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When was the last time your investment advisor or you hae reviewed your portfolio?  Have you noticed the wider intraday fluctuations in the major averages?  The quiet days of the major averages moving less than ½ of a percent appear to be over.  There are wider swings in the movement of stocks and the market averages each day.  Volatility in the U.S. and international markets has started to pick up.

The good news is our stock market models indicate a positive market climate. Also favorable seasonality remains supporting the stock market, along with the intermediate and long-term trend being up.  However, a bumpier ride may be in store for the next several weeks.

A shift out of technology appears underway. 

Technology stocks have been much more volatile as of late. The selling pressure started before the news that the Senate would approve the tax bill, and further intermittent selling has continued since the bill passed.  Investors have recently rotated into telecommunications stocks, consumer discretionary, staples, financials, and industrials after the approval of the tax bill.  The shift out of technology may be only temporary, but I believe risk has increased substantially in the technology sector since the beginning of the year.

I recommend reducing your technology exposure if you are heavily invested.  The Nasdaq relative strength is now weaker than the S&P 500 and is losing momentum. This could be a warning of a possible short-term pullback in technology that could carry through to the overall market.  In addition this could affect other sectors that are also extended in the near term.   It’s a good idea to keep an eye on the top holdings in the Nasdaq 100 (QQQ), to confirm the shift away from the technology sector. It’s a little early to tell if it’s profit-taking or the start of a larger move lower.

 

 

 Figure: 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 daily Power Shares 100 (QQQ), an exchange-traded fund based on the Nasdaq 100 Index, and its operative trend channel (purple line). The QQQ includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq.  As of 12/5/17, Apple, (AAPL) is the largest holding comprising 12.19%, Microsoft Corp (MSFT) 8.75%, Amazon.com, Inc. (AMZN) 7.63%, Facebook, Inc. Class A (FB) 5.70%, Alphabet Inc. Class C (GOOG) 4.86%, and Alphabet Inc. Class A (GOOGL), 4.23 % totaling 43.36%.

The technology sector has been one of the strongest areas of the stock market this year. The QQQ has made new highs with only a few small pullbacks along the way. The declines were sharp, but never broke the uptrend and were able to recover to new highs.  This time could be different. If investors continue to rotate out of technology, the selling pressure will be magnified and money may flow into other sectors of the market.  If this indeed is the case, a sign would be if the QQQ weakens during the late afternoon trading hours especially in the last hour of trading.

The intermediate price trend remains up as long as the QQQ is above its uptrend line (orange).

Support is at 147.00 and the upside channel objective is at 164.00.  If the QQQ falls below support at 147.00 on a weekly close, the intermediate trend would change from up to down, implying weakness potentially to the middle channel at 140.00 followed by the lower channel at 117.00.

The bottom half of the chart is MACD (12, 26, 9), a measure of momentum. In June, MACD made a high.  The difference between now and June is MACD not confirming the price high made in QQQ.  The negative divergence is spread over 26 weeks.  Time is no longer on the side of the bulls.

On the other hand, MACD has not yet generated a sell, so it’s still possible for MACD to turn up and move higher to confirm the QQQ high.  I am recommending lightening up on technology stocks now.  If you are overly invested in technology stocks, lock in some of your profits before a decline occurs.  An old adage I have learned over my 35+ years “You Never Go Broke Taking a Profit”.   If you do decide to wait, I recommend keeping an eye on the top holdings in the QQQ.  If they start weakening again, have a plan ready in case further selling pressure occurs.

Figure: Daily Price of Microsoft (MSFT), Amazon (AMZN), Facebook, (FB) Apple (AAPL), and 12-26-9 MACD

In the past few trading sessions, technology stocks have been under some selling pressure. Uptrends are in effect for Microsoft (MSFT), and Apple (AAPL).  Since November daily MACD patterns on all of these stocks are weakening, a warning sign a decline may be imminent.  MACD is not yet oversold, below 0, or in a favorable position to support an extended rise.  MACD uptrends (purple lines) have been broken in Microsoft (MSFT), Apple (AAPL) and Facebook, (FB).  Only the MACD uptrend in Amazon (AMZN) remains in effect.

If the top holdings in the QQQ continue to weaken, further gains for the overall market could be jeopardized in the short-term.  For aggressive investors and traders, here are some key levels of guidance.

Microsoft (MSFT) filled its gap from October and has risen the past two days.  Further decline would not be a good sign.  Support is at 77.00 followed by 72.00.  Resistance is at 88.00.

Facebook (FB), has the most disturbing pattern of the group.    FB broke its daily price uptrend this past week.  What is different now?  The weekly uptrend (not shown) has also been violated.  Therefore, the short and intermediate term is now down.  In addition, MACD is now on a sell with a negative divergence in place.  The risk is higher than at any time this year based on the charts.  During the recent quiet market environment where pullbacks have been contained, investors have been profitable buying quickly into weakness. Now selling strength could be a better strategy.   Resistance is 179.50 followed by 184.00.  Support is at 165.00, followed by 161.00.

Amazon (AMZN) peaked in late November, also under some selling pressure, but its chart pattern is more constructive because it remains above its breakout level in October. Resistance is the old highs at 1003.00 followed by 1029.00.   Support is at 1108.00 followed by 1012.00.

Apple (AAPL) made a new all-time high on November 8 at 176.24.  Apple (AAPL has pulled back in a quiet decline but remains in an uptrend. Support is at 163.00.  Resistance is at 175.50.   Many times Apple is a leader in the technology sector.  A break through resistance would imply potential to 185.00. If this were to occur it could boost the entire sector.

Summing Up:

The market as a whole has been extremely resilient. The daily range of the major averages has widened, suggesting volatility could pick up, with an increase in risk compared to earlier in the year. Weakening momentum patterns are clear and spread over time which normally doesn’t work out well.  However, 2017 is not an ordinary market; it’s one that is defying the odds. The short-term and intermediate-trend remain up for now.   If you are overly invested in technology stocks, I recommend you lock in some of your profits before a full-fledged decline occurs. If the QQQ falls below support at 147.00 on a weekly close, the intermediate trend would change from up to down, implying weakness sooner rather than later.

I would like to wish you and your family a happy holiday season full of joy, health, and prosperity.

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 December 07, 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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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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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

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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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042816 Key Points IWMMost stocks have continued to advance in April, another profitable month for investors.  On down days profit taking has been contained as the bulls remain in control. Investors appear fearless moving into higher risk sectors and away from defensive sectors.  An important question remains will the major averages break out to the upside, or is it best to sell and go away in May?

Time will tell if the market continues to rise without a pullback, leaving some investors missing out on further profits.  Our models remaining favorable,with above-average profit potential with risk well below average. I continue to give the benefit of the doubt to the bulls.  The easy money from the February lows appears over.  Stock selection regarding what sector to invest in will be important as we move further on in the year. Normally defensive sectors flourish as investors want quieter sectors as the calendar moves into the more unfavorable months of the year, May through October.  Defensivesectors such as utilities (XLU) and Consumer Staples (XLP) have lost some of their luster. Investors have beenmoving money out of these defensive areas in April. Keep an eye out if this recent trend continues.

The technology sector (QQQ and XLK) has not been a strong. Poor earnings from Microsoft (MSFT) and AlphabetInc. Class A (GOOGL) didn’t help this area. In addition, Apple disappointed investors and fell hard as well.

Technology was losing momentum fast compared to the S&P 500 (SPY) even before all of these earnings reports.

In the long run this is not a positive development and bears watching.

Listen here to the audio version of the article “Small Caps Gaining Momentum: Enjoy The Ride”

These are some of my favorite sectors giving a sign of a healthy market going forward.  The
financial sector (XLF) has penetrated its first level of resistance at 23.00 as mentioned in the 03/13/16 newsletter, 24.50 is next target. In addition Regional Banks (KRE) has joined in on the advance, a very strong performer in 2015.  Also market breadth remains strong; more stocks are participating in the rally, helping the Russell 2000 Small Cap Index (IWM) and the Mid Cap 400 (MDY) sectors of the market. Review the tape action clues to monitor that I discussed in the 04/14/16 newsletter for more of what it is needed for further gains ahead.  The
odds favor higher prices ahead.

What Are the Charts Saying?–iShares Russell 2000 ETF (IWM) Weekly Price (Top), and 12-26 Week

MACD (Bottom)

042716 iwm weekly newsletter use

The top portion of the chart shows the weekly iShares Russell 2000 ETF (IWM) which is made up of companies with a market capitalization of between $300 million and $2 billion. The Russell 2000 (IWM) peaked on 06/22/15 at 129.10 and has been out of favor with investors. In November 2015, normally a seasonally favorable period, the IWM tried to rally but failed. Now a new development has taken place, IWM is showing strength.

Notice the two key weekly significant downtrends that have been broken from June 2015 (blue line) and another from November 2015 (purple line) on this latest rally from the February low. This is bullish.

IWM closed at 114.63 on 04/26/16 clearing its 50 week moving average (line not shown). Resistance is just above at 116.00. If IWM can get through resistance, a move toward the upper channel objective at 134.00 is possible.  If IWM pauses, on the other hand, then support is at 112.00.  A break below 112 would negate my short term bullish outlook and cause me to reevaluate.

The lower portion of the chart is the technical indicator MACD, (a momentum indicator). MACD has generated a buy from an oversold condition and is rising rapidly breaking the short term trend line (pink line). Momentum has been in a long term down trend since December 2013 (green line). If IWM keeps moving higher this downward trend in momentum will change and turn favorable. The best is yet to come!

Summing Up:

Our models remain on a buy and in the most bullish condition.  There is a lot of disbelief in the rally which is bullish. Tape action has been positive with market breadth strong, especially in the small and midcap sectors.

Financials have picked up their performance as well, all signs of a healthy market.  Defensive areas such as XLU and XLP have been losing momentum.  Technology was not acting very well, losing impetus before Apple’s disappointing earnings announcement.  This needs to be monitored to see if it is temporary or a warning sign for the future. Sector selection will be important. I am recommending watching the Russell 2000 (IWM) to see if it can break through resistance at 116.00. If so, 134.00 is possible.   A break below support at 112.00 would negate
my short term bullish outlook and cause me to reevaluate.  The stock market is moving into an unfavorable seasonal period over the next few months.  Review your investment portfolio, enjoy the ride now, however be ready with your exit strategy in case market weakness begins and the bears come out of hiding.

I would love to hear from you.  Please feel free to share your thoughts, comments or ask any question you might have.

Please call me at 1-516-829-6444 or email at bgortler@signalert.com.

*******Article in Systems and Forecasts April 28, 2016

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Disclaimer: This is a hypothetical result and is not meant to represent the actual performance of any particular investment. Future results cannot be guaranteed. Although the information is made with a sincere effort for accuracy, it is not guaranteed either in any form that the above information is a statement of fact, of opinion, or the result of following any of the recommendations made herein. Readers are encouraged to meet with their own advisors to consider the suitability of investments discussed above for their own particular situations and for determination of their own risk levels.

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XLF SummaryU.S. equities started the month of February poorly XLF Summary but the major averages gained back most of their early losses by the end of the month. As oil prices Financial stocks (XLF) have held their ground fell, stocks went lower in tandem leaving stocks above their August intra-day lows and appear falling over 20%; defensive sectors such as Utilities (XLU), and Consumer Staples (XLP) were more stable. Higher risk sectors such as Materials (XLB), and Industrials (XLI), fared better than Biotechnology (XBI), and technology stocks lagged.

When oil stopped its slide and moved higher, investors were inspired. The temptation to investors was high, stocks were at bargain prices and investors stepped in to buy. The past two weeks U.S. equities rallied sharply off their February 11th lows. Many of the out favor stocks were cheap after being beaten up, falling below their support areas. The market tape has improved noticeably since, especially an improvement in market breadth. Mid-caps have come to life,small-caps are acting better, and banks stocks have rebounded after being crushed. Volatility as measured by VIX is lower, now below 20, and prices of major averages are near or above their 50-day moving averages, all bullish signs. The market is now short term overbought, and trading near overhead resistance above. Investors have been cautious during these last few months as the S&P 500 (SPY) and the Nasdaq have had 3 down months in a row.

They are still trading below the longer term 200-day moving average, a long term negative hanging over the market. Volume has been noticeably low on the rally; money has been flowing away from more aggressive areas as investors have been opting for safety. By no means is the market out of the woods; the bear is resting and in hibernation at the moment, and the market is moving higher even as the long term trend remains negative.

What Are The Charts Saying?

Weekly SPDR Financial Select Sector SPDR (XLF)030116 XLF

 

The top portion of the chart above shows the weekly SPDR Financial Select Sector SPDR (XLF) with price and trend channels that are acting as support and resistance areas. XLF looks to mirror the behavior of the financial sector of the S&P 500 Index. The index includes companies from commercial banks, capital markets, diversified financial services, insurance and real estate. The top five largest holdings as of 02/29/2016 are; Berkshire Hathaway (BRK.b) 9.54%, Wells Fargo & Co (WFC) 8.73%, JP Morgan Chase & Co (JPM) 7.86%, Bank of America Corp (BAC) 4.95 and Citigroup (C) 4.39%, representing 35.47% of the ETF.

XLF was one of the weaker sectors of the market, down 8.52% year to date through 03/01/16, and more than 13% below its peak on 07/22/15. Financial sector weakness is not a healthy sign of a bull market. However there is hope. XLF is acting much better recently. All of the top holdings are well off their lows ranging from up 8.9% to 19.4%. The down trend remains in effect from October 2015 (pink line); however XLF appears to have successfully tested its August 2015 lows and is now starting to head up towards resistance at 22.60. In addition, if XLF could break above 23.00, the down trend would be broken. This would be a bullish message for the market going forward. If XLF can break above the resistance then I would expect it to challenge 24.50, which is the longer term down trend line (Purple Line) from the highs of July 2015.

The bottom half of the chart shows the Relative Strength Index, a measure of momentum developed by Welles Wilder. RSI is based on the ratio of upward price changes to downward price changes. RSI has broken the down trend (red line), indicating that XLF is gaining momentum along with a very bullish potential bottom forming that is spread over 23 weeks. The financial sector is also gaining in relative strength to the S&P, (XLF/SPY ratio chart not shown) turning up from a very oversold position on a daily and intermediate basis, good sign suggesting further gains to go. A strong financial sector could be exactly the fuel that the market needs to support the overall stock market to challenge the old highs one more time.

Summing Up:

We are in a bear market rally, but a major bottom in the stock market is not yet in place. The stock market has made an impressive rally over the last few weeks forming an overbought condition for the short term; however the long term trend remains down. For most of this year money was flowing into defensive areas of the market such as Utilities and Consumer Staples as investors were more defensive. In the past three weeks investors’ psychology looks like it’s moving to a higher risk appetite. The financial sector was hit hard, normally not a healthy sign for the market going forward, however a potential bottom appears to be in place with financials stabilizing and beginning to be stronger than the S&P 500. XLF is trading now at 21.95 intraday on 3/2/2016. Watch XLF to see if resistance at 22.60 is broken and then if it can break above 23.00. This would be a bullish message for the market going forward that a rise to the old highs could occur sooner rather than later. The market is not out of the woods; the bear is resting and in hibernation at the moment.

I welcome you to call me with any comments, feedback or questions at 516.829.6444 or email bgortler@signalert.com.

*******Article in Systems and Forecasts March 3, 2016

Disclaimer: This is a hypothetical result and is not meant to represent the actual performance of any particular investment. Future results cannot be guaranteed. Although the information is made with a sincere effort for accuracy, it is not guaranteed either in any form that the above information is a statement of fact, of opinion, or the result of following any of the recommendations made herein. Readers are encouraged to meet with their own advisors to consider the suitability of investments discussed above for their own particular situations and for determination of their own risk levels.

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The Fed’s action in December of increasing rates for the first time since June of 2006 added to an already challenging year for stocks in 2015.

The last few days of 2015 disappointed investors. After the stock market started to show some encouraging technical signs, a year-end rally did not materialize. Buyers quickly turned into sellers after major market indices failed to get through overhead resistance, the same pattern that had occurred numerous times during the year.

The Nasdaq Composite finished positive for the year gaining 5.7%, mostly from a few stocks; Amazon (AMZN), Microsoft, (MSFT) Google, (GOOGL) Facebook (FB), and Netflix (NFLX). The S&P 500 index didn’t fare as well, finishing down for the year -0.7% (excluding dividends).

In case you were wondering why it was so difficult to make money in 2015 I will share some research by Glenn Gortler, Director of Research at Signalert. Out of approximately 4100 stocks tracked in our database:

• 57% of stocks were down for the year.
• 44% of stocks were down more than 10% for the year, and
• 32% of stocks were down more than 20%.

Even though some of the major averages showed small losses, only a few stocks led the indexes higher. If this trend continues, it could be even more of a problem going forward.

In my experience, during the first week of January crazy things happen. Large swings up and down occur frequently, and this year is starting off no differently. The first trading session of the New Year started poorly, after China’s Shanghai Composite lost 7%, halting trading overnight. The Dow Jones Industrial Average followed China’s lead, down more than 250 points at the opening bell, falling over 400 points intraday, before recovering some of their losses.

As I am writing this article (on January 7th) the market is down for the fourth day in a row, with double digit losses intraday.

My favorite sectors to watch for the direction of the market are not acting well. Technology (QQQ) Biotechnology (XBI), Semiconductor (SMH), Transportation (IYT), Finance (XLF) and Small Caps (IWM) all remain under selling pressure, and are not showing any strength yet, indicating that the decline is not coming to an end. Investors have moved away from high risk sectors.

On a positive note, research taken back to 1950 (by Joon Choi, Senior Portfolio Manager) shows if the S&P 500 is down more than 1% but less than 2% on the first day of January, the rest of the month is up 1.6% on average. Another hopeful sign is that momentum oscillators on some averages are no longer extended short term, and stocks are displaying potential positive divergences if they could turn up from here. Many stocks are down more than 20% from their peaks, already creating favorable buying opportunities when the market quiets down and selling pressure subsides. Time will tell. It remains to be seen if the market can hold on and turn up from here.

What Are the Charts Saying?

0107 spu weekly use with labels

The SPDR S&P 500 (SPY) Weekly ETF With Channel (Top) and RSI14 (Bottom)

The top chart is the SPDR S&P 500 (SPY) ETF which is comprised of 500 stocks of the largest companies in the U.S. listed on national stock exchanges, including over 25 different industry groups.

As of 01/05/16 its top 4 holdings in the S&P 500 are Apple Inc. (AAPL) 3.24%, Microsoft Corporation (MSFT) 2.49%, Exxon Mobil Corporation (XOM), 1.92% and General Electric (GE) 1.64%.

The SPY was near its top of its channel only 6 weeks ago. Each time the S&P 500 rallied, it was unable to break through resistance between 211.50 and 214.00. Failing to get through resistance, the S&P 500 (SPY) pulled back towards its up trendline from July of 2015 (orange line). The trendline was holding, but with today’s action (on 01/07/16) now it has been violated, and that’s not a good sign. The intermediate trend has changed to down. Also, the channel (the blue line), was penetrated at 195.00 and will act as short term resistance. The downside projection is towards the old lows, the bottom of the channel, at 180.00 (lower blue line).

The bottom half of the chart shows the Relative Strength Index, a measure of momentum developed by Welles Wilder. RSI is based on the ratio of upward price changes to downward price changes. In this case over the last 14 weeks RSI looked like it was going to rise and break through the down trend (pink line). This would have been a sign indicating that the SPY was gaining momentum, however with the decline it has turned down, signifying the S&P 500 (SPY) is losing momentum and potential lower prices lie ahead. The downtrend would have to be broken (pink line) for the bulls to regain control and the trend change from down to up.

The Big Question on all of our minds is: Will the decline continue, or will the market turn up from here? Positive Signs That Could Indicate the End of the Decline:

1. Overseas markets start to rise. Keep an eye on Emerging Markets (EEM), China (FXI) and Europe (IEV) as benchmarks.

2. The Value Line Geometric Composite, an unweighted average of roughly 1700 U.S. stocks gains strength showing more broad participation than only a few stocks rising.

3. Firming action in Biotechnology (XBI) and the Financial Sector (XLF, KRE)

4. Apple starts to rise again (APPL).

5. High Yield Bonds stabilize. Use HYG or JNK as a benchmark.

6. Less intraday volatility. Watch to see if VIX moves lower and can get below 18.00.

7. Oil stabilizes and stops falling. Watch oil (USO) and the energy sector (XLE)

8. Small caps (IWM) stabilize, turn up and then gain in relative strength compared to the S&P500 (SPY).

9. S&P 500 (SPY) moves above 195.00 and stays above.

Watch the last hour of trading if the market rallies or falls. If the market indices close near their highs of the day, it’s a good sign that this decline is short lived and better times are ahead. If the last hour of trading moves lower and prices settle near the lows of the day, then this decline could continue for a longer duration.

Summing Up:

2016 has started with a bang: an onslaught of selling pressure in both U.S. and global stocks that is still taking place as of this writing. The first month of January has historically had many roller-coaster rides. This year is no different. The tape is not acting well, to say the least, giving me the feeling that this decline could be more serious. The S&P 500 (SPY) weekly chart broke below support at 195.00, changing the intermediate trend from up to down. Daily volatility is increasing, ]not a good sign. The average daily movement in the S&P 500 (SPY) the past 25 days is now over 1% and rising. It looks like more selling to come. There is plenty of room to the downside towards the old lows, that coincides wth the bottom of the channel at 180.00 on the S&P 500 (SPY). Bottom fishing now without the market stabilizing could be dangerous. Be aware, there is a possibility the major trend has changed and a bear market has started.

If you have questions or comments on this article, please feel free to contact me at bgortler@signalert.com; phone: 1-516-829-6444.

Bonnie Gortler, Senior Portfolio Manager

 

*******Article in Systems and Forecasts January 8, 2015

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