunities.  A buying opportunity has developed in the energy sector (XLE).  The short and intermediate trend has shifted from down to up.  As long as the XLE remains above 67.86 you can anticipate higher prices in the near term and risk to be limited.

I would love to hear from you. Please call me at 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.


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*******Article published by Bonnie Gortler in Systems and Forecasts April 13, 2017

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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 guarantee any future results.

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The time of maximum pessimism is the best time to buy and the time of maximum
optimism is the best time to sell.
” ~John Templeton

New record closing highs seem to be a normal occurrence during 2017 as the Trump rally continues.  Equity markets have been going up on expectations of increased infrastructure spending, decreased regulation, and lower corporate taxes.  The advance has been broad, although some sectors have clearly been stronger than others.

Some major averages are near the top of their channels as some stocks have had hefty gains.  There are many favorable looking charting patterns, while others are in the process of the beginning stages of a parabolic advance.  This is a chart pattern in which prices rise (or fall) with an increasingly steep slope.   When the advance stops, a large decline follows that you want to avoid.

Our trading models remain neutral positive and the tape remains bullish.  The best kind of advance is the one where pullbacks are very minor and price continues higher, as investors wait for the decline which doesn’t happen.  This appears to be what is happening now.   The trend is your friend.  For now, enjoy the ride.

PowerShares QQQ ETF (Nasdaq 100 Index) Weekly Price and Trend Channels (Top), and MACD 12-26-9 (Bottom)

The top part of the chart shows the weekly Power Shares 100 (QQQ), an exchange-traded fund based on the Nasdaq 100 Index and its active trading channels.  The QQQ includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq stock market based on market capitalization.

As of 02/13/17, Apple, (AAPL) is the largest holding comprising 11.83%, Microsoft Corp (MSFT) 8.25%, Amazon.com, Inc. (AMZN) 6.53%, Facebook, Inc. Class A (FB) 5.15%. Alphabet Inc. Class C (GOOG) 4.65% and Alphabet Inc. Class A (GOOGL) 4.09%, totaling 40.50%.   All the top holdings have rebounded this year after being out of favor before the election.   Apple (AAPL), its largest holding has had significant gains already this year, and has higher upside projections that will help the QQQ, and has favorable implications for the technology area over the next several months.

Revisiting the article in the Systems and Forecasts newsletter on 01/13/17 “Breakout in Technology Looms”, QQQ looked poised for a breakout.  This indeed did happen.  The QQQ is getting close to its 130.00 objective, closing at 129.40 on 02/15/17.

It looks like the QQQ could start another leg up, going through 130.00 to potentially reach 139.00 (orange line), the next target.  As long as the QQQ is above the up trendline line, the trend is up.    The trend line is important; it coincides with the break out at 123.00 that is now acting as support.  For another leg up to start, the QQQ needs to close above 130.00 for 2days and declines should be contained between 1-3%.  If the QQQ falls below the up trendline my bullish outlook will be negated.

The bottom half of the chart is MACD (12, 26, 9) a technical indicator that measures momentum.   MACD is overbought, however still rising, and gaining momentum which is positive.   MACD has confirmed the price high suggesting even if the QQQQ would decline another rally attempt would occur.

QQQ Performance Will Be Helped By Apple: Long Term Trend Is Up

AAPL Monthly Price and Up Trend Line (Top), and MACD 12-26-9 (Bottom)

** Apple’s stock underwent a 7-for-1 split, giving 6 additional shares to each shareholder on 06/09/2014.  The stock closed at 645 becoming 92.00/per share.

The top chart is a price chart that shows the high-low-close each month of Apple since 2005.  The Black line is the prevailing key uptrend line.  As long as Apple’s price is above the uptrend line, the trend is up and further profit potential on the long side is likely.   Apple was under selling pressure since its high in April 2015, when it was out of favor by investors.  In September 2016, Apple broke its down trend (orange line), and investors stepped in to buy.   After its quarterly earnings were announced on 01/31/17, Apple gained 11.7% (121.35-135.60 as of 02/15/17 intraday) and then soared ahead breaking its all-time intraday high of $134.54 set in April 2015 on February 14, 2016.

The bottom half of the chart is MACD (12-26-9), a technical indicator that measures momentum.  MACD is on a buy, and has a very favorable pattern turning up from an oversold condition below 0, where good buying opportunities develop.  This certainly has been the case for Apple.

In 2009 MACD was oversold, below 0, and generated a buy.  MACD rose into 2011 while MACD went sideways into 2012 as Apple stock continued to rise from 11.76 to 100.72, +756% gain.   MACD turned down crossing its signal line in 2012, generating a sell in 2013.  Apple fell from 100.72 to 52.55, a 47.8% loss.  MACD then started to flatten out forming a rising double bottom formation (one of the most bullish formations to look for on charts and make money).  Apple rose from 52.55 to 134.54, +156.0% gain. MACD peaked in 2015, turning down, losing momentum and Apple fell from 134.54 to 89.47, a -33.5% loss.

Apple’s latest rise off of the bottom is from 89.47 to 135.50, a gain of 51.5%. The good news is the MACD pattern remains very bullish even with its rise to new highs.  Next objective is 155.00 and support is 127.00.  There has been a definite shift in investor sentiment since the election and belief the company will benefit from potential changes down the road by President Trump. Time will tell.

Summing Up:

Major averages have made new all-time highs, a common theme of 2017.  The advance that is taking place is the best kind of advance, one where pullbacks are very minor and price continues higher as investors wait for the decline.  The Nasdaq 100 (QQQ) did break out in January, and could well be on its way to another 7% gain.  The trend is up.  Apple, its largest component has a very favorable MACD pattern suggesting there is more room to the upside on top of its recent gains.   The trend is your friend. Enjoy the ride.

I would love to hear from you. Please call me at 516-829-6444 or email at bgortler@signalert.com to share your thoughts or ask me any questions you might have.

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 guarantee any future results.

If you like this article, then you will love this! 

Click here for a free report: Top 10 investing Tips to More Wealth

*******Article in Systems and Forecasts February  16, 2017

Discover the right wealth building attitude…

Download a Free chapter of my book
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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 guarantee any future results.