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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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 Equity market overview—bullish developments remain in place

The stock market has been extremely resilient, filled with enthusiasm since the presidential election.  Major averages have made new all-time highs on a regular basis.  Market breadth has been mixed from day to day, with Nasdaq breadth not yet confirming the highs in the Nasdaq Composite.  Whenever potential warning signals show up (such as weakening momentum or unnerving world news events) and the market looks like it might be ready to fall, instead the bulls step in to buy and the market rebounds.

Technology has been the star performer, continuing to charge ahead, leading the advance outperforming the other major averages.  Overseas markets have joined the party, high yield bonds remain firm, and VIX (a measure of fear) is near its lows.  All of these are signs of a healthy market. Our models remain overall neutral-positive.  The intermediate and long-term trend remains up. There is no evidence of a change in trend until proven otherwise.   Review my last Systems and Forecasts article dated 05/25/17 for 11 clues you want to watch for a potential trend change.  The trend is your friend so why fight it.

Let’s turn now to an area where we haven’t talked about in a long time—Gold.  You can trade gold bullion with the SPDR Gold Shares ETF (GLD).  The charts suggest that gold now appears ready to shine.


It is easy to trade gold bullion using the SPDR Gold Shares ETF (GLD)

GLD has a relatively low expense ratio of 0.40 and, like the physical metal, is 1.43 times more volatile than the S&P 500 (SPY).  Investing in commodities entails significant risk and is not appropriate for all investors.  GLD, for the most part, is not usually whippy; it tends to be trendy, with its price moving steadily in the same direction for extended periods.  After GLD establishes a trend, it could remain in that trend for many months or years at a time.   Gold (GLD) appears now to be at a critical juncture that could represent the early stage of a long term rally.


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

 

The top portion of the GLD chart above shows the weekly active trend channel in effect (blue lines).  Purchasing the GLD is an easy way to participate without holding the physical commodity.

Gold (GLD) bottomed on 12/07/15 at 100.23 after years of decline, being out of favor by investors.   A sharp rally followed, before GLD fell again, retracing most of its gains and bottoming at 107.00 on 12/15/16.  Since hitting bottom last December, GLD has traced out a series of higher low and higher highs.  This week GLD penetrated the high on 04/17/17 at 123.07 and has now broken its downtrend from its peak (orange line) from 07/05/16.   There is more room for further price gains, especially if GLD can penetrate the middle channel.  A break above 125.00 would suggest a potential upside target to 138.00.

The lower portion of the chart is the 12-26-9 MACD, a momentum indicator.  MACD had a timely entry from an extreme oversold condition. Only recently has MACD turned positive.  There is plenty of room to the upside before MACD will be in an overbought condition. MACD is still rising, showing no signs of weakness.  The trend of gold has improved.  With equities at new highs, now could be a good time for investors to add some diversification to your portfolio into a sector where the trend has turned favorable, before further interest from other investors and institutions.

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

The top portion shows the SPDR Gold Trust (GLD) monthly (ETF) chart. GLD has been out of favor for many years.  GLD peaked in September 2011 (yellow circle). Investors are more optimistic about the precious metal and it’s up 12.5% this year through 06/06/17.   After breaking the shorter term monthly downtrend (pink line), GLD had a brief rally but didn’t have enough strength to break the longer term downtrend from the September 2011 high (blue line).  Most times after weakness prevails for long periods of time, the first rally attempt normally is unsuccessful and not sustainable to continue.  Another test of the low is required.  The second attempt tends to be a safer, profitable and more sustainable.  GLD appears to have made a successful test of the low.   For those of you who are willing to take the risk, I recommend adding GLD to diversify your portfolio, using 107.00 on a close as a stop.

The lower portion of the chart is the 12-26-9 MACD, a momentum indicator. MACD has been oversold since June 2013, below 0, now on a buy and gaining strength.   Gold is looking more appealing and it is also gaining some relative strength against the SPY. There is a good chance if GLD does indeed move higher you can expect additional money to flow into this sector from investors and institutions to fuel a further advance.  It would be bullish if GLD breaks above 125.00, (the same as the weekly chart), which would break the monthly downtrend from 2011 (blue line) and then penetrates 131.15, the July 2016 high.

Summing Up:

Our models remain overall neutral-positive.  The stock market remains resilient and continues to work its way higher with the bulls in control.  There is no evidence of a change in trend until proven otherwise.  An area out of favor with investors appears ready to shine. GLD appears to have made a successful test of the low.  A buying opportunity has developed in GLD on weekly and monthly charts.  I recommend adding GLD to diversify your portfolio, using 107.00 on a close as a stop.

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 08, 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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Technology continues to lead the overall market and outperforms other major averages.  The Nasdaq Composite is stronger than the S&P 500 Index, a condition that has characterized more favorable overall market climates historically.  In May, we saw the first noteworthy selling that generated the most fear and angst seen in many months among investors (including me).  But the decline was short-lived as stocks have rebounded.  Broad market indexes are resilient as price trends remain intact.  Our models remain overall neutral-positive.

But we are not in the clear.  Leadership has been thin.  Stocks making new 52 week highs on the New York Stock Exchange index have been rather lackluster.   The bellwether Financials Sector SPDR (XLF) was a hot sector early in the year.  However, in recent weeks financials are lagging, not a good sign for the bulls.

The momentum of the rally has been diminishing over time and warning signals are starting to appear.  As discussed below small-caps remain in their 16-month old price uptrend that began (on monthly charts) in February, 2016.  However, the relative strength trend of small caps outperforming large caps that also started in February 2016 has now been broken.  In general, when financials and small caps are weak, this is not a sign of a healthy market.

So the question remains: will the major averages will break out to new highs and begin another leg up, or will the major averages stall, turn lower and usher in a more meaningful decline?

11 Clues You Want To Watch For a Potential Trend Change

  1. Whether overseas markets continue to rise or begin to stall and work their way lower. Watch Emerging Markets (EEM), China (FXI) and Europe (IEV) as benchmarks.
  2. Look at the Technology sector if it continues to make new highs or suddenly turn down. Monitor Nasdaq 100 (QQQ) and the Semiconductors HOLDR (SMH).
  3. The Value Line Geometric Composite, an unweighted average of roughly 1700 U.S. stocks regains strength to take out its high at 526.83 on 04/26/17. This would indicate more broad participation rather than only a few stocks rising.
  4. Observe the action in the Biotechnology sector (XBI). Strength would indicate investors are willing to take on more risk.
  5. The Transportation Average (IYT) has been weak, well below its high on 03/01/17 at 173.88. If the IYT continues to decline this would suggest a strong rally from here is unlikely.
  6. The Financial Sector regains relative strength vs. the S&P 500 (SPY). Watch XLF and KRE as benchmarks.
  7. High Yield Bonds remain firm instead of weakening and turning lower. Use HYG or JNK as a benchmark.
  8. Apple continues to be a leader (APPL). Upside objective 175.00.  A break below 150.00 on a closing basis could portray weakness to follow in other technology stocks.
  9. Volatility remains low. Look out if VIX takes out the previous high from 05/18/17 at 16.30.
  10. New 52 week lows on the New York Stock Exchange Index remain low, presently at 33. An increase to over 150 would not be a good sign.
  11. Watch the last hour of trading. If the major indices closed near the highs of their daily range consistently this would be bullish.  If the major average closed near the low end of their daily range consistently this would be bearish.

Warning:  A potential trend change has been given by Russell 2000 (IWM).

Russell 2000 Index (IWM) ETF Weekly Top and (IWM) Russell 2000 Index / (SPY) S&P 500) Ratio (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.  After the election last November, small caps lead the advance.
Strong gains followed in January and February this year peaking on 04/26/17 at 141.81.  The IWM has been unable to generate enough momentum to break out and regain the strength it had early in the year because investors have favored large-cap growth stocks.

The Russell 2000 (IWM) has been in an uptrend since 02/01/16. The intermediate uptrend will remain intact as long as the IWM is above 130.00.   If the intermediate trend is violated, this would not be a good sign and the likelihood of a potential serious decline would increase.

The bottom part of the chart is the Weekly Russell 2000 /S&P 500 (IWM/SPY ratio).  A rising line means the IWM is stronger, and if falling, the S&P 500 is stronger.  The IWM ratio was steadily rising with a few small turn downs but holding above the uptrend line (purple line).  However, the uptrend from 02/01/16 has been broken.

Summing Up:

A warning of a potential trend change has just been given. I recommend reviewing your portfolio to make sure you are not overly exposed to small caps.  Historically, when IWM is stronger than the S&P 500 (SPY) it has been a bullish condition for the broad market. This condition is no longer supporting the market. Risk has increased.  For those of you who have large holdings, I suggest shifting your assets out of small caps and move into S&P 500 (SPY) or raise cash and wait for a safer buying opportunity later this year.  If the IWM fails to take out its high and turns down below support at 130.00, you can expect further weakness in IWM and could potentially spread into other sectors of the market.

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 May 25, 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.


If you like this article, then you will love this!
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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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U.S. stocks were quiet early in March as the major averages traded in narrow ranges closing at the end of the day near their highs. This phenomenon changed as the month moved on. Buyers turned to sellers. The S&P 500 was down more than 1% in a single day, which didn’t happen for 5 months previously.  The Financial sector and Small Cap sector that led the market higher weakened. Technical momentum oscillators were extended, showing loss of momentum, ripe for a short term pullback.  The short term trend changed from up to down (based on charting methods).

What ETF to Watch To Guide You for Direction?

 

SPDR S&P Financial Select SPDR ETF (XLF) Daily Price (Top), and MACD 19-26-9 (Bottom)

The top part of the chart shows the weekly Financial Sector SPDR (XLF), an exchange traded fund (ETF) that tracks a mix of diversified financial service firms, insurance, banks, capital markets, consumer finance and thrift companies. As of 03/28/17 the top holdings of XLF are: Berkshire Hathaway B, (BRK.b) 10.97%, JP Morgan Chase & Co (JPM) 10.86%, Wells Fargo & Co (WFC) 8.65%, Bank of America Corp (BAC) 8.08, and Citigroup Inc. (C), 5.65%.   Historically it’s a sign of a healthy market when financial stocks are strong, showing signs there is economic growth.  The S&P 500 (SPY) also tends to do well because the S&P 500 index has 16.48% of its holdings in the financial sector, only the technology sector is higher at (19.25 % through 02/27/17.

Investors shifted assets to financial stocks after the election. The XLF peaked at 25.29 on 03/02/17.  A pullback followed a few weeks later, breaking its short term trend up trend on 03/17/17, two days before the S&P 500 (SPY) broke their daily trend line.   Notice how the XLF retraced all of its 2017 gains, stopping above a key support area (green rectangle), at 22.97, holding above the December 2016 low at 22.84.

Many times once an uptrend is broken after a test of an important support area, another rally attempt will occur. This looks like what is happening now.  The XLF just penetrated its down trend, a positive sign for a short term rally to begin.  If the decline is over, the XLF should challenge its down trend line from the peak, around 24.50, (green line).  If the XLF stalls and turns lower, then look for another test of the support area. A break below would be considered bearish. A break above 24.50 would suggest another attempt at the March highs.

The bottom half of the chart is MACD (12, 26, 9) a technical indicator that measures momentum.  MACD is now oversold, below 0, and has a favorable pattern forming.  If the XLF rises for a few days in a row a buy will be generated.  Keep an eye out for the downtrend in MACD to be broken. This would confirm the short term decline is over and further gains are ahead.

  

 

SPDR S&P Financial Select SPDR ETF Weekly Price (Top), and MACD 19-26-9 (Bottom)

The top portion shows the weekly SPDR S&P Financial Select SPDR ETF (XLF) active trading channel (purple lines). The XLF had a huge advance, breaking through its upper channel.   However, a false breakout materialized, the XLF couldn’t sustain its rise and the XLF declined by 9.2%, holding above its weekly low made in December 2016 (red circle).  The intermediate trend is up. The uptrend remains intact.

A break below the recent low at 22.97 would increase the odds of a further decline that would potentially break the uptrend, and would shift the intermediate trend from up to down.

The bottom half of the chart is MACD (12, 26, 9) a technical indicator that measures momentum.  MACD has just given a sell.  But I am not worried about this MACD sell because it was not accompanied by a negative divergence. Moreover MACD did make a new peak to confirm the price high and its uptrend is intact.  Usually when you have a powerful thrust as XLF did, another rally attempt occurs after the first decline.  As long as the uptrend is in effect the odds favor the bulls. If the downtrend is broken (black line) a warning sign would be given and the bears most likely would come out of hiding.

In Sum:

Our equity models remain overall neutral-positive, implying further gains are likely for the intermediate term (weeks–months). Look for wider intraday swings, as the historically favorable seasonal period will be ending in April.  Financials have lost some of the luster they had early in the year but resurgence could begin soon.  The recent decline appears to be over if the recent low at 22.97 holds.  As long as the uptrends remain intact for the intermediate term (weekly chart) in terms of price and MACD, give the benefit of the doubt to the bulls.  Time will tell.

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 March 30, 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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Support levels on the major averages are intact, despite the decline in early March.  Technical indicators based on market breadth and volume is in the process of working off its overbought condition from the rise since the election.  In addition historical research shows after January and February are strong months; the year has the potential for additional gains. This doesn’t mean a short term decline will not occur, however the odds favor declines could be a buying opportunity.

The optimistic tone of the market has changed somewhat as the expectations of rising rates became a concern for investors.  The 10-year Treasury note yields have been rising steadily since the end of February spooking investors.  There has been an overall weakening in market breadth indicators that need to be monitored. Our stock market timing models remain neutral-positive indicating a potentially profitable market climate and further gains over the next several weeks.

The overall technical picture of the market remains positive. The cumulative advance decline line of the NYSE advance/decline line confirmed the highs made in February.   When market breadth confirms price, usually that suggests the final high has not been made.  The Technology sector is acting well. The NASDAQ 100 (QQQ) is not far from its recent all-time high.  It’s also bullish that the Nasdaq Composite is leading in relative strength vs the S&P 500, a condition which has historically overall characterized more profitable market climates.

Watch The Strength of Technology:

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 03/10/17, Apple, (AAPL) is the largest holding comprising 11.91%, Microsoft Corp (MSFT) 8.11%, Amazon.com, Inc. (AMZN) 6.50%, Facebook, Inc. Class A (FB) 5.22%. Alphabet Inc. Class C (GOOG) 4.67% and Alphabet Inc. Class A (GOOGL) 4.11% totaling 40.52%.

The QQQ broke out at 123.00 (red circle above) on January 6 and has been steadily rising. The QQQ has now slightly penetrated the channel objective at 130.00 (top blue channel line), now trading at 131.30. The intermediate trend is up as long as the QQQ remains above the up trendline line (pink). The next upside target is 139.00.   Keep an eye on Apple, (AAPL) the largest holding of QQQ.   Apple has moved sideways for 10 days giving up no ground.  If Apple continues making new highs, this could be positive for the technology sector over the next several months.   If the QQQ falls below 123.00, breaking the up-trend, my bullish outlook would be negated.

The bottom half of the chart is MACD (12, 26, 9) a measure of momentum.  Its bullish MACD has confirmed the price high made in QQQ suggesting any weakness in the QQQ most likely would be temporary.

 

A Breakout in the S&P 500 ETF (SPY) is Possible?

The chart above is the weekly SPDR S&P 500 (SPY) ETF that is comprised of 500 stocks of the largest companies in the U.S.   The S&P 500 (SPY) hit its weekly upside channel on March 1st at 240.32 and pulled back.  Market breath has weakened however the SPY has not given up much ground over the last two weeks, a bullish sign.  If the SPY can get through the old highs, higher projections above 260.00 will be given.

The lower portion of the chart is the 12-26-9 MACD, a measure of momentum.  Like the QQQ discussed above, MACD has confirmed the price high in the SPY and is in a clear uptrend.  This is the sign of a healthy market.   Look for the SPY to at least test the old highs.

Summing Up:

Market breadth has been weak as of late after being very strong for many months. There has been no real thrust on the advancing days to get excited about, however not much ground has been given up either.  Market breath indicators have worked off its overbought condition since the election.   Our stock market timing models remain neutral-positive indicating a potentially profitable market climate and potential further gains over the next several weeks. MACD over the intermediate term for the Nasdaq 100 (QQQ) and the S&P 500 (SPY) have confirmed the strength of the overall market.   Continue to give the benefit of the doubt to the bulls.

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!

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*******Article published by Bonnie Gortler in Systems and Forecasts March 15, 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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February had a strong month of gains following January’s advance.  The Dow Industrials rose 12 straight days.  Healthcare (XLV), Utilities, and Financials were the leading sectors for the month along with solid gains by the Dow, S&P 500, and the Nasdaq.  Our trading models remain neutral-positive and the tape remains bullish.  Up trends are intact.  Some indices have met their intermediate channel objectives including Regional Banks, (KRE) Nasdaq 100 (QQQ), and Russell 2000 (IWM); however there is a good chance more gains are ahead. The bulls remain in control.

What Do You Want To Watch Now?

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. After the election the Russell 2000 (IWM) skyrocketed.  The IWM made a high of 138.85 on 12/08/16 overshooting slightly its channel objective at 138.00 (green rectangle).  After making a high, the IWM moved sideways for about 8 weeks, not giving up much ground.

As of March 1st, a potential breakout may have begun.  The upside objective is 157.00 while support is at 133.00.

The lower portion of the chart is MACD, a technical indicator that measures momentum.  MACD is overbought, confirming the new high made in IWM.  If the rally stalls MACD can give a sell quickly.  Its bullish, the uptrend from January 2016 is in effect, and MACD has confirmed the IWM high.

iShares Russell 2000 ETF (IWM) Weekly Price (Top), and 12-26-9 Week MACD (Bottom)

The top part of the chart is the weekly (IWM) Russell 2000 Index / (SPY) S&P 500 Index Ratio (IWM/SPY).  A rising line means the IWM is stronger, and if falling, the SPY is stronger. The IWM/SPY ratio peaked on 12/05/16. The IWM has clearly been losing strength, however the uptrend from January 2016 (black line) is intact.

The lower portion of the chart is MACD, already on a sell warning of a potential change of leadership.  Not only is momentum weakening, but at the same time the IWM/SPY relative strength ratio has broken it’s up trend. Also, the average daily trading range for the past 25 days has been more than double the SPY.  Even though the IWM has the potential to be breaking out, if you are heavily weighted in small caps, it may be a good time to reduce your exposure and lower your risk, shifting part of your assets to the SPY.

The SPDR S&P 500 (SPY) Weekly With Channel (Top) and Weekly 12-26-9 MACD (Bottom)

The chart above is the weekly SPDR S&P 500 (SPY) ETF that is comprised of 500 stocks of the largest companies in the U.S. As of 03/01/17 its top 4 holdings in the S&P 500 were Apple Inc. (AAPL) 3.58%, Microsoft Corporation (MSFT) 2.45%, Exxon Mobil Corporation (XOM), 1.66% and Johnson & Johnson (JNJ) 1.64%.  Investing in the S&P 500 gives you a broad representation of the overall large-cap U.S. stock market.

The top part of the chart shows the S&P 500 (SPY) weekly trading channel.  The S&P 500 (SPY) has been in an uptrend since December 2016 and steadily rising since the election.  While the Russell 2000 (IWM) is at its top of its trading channel, the SPY still has some room to go before hitting its upper channel at 245.50.

The bottom half of the chart shows MACD, confirming the highs in the SPY. This is bullish.

Just To Sum Up:

The tape remains strong. Major averages continue to make new highs and pullbacks have been minor.  The Russell 2000 (IWM) has met its intermediate objective.  The SPY has taken over leadership in terms of relative strength. Even though the IWM has the potential for a break out, if you are heavily weighted in small caps, it may be a good time to reduce your exposure, lowering your risk by shifting part of your assets to the SPY.  Our models remain overall neutral-positive so stocks could rise for several more weeks. As long as the Russell 2000 (IWM) stays above its support at 133.00 and the SPY stays above its hourly support of 234.00, you can expect higher highs. Continue to give the benefit of the doubt to the bulls.

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! 

Click here for a free report: Top 10 Investing Tips To More Wealth

*******Article in Systems and Forecasts March 2, 2017

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Journey To Wealth

 


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
Journey To Wealth

 


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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