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The bears were unable to take control through the ups and downs during July and August. Normally a weak market period, the averages had a modest pullback, holding above key support levels and working off their daily overbought condition.   After the short decline without much price fluctuation, the major averages formed favorable technical patterns on a daily basis  from oversold conditions. The bulls stepped in to buy and the bears were disappointed once again.  At the time of this writing, we remain in a rally phase that began in the end of August. The Dow, S&P 500, and Nasdaq made new record closing highs on September 12.  

Price trends seem to be more significant indicating market direction than weakening momentum patterns.  The recent rise occurred even thought there were clear negative patterns on many intermediate charts.  It’s good to keep in mind, there has been not been a bear market since March 2009, when the past bear market ended.  The rise in equities since then is one of the longest time periods without at least a 20 percent drop in the S&P 500.

On this latest rally there has been no big thrust in volume or surge in market breadth to suggest a strong up move is forthcoming.  However, there has been no major sign of danger either.  Our models remain overall neutral-positive for the intermediate term which means upside potential remains greater than downside risk.  Weakening momentum patterns remain on the intermediate charts and still need to be monitored.  However, until support levels and uptrends are broken look for higher prices ahead.

These clues will help guide you if the market will continue to advance or weaken.

7 Simple Clues You Want To Follow For a Potential Trend Change

  1. Overseas markets have been strong. Observe the action to see if 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. Follow the Nasdaq 100 (QQQ) if it continues to make new highs or turns down. Keep an eye on Apple (APPL), Microsoft (MSFT), Amazon (AMZN), Alphabet Inc Class A (GOOGL), and Facebook, (FB) if they start to lag and start to turn down.
  3. High Yield Bonds weaken, turning lower instead of holding their ground or rising. Use the ETF’s HYG or JNK as a benchmark.
  4. The Transportation Average (IYT) has not yet confirmed the Dow Industrials high. If the IYT turns down now and doesn’t close above 175.40 this would not be a good sign.
  5. Volatility remains low. Watch if VIX takes out the August 11 high of 17.28. A warning signal would be if VIX goes above the high made on September 5 at 14.06.
  6. New 52 week lows on the New York Stock Exchange Index are low, presently at 8. An increase to over 150 would not be a good sign.
  7. Watch the last hour of trading. If the major averages closes near the low end of their daily range instead of near the highs, this would be bearish.

 

Keep an eye on the S&P 500 (SPY) For a Breakout

 

The SPDR S&P 500 (SPY) Daily Price Channel and 19-26-9 MACD

The top part of the chart is the SPDR S&P 500 (SPY) ETF and its active daily trading channel.  The S&P 500 Index (SPY) is comprised of 500 stocks of the largest companies in the U.S.   The S&P 500 (SPY) this week made a new all-time high.  The new high coincides with hitting the daily upside channel.  Further strength in the SPY now, will give a new short term channel objective to 259.00, another 3.6% higher.  A break below 239.00 on a closing basis would raise a red flag.

The lower portion of the chart is the 12-26-9 MACD, a measure of momentum.   MACD is on a buy since late August.  MACD is above 0, rising and its pattern has room to the upside before it would be considered extended.  MACD broke its daily down trend from its March 1 peak.

Higher Intermediate Term Upside Objectives For the S&P 500 (SPY)

 

 

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

The top part of the chart is the SPDR S&P 500 (SPY) ETF and its active weekly (intermediate) trading channel. The SPY has had a slow and steady rise this year.  The SPY chart pattern has been in a consolidating pattern, with an upside bias.  The SPY remains clearly in an uptrend (black line).  There has not been even a minor downside penetration of the trendline since the lows were made on 2/8/16.   Declines have been small and for relatively short periods of time. Until this trendline is broken, no serious threat of a major decline should occur.   The upside channel objective is 277.00. Below 239.00 implies more weakness towards the middle channel at 212.00.

Summing Up:

The major averages have made new highs.  However, keep in mind intermediate momentum patterns have not confirmed the recent highs.  The market breadth and volume indicators that we follow have not been strong enough to generate any impulse signals that suggest the rally is sustainable and would be stronger than an average market rise.  There has been no real thrust on the advancing days to get excited about, however not much ground has been given up either.  Our stock market timing models remain neutral-positive, indicating a potentially profitable market climate and potential further gains over the next several weeks to months.

As long as the SPY remains above 239.00, the trend is up and the odds favor the SPY to work its way higher towards the upside channel objective at 277.00.  If the SPY falls below 239.00 on a weekly close, then risk would increase, and the intermediate trend would change from up to down implying more potential weakness towards the middle channel at 212.00.  Ride the trend for now. However, watch for the 7 clues for a potential trend change.

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

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

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

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

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


Summing Up:

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

 

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

 

 

 

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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 – The bulls remain in control for now

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

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

ETF Corner

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

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

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

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

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

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

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

In Sum: 

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

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

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

 

 

 

 

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

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

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

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

 

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

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

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

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

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

ETF Corner: Negative Divergences Have Formed on Weekly Charts

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

 

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

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

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

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

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

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

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

Summing Up:

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

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

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

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

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

 

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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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 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.

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

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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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