Tutor Your Trade

Tutoring for your Investment trading

Tutor Your Trade

Welcome to Tutor Your Trade

Tom Aspray is the driving force behind Tutor Your Trade.  Tom has been analyzing and advising institutions and investors on the financial markets since the early 1980’s.

From his extensive biochemistry research using computers in the late 70’s, Tom envisioned the potential for applying his research techniques to the financial markets.  Through rigorous and methodical analysis Tom developed his own unique methods of computerized technical analysis.  These methods have been taught to financial professionals around the world.

In 1982 Tom became the research director for a financial advisory firm and the early use of professional technical analysis software provided a platform for testing many of the analytical methods that are used by today’s traders and investors. Tom’s work has been highlighted in books by both John Murphy and Stanley Kroll and he is well respected in the financial community for his knowledge and approach to the markets.

For the past 8 years Tom has provided general market commentary through Forbes, Moneyshow and PA Stock Alerts. In Tutor Your Trade, his insights and techniques are available to a select group of traders and investors on a 1-1 basis or you can join in each day to his pre-market analysis session.

Should Investors Tune In Or Tune Out?

Posted by on 3:52 pm in Uncategorized | Comments Off on Should Investors Tune In Or Tune Out?

Should Investors Tune In Or Tune Out?

The stock market moved sideways for most of last week with the heaviest selling on Wednesday. Finally on Friday we got Janet Yellen’s long awaited comments from Jackson Hole where she said “the case for raising rates has strengthened in recent months.” This did little to change the already low expectations for a rate hike in September but then Fed Vice Chairman Stanley Fischer hinted on CNBC that a rate hike was still possible next month. The S&P futures reversed course on his comments as the futures dropped 20 points. This increases the focus on the September 20-21 FOMC meeting which makes it more likely that it will be tough three weeks for investors and traders.  It does not help that we are entering a seasonally weak period where an increase in market noise can play a larger role. The recent tight ranges and low volume does make the market more vulnerable to wide swings. This low volatility is evident on this Bloomberg chart as there has been only one day with a 0.80% range since mid-July.  In the article they commented that “the market is locked in its tightest trading range since the end of 1965.”  ( I took a look at the chart of the time period and the S&P 500 peaked out early in 1966 and then dropped over 20%) The volatility is likely to be different  in September as on Friday the S&P futures dropped below the lows of the past fourteen days. The stock market rallied Friday afternoon and the Spyder Trust (SPY)  closed  just barely above the doji low of two weeks ago. Therefore a weekly doji sell signal was not triggered but it could be next week if SPY closes below $217.23.  As I discuss in the Market Wrap section the A/D lines have not yet moved into the corrective mode. Many are wondering if we do get a market correction in the next few weeks how far might the S&P 500 or SPY fall?  The fact that the 20-week EMA at $213.32 is still rising strongly is a healthy sign. It does not rule out a drop below the EMA  as part of a correction in the major trend. It would take more time and a deeper correction before the SPY could complete a major top.  The 20-week EMA is now 1.8% below Friday’s close. The weekly S&P 500 A/D line has been flattening out after rising strongly since February (section b). It also could correct back to its WMA but it shows no hint yet of topping out.  The A/D line is still clearly on the February buy signal. The recent action shows some similarities to early 2013 (chart on right) as there was also a strong six-month rally before there was a meaningful correction. From early January through the middle of June 2013 the SPY stayed above its strongly rising EMA. In 2013 the SPY corrected for five weeks as it dropped below the 20 week EMA for two weeks before the market again turned higher. The selling in the stock market increased in late June (point d) after Fed Chairman Ben Bernanke commented that the bond-buying program could be stopped by the end of the year. This pullback turned out to be a great buying opportunity. The weekly...

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Another Wrong Way Crude Oil Trade

Posted by on 3:29 pm in Uncategorized | Comments Off on Another Wrong Way Crude Oil Trade

Another Wrong Way Crude Oil Trade

Most experienced commodity traders know that crude oil is one of the more volatile commodity markets where the gains as well as the risks are high. Having followed the crude oil market for thirty years I am still amazed how many try to trade this market based on fundamental analysis. Over the years through my past crude oil training sessions in Singapore and London  I have made a number of converts. This week the new head of one of the oldest commodity trading firms recommended shorting crude oil at $50-$55 according to Bloomberg based on bearish fundamentals. Those who follow the crude oil market may remember the negative headlines on crude oil as prices dropped in early 2016.  The decline was based on the perceived weak demand, concerns over the economy and a rising trend in oil rig counts. This data is the focus of the major financial news networks. In early January as crude oil prices were collapsing a Barclay’s commodity analyst commented to CNN  that “The fundamental situation for oil markets is much worse than previously thought.”  The sharp slide was due in part to small speculators dumping long positions. As was also the case during the July decline many jumped on the short side of the market based on these bearish forecasts. Just a week later on January 21st I pointed out in “Time To Squeeze The Short Oil Speculators?” my analysis of the open interest (the number of crude oil contracts outstanding) suggested those on the short side were about to get squeezed.  As it turned out crude oil made its low on January 20th. Though many have maintained an overall bearish outlook on crude oil prices in 2016, the energy ETFs like the Energy Select Sector SPDR Fund (XLE) and SPDR S&P Oil & Gas Exploration & Production ETF (XOP) have outperformed the Spyder Trust (SPY) YTD by 10-15%. As crude oil dropped below $40 in early August several analysts were calling for a drop to $35 or lower based on their negative fundamental analysis.  On August 3rd, Zacks Equity Research even advised shorting oil and the energy ETFs (Oil in Bear Territory: Short Oil & Energy ETFs) As was the case in January the technical outlook was much different in early August. A look at the weekly analysis will illustrate why the $50-$55 level is so important. The weekly chart shows the doji low in early August and the key resistance in the $51 area, line a. A weekly close above this level would complete a reverse head and shoulders bottom formation as the August low may represent the left shoulder. The upside target from this formation is in the $75-$80 area. The Herrick Payoff Index (HPI) which uses volume, open interest and prices has been diverging from prices since 2015, line d. The HPI also formed a short-term divergence early in the year that was confirmed by the move above its WMA and the downtrend, line c. On the July drop the HPI dropped back below the zero line but moved back into positive territory just after the August lows. The daily chart of the October crude oil contract shows the thirteen day rally from $40 to $49.36 which thoroughly confused the media and likely added to the mounting hedge fund losses....

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Don’t Worry This Bubble Market Turns Slowly

Posted by on 8:43 pm in Stock market strategies, Technical Analysis | Comments Off on Don’t Worry This Bubble Market Turns Slowly

Don’t Worry This Bubble Market Turns Slowly

The stock market recorded nice gains on Monday but then returned to its narrow trading range since it has not had a 1% move either up or down for the past month. The Spyder Trust (SPY) has been grinding higher as it is up 1.3% during the period. Even though the broad market gains have not been impressive the attitude of many professionals, as expected, has become a bit more positive. At the end of February I discussed  why investors should not avoid stocks because of their fears over China, weak crude oil prices, earnings or a weak economy. It was also important that with the close on February 27th “the weekly NYSE A/D line has moved back above its WMA for the first time since the start of the year”. The daily chart of the Spyder Trust (SPY)  shows the both the bullish divergence at the February lows as well as the break of the downtrend in the A/D line. Despite the pickup in articles that are more positive on the stock market more high profile bears keep coming out of the woodwork. In a letter to investors in his $28 billion dollar hedge fund manager Paul Singer thinks that the negative yields in many of the world’s bond markets has investors facing “the biggest bond bubble in world history” . He also fears a drop may be very sudden and very sharp. I found it interesting that Elliott further stated “Everyone is in the dark….Experience doesn’t count for much, and extreme confidence may be fatal.”  Is this possibly an excuse for the continued poor performance of the hedge fund industry? It has been my view for over two years that the hedge industry as entered its own bear market.  (“The Bubble No One Is Discussing”) In last week’s column I wondered why there was not any euphoria amongst stock investors despite the many proclamations of a major bull market top.  The bond market is clearly a very crowded trade as nervous investors fight for yields but most bond traders I come across are nervous not euphoric. These concerns come as the stock market is ready to endure another month or more of obsessive discussion on whether the Fed will raise rates. This Friday Janet Yellen will be giving a widely anticipation presentation that is likely to be fully dissected by the bond market CSIs. This will be the start of another round of painful debates even though the futures markets currently reflects that there is a low chance of a September rate hike. It seems that many investors are still convinced that a rate hike will be negative for stocks and that it will likely cause a recession.   As I have noted in the past this only typically happens late in a rate hiking cycle, not at the start. The long-term chart of 10 Year Constant Maturity yields has the recessionary periods shaded in grey. Prior to the recession in 1970 rates had been rising for a number of years, line a. This was also the case during the recession in 1973-1975, line b, as rates continued to rise after the recession was over. The major rise in rates occurred in the late 1970’s as the Fed was trying to fight inflation. The yields finally peaked above 15%...

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The Week Ahead; What’s Missing From This Bull Market?

Posted by on 11:17 am in Stock market strategies, Technical Analysis | Comments Off on The Week Ahead; What’s Missing From This Bull Market?

The Week Ahead; What’s Missing From This Bull Market?

The stock market spent most of the week consolidating its gains after the sharp rally in reaction to the July jobs report. Thursday’s sharply higher close and very positive A/D numbers suggests that stocks are likely ready for another push to the upside as the S&P 500 challenges the 2200 level. The new high in the major averages and leading action of the advance/decline lines has still not convinced everyone as Goldman Sachs advised their clients on August 1st to “avoid all stocks for the next three months”. They are also sticking with their yearend target for the S&P 500 at 2100 which is 3.7% below current levels. It has not been a good year for Goldman Sachs as on February 16th they advised selling gold short when the December contract was trading at $1209. As of last Thursday’s close at $1350 it is up 11.6% since this recommendation.  Their crude oil forecasts also seem to be out of sync as they turned bullish three weeks before it topped out in June. As they continue to lay off staff I hope they consider hiring some good technical analysts. There has been a shift in some of the market commentary as it is not nearly as negative on the stock market as it was in July. If the S&P 500 can close above 2200 I would expect to see a further reduction in the bearish commentary. There are still many bearish article as mid-day Friday as one article advised to Sell Everything based on the following questionable bullet points. Our greatest investment minds are warning investors to avoid stocks and bonds. There are a multitude of fundamental reasons for this warning. Perhaps the most paramount of all is the issue of moral hazard. Moral hazard – really?  Looking back at the author’s previous articles I found his February 25th 2013 article proclaiming it was still a secular bear market.  The 53% gain in the Spyder Trust (SPY) since this article illustrates the danger of having an inflexible investment outlook and fighting the trend. There was little change in individual investor sentiment over the past week as the bullish % just rose 1.5% to 31.3% while the bearish % was unchanged at 26.8%. The neutral camp at 42% is still quite high. The CNN Fear & Greed Index is still well in Greed territory  at 76 as it has been for the past month or so but it is below the recent highs. I have found this measure to be much better at market bottoms than at market tops. This is because when two of its components, stock price breadth and stock price strength, are very high my analysis indicates it is a sign of a strong as well as healthy market.  High levels are not necessarily bearish unless they start to diverge and then turn lower. It should be noted that stock price breadth  does not track the actual A/D data as it looks at the advancing and declining volume. Put and Call option data is a contrary indicator as when too many are buying puts it is a sign that too many are bearish on stocks. Converesely a prolounged period were the call buying is much higher than the put buying it can be a negative. It is the...

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The Week Ahead: Is Macro Really Wacko?

Posted by on 5:29 pm in Stock market strategies, Technical Analysis | Comments Off on The Week Ahead: Is Macro Really Wacko?

The Week Ahead: Is Macro Really Wacko?

The eight down days in the  Dow Industrials since the July 20th high was enough to cause many analysts to question the validity of the rally from the late June lows. Their focus had turned to the historically weak performance of stocks in August. According to AAII the bullish % of individual investors has declined for four weeks in a row. A Seeking Alpha survey before Friday’s job report indicated that only 3.5% were looking for big gains in employment while 27.9% were expecting a “downside surprise after June’s blowout number”. Needless to say the 255,000 surge in nonfarm payrolls caught many by surprise as those who ventured on the short side scrambled to cover their positions. The major averages gapped higher on the opening Monday and several were quickly at new highs. Another push higher in the stock market is likely to add to the pains of the hedge fund industry. Since my July 2014 article  “The Week Ahead: One Bubble Starting to Burst?” I have felt that the hedge fund bubble was bursting. As noted in a May CNN article it looks like the industry is now facing up to this reality. As they noted “A barometer of hedge fund performance, called the HFRI Fund Weighted Composite Index, has generated an annualized gain of just 1.7% over the past five years. Compared to that, the S&P 500’s average annualized return for the same period was 11%.” The majority of the hedge funds apparently rely on fundamental analysis to guide their investment decisions though some claim to use technical analysis for their timing. The current bull market may turn out to be the best argument in favor of technical analysis.  The fundamental opinion was very negative at the correction lows in 2010, 2011, 2012 as well as February and it was the action of the A/D lines that signaled it was now the time to fight the tide and buy. The one hedge fund strategy I have had the most problem with in the past ten years is the so-called macro strategy where positions, long or short, are taken based on the manager’s analysis of the economic and political views of various countries. There are no hard rules for this analysis as more often it comes down to their opinion which in my view is often based on sometimes-dubious data. One analyst I know stayed out of stocks for most of the bull market because of his concerns over China. I should point that there are several macro analysts who I think are very smart and insightful but it is the timing of their investments that I often question. It should come as no surprise that these funds have not performed well since 2012 according to BarclayHedge. I have added in the performance for the Spyder Trust (SPY) from Morningstar so that it can be compared to the Barclay Global Macro Index. The table shows that so far this year the SPY is up 7.61% while the Macro Index is down 0.14%.  Only in 2015 did the macro funds do better as they had a 2.28% gain versus 1.25% by the SPY. In most other years the SPY has been much stronger as it was up 32.31% in 2013 versus only a 4.81% gain in the Macro Index....

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The Week Ahead: Breakout Or Fake Out?

Posted by on 10:01 am in Stock market strategies, Technical Analysis | Comments Off on The Week Ahead: Breakout Or Fake Out?

The Week Ahead:  Breakout Or Fake Out?

The ability of the S&P 500 to close well above the May 2015 highs has not really diminished the debate over the market’s future. The somewhat surreal Republican Convention that seemed to contradict decades of past policy did not seem to impact the stock market. The opinion of the fundamental analysts has seen little change despite the new highs as they continue to believe they are not justified by their analysis. A few of the bears have converted to the bullish camp but most have not as the majority continue to argue why the market must be forming a major top. The individual investor according to AAII was a bit less bullish last week as the bullish% dropped to 35.4% which is still well below the 40% level.  The bearish% rose to 26.7%. As of July 19th Investor Intelligence reported that 54.4% of financial newsletter writers were bullish with only 23.3% bearish. Historically the bullish% has risen to well over 60% at a market top while the bearish % has been below 15%. One of the more interesting arguments for why the market must be topping out is based on the observation that there is a surge in the construction of tallest buildings prior to a major recession or market top.  I found this chart, which chronicles these observations since 1900, quite interesting.  New tallest towers are under construction in Dubai, Shanghai and San Francisco. The frustration expressed by some Wall Street professionals has its roots early in the year as advisors, like the Royal Bank of Scotland (RBS), advised their clients to sell everything.  The recent data on institutional cash levels also suggests that many managers have missed this rally. It is not surprising that many mutual funds have performed poorly in 2016 and that many clients are not very  happy.   Therefore any panic on Wall Street maybe based on the fear of further redemptions and a loss of business if managers continue to lag their benchmarks in the 3rd quarter. Many feel that the recent surge to new highs in the S&P 500 is a fake out while others are convinced that the completion of the two-year trading range in the S&P 500 means that the market can go higher.  Instead of just looking only at prices I suggest that investors look at the breakout in terms of the market internals. As I commented in April  “Charts Talk-Fear Walks” the new highs in both the NYSE Advance/Decline and S&P 500 A/D lines …  means that the NYSE Composite and S&P 500 are both likely to make new highs”. Even though the NYSE is still 4% below its 2015 high the completion of the weekly trading range does project an eventual move to new highs. It is my view that the ability of the  NYSE A/D line to overcome year long resistance is a sign of strength and that it has implications for the market that are likely to carry over until next year.   looking at what has happened after similar A/D line breakouts can help us better prepare for the weeks ahead. The NYSE A/D line was in a 25 month trading range between June 1983 and December 1985, line a. The completion of this range (line 1) occurred after ten weeks of solid gains. It was...

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Charts Not Fear Guide Gold Market

Posted by on 4:25 pm in Uncategorized | Comments Off on Charts Not Fear Guide Gold Market

Charts Not Fear Guide Gold Market

The eight-day $120 rally in gold in reaction to the Brexit vote cleaned out those who remained on the short side and caused a new flood of buying as the long side of the gold market became even more crowded As I pointed out on July 9th “The latest data from the CFTC shows that the long positions of money managers have made another new high even though margins were recently raised. In my experience this is a dangerous combination and I continue to think the long side is risky now.” In  trading Wednesday gold futures are down $14but many are confident the rally from the early 2016 lows is not over yet. The December Comex gold contract has dropped $60 per ounce from the July 7th high as even the events in Turkey could not interrupt the decline. In over 30 years of analyzing the commodity markets I have paid particular attention to the open interest in order to identify both long and short-term turning points.  This open interest  analysis in January “Time To Squeeze The Short Oil Speculators?”  indicated that the four-month slide in crude oil prices was likely to reverse. Crude oil completed its bottom just a few weeks later. The number of long gold contracts held by money managers only dropped 3% in the latest period as their long position represents 33.4% of the open interest. Since late 2015 the number of long contracts held by money managers has surged 220,000 contracts. This suggests that more longs will be liquidated before the bullish sentiment has been significantly reduced. So what do the monthly, weekly and daily charts say about the outlook for gold futures? The monthly chart of gold futures shows that the futures formed a doji in December 2015 and then triggered a buy signal with the January close. (Chart is updated through 7/19) The monthly downtrend from the 2011 and 2012 highs has now been reached. Currently the gold futures are trading near the month’s low so the July close will need to be viewed in terms of the monthly open at $1324 to see if another doji has formed. There is monthly support at $1220 which corresponds to the 20 month EMA. Since prices are currently slightly higher for the month the OBV is slightly above its WMA but it has been weak on the rally. The Herrick Payoff Index (HPI), which uses volume, open interest and prices is showing the best strength since 2009. The HPI moved above the zero line at the end of February, point 1 and is still clearly positive. The WMA of the HPI could move above its WMA in July for the first time since late 2013. The weekly chart shows last week’s reversal as the close was well below the prior week’s low. There is first good support in the $1295-$1305 area with the quarterly pivot at $1294. (Chart is updated through 7/19) The rising 20-week EMA is at $1272 with the uptrend in the $1240 area. The weekly starc- band and the quarterly pivot support are in the $1230 area. The weekly OBV only moved above its WMA four weeks ago as it made new lows in late May even though prices were moving higher. The OBV is still well below its long-term downtrend,...

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The Week Ahead: What Are Those Bear Market Forecaster’s Missing?

Posted by on 2:48 pm in Stock market strategies, Technical Analysis | Comments Off on The Week Ahead: What Are Those Bear Market Forecaster’s Missing?

The Week Ahead: What Are Those Bear Market Forecaster’s Missing?

The widely anticipated monthly jobs report on Friday shocked forecasters as for the second month in a row they were way off the mark. In the June report May’s numbers were revised even lower to just 11,000 new jobs. The 285,000 reading for Non-Farm Payrolls was above even the most optimistic CNBC forecast and the increase of 38,000 jobs in professional and business services was especially encouraging. Even manufacturing had a gain of 14,000. Still it is not surprising that some who have been warning about the deterioration in the economy were still not impressed. The Non-Farm Payrolls chart suggests the trend may have changed with the June report but one should remember that this data series, like many of the economic reports, is subject to wide swings on a month-to-month basis. Many economists are more concerned by the fact that S&P 500 came within a fraction of the all time high and yields on the 10 Year T-Note dropped to new all time lows. Technical indicators like volume, price as well as the number of stocks advancing or declining are rarely revised and this is one of the many reasons I favor technical over fundamental analysis. As I pointed out last week the fact that the A/D lines on the major averages did not make new lows during the post Brexit market decline was a sign of strength. Friday’s gains were impressive as the major averages were up 1.5% or more and even more important there were 2711 stocks advancing and just 370 declining. The strength of rally was likely fueled in part by short covering as even after the close one long time market bear called the market’s reaction “comical”. The continued disbelief in the market rally is a bullish sign. The weekly chart of the Spyder Trust (SPY) shows that the S&P 500 Advance/Decline line moved back above its WMA on February 26th and the SPY has gained 10% since the A/D analysis again turned positive. It made another strong new high this week as it continues to lead prices higher. Those who have been following my analysis throughout the bull market know that this analysis is what I use to determine whether I am buying or selling stocks and ETFs. Even though many of the major averages have just made it back to their pre-vote levels many stocks have done much better. Two of the recent Viper Hot Stocks picks, CBOE Holdings (CBOE) and Paychex (PAYX) were identified as market leaders before the vote and are now 4.8% and 8.3% above their pre-vote levels. Since the Brexit vote my inbox has been deluged daily by 6 or 7 times the average number of financial articles and for a while I thought my spam filter had been turned off. A very high percentage of the articles expressed a pessimistic view on the stock market and/or the economy. Many focused on the dire consequences of the recent vote and how it must doom the Euro zone economies and lead to a global bear market. They may be right eventually but since the vote it has become clear that no one really knows how the UK exit from the European Union will pan out. There will probably not be clarity on this issue until next year and there...

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The Week Ahead: Is The Fear Trade Your Best Bet Now?

Posted by on 4:45 pm in Technical Analysis | Comments Off on The Week Ahead: Is The Fear Trade Your Best Bet Now?

The Week Ahead:  Is The Fear Trade Your Best Bet Now?

It was a rough week overall for global investors and the comments from the FOMC made things worse not better. The focus prior to the Fed meeting had been on what the long term impact of negative bond yields could have on the world’s economy and whether voters in the UK would decide to leave the European Union. The Fed’s concern over the health of the US economy and the polls that currently suggest that UK citizens now favor leaving have heaped more pressure on the indecisive investor. In last week’s AAII survey the bullish% dropped to 25.4% and is now further below its long term average. Though it is difficult to really assess the professional sentiment we do know that many high profile hedge fund managers are expecting a sharp market decline. Based on commentary in the financial media and blogs it does not seem many are looking for higher prices. As I cover in more detail in the Market Wrap section the stock market looked ready to complete its correction in the middle of last week but it did not generate enough positive momentum to signal that the market had turned the corner. This may happen this week but the spike in the VIX is a sign that the fear trade is the most popular now. The possible exit of Greece from the Euro zone monetary union had been a concern during most of the market corrections since the bull market began. In each instance I thought it was unlikely as the economic costs with the common currency were too high. In 2010, 2011and 2012 it was even more important that the technical analysis of the US stock market indicated that they were just corrections and not warnings of a major top. The fear trade did not work then as many sold their long positions near the market lows. I would argue that it is not the best trade for most right now. The United Kingdom’s stock market, the FTSE 100, has failed to rally much from the lows early in the year. Tt does look weaker that the major Euro zone markets. The correction did take the FTSE 100 between the 38.2% and 50% support levels before it bounced. The close last week was below the prior three-week low which is a sign of weakness. This suggests that no matter how the vote turns out their market could stay weak. The senseless and apparently politically motivated murder of Jo Scott, a member of parliament who supported staying in the European Union could cause a shift in sentiment. My concern over the vote is not tied to how investments may do for the rest of 2016 but is more a concern of what it might mean to global politics in the years ahead. Historically periods of nationalism and isolation have often led to periods of conflict and war. When some look at the long-term chart of the S&P 500 they focus on the trading range (blue lines) that has been in effect since the latter part of 2014 which some interpret as a major top formation. That of course could be the case but the new highs in the monthly S&P 500 A/D line suggest that it is just a major pause in the overall uptrend. In...

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Why I Liked This ETF On The Dip

Posted by on 3:58 pm in Stock market strategies, Technical Analysis | Comments Off on Why I Liked This ETF On The Dip

Why I Liked This ETF On The Dip

The stock market correction that started last Thursday has picked up steam as the market bears are getting louder once more as a couple of new layers have been added to the wall of worry. The upcoming Brexit vote does have a chance of rocking the boat temporarily but the longer term measures of the A/D line do not suggest that a vote related drop will complete a major top. Of course the high number of bear market forecasts is positive as it should provide fuel for a rally. It is interesting that a four day pullback and 2% decline has stimulated this degree of bearishness. The market is now less overbought as the NYSE McClellan Oscillator has dropped from +141 last week to -208 Tuesday as I Tweeted earlier this morning. The Spyder Trust (SPY) has pulled back to good support as it dropped below the monthly pivot at $207.77 before closing above it. This widely watched market tracking ETF formed a doji Tuesday and a close above $208.74 will trigger a positive momentum shift. I am still look for Spyder Trust (SPY ) to reach the quarterly pivot resistance at $214.58 with additional targets in the $218-$220 area. One ETF that has been leading the Spyder Trust (SPY) higher all year is the Materials Sector Select (XLB) as it is up 8.3% YTD and is up over 29% from the lows early in the year. In contrast the SPY is up 2.6% YTD and 15.5% from the year’s low. In last week’s “Why Didn’t I Buy This Mining ETF?” I explained why I was not ready to buy the SPDR S&P Metals & Mining ETF (XME) because the risk was too high. This meant that the correction needed to be watched. The situation was different for the Materials Sector Select (XLB) as the analysis of the weekly and daily technical studies demonstrate why I favored buying it on the recent dip. The weekly chart shows that the Materials Sector Select (XLB) bottomed almost three weeks before the SPY in the middle of January. There is next long-term resistance, line a, in the $50 area. The weekly relative performance is one of my favorite indicators and it moved above its WMA in early February signaling it was now a market leader. The weekly RS resistance, line b, was overcome in early March. The weekly OBV formed sharply higher lows in January and this bullish divergence warranted new long positions. The OBV has not yet surpassed the April highs but is still well above its rising WMA. The recent correction has taken prices back to initial weekly support at $46.37. The daily chart shows that a doji was formed a week ago which set the stage for a pullback. The monthly pivot at $46.85 was reached on Tuesday with daily support, line d, in the $46 area. The monthly pivot support is at $45.51 with the May swing low at $45.42. The daily relative performance shows a well-defined pattern of higher lows, line e, and has just dropped below its WMA. The daily on-balance-volume (OBV) made another new high last week but has also dropped below its WMA. There is important OBV support now at line f. The monthly R2 resistance is at $49.61 while the recent trading range...

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