ETF Market Trends: Bears Emerge from Hibernation in Oversold Market

ETF Market Direction Summary: 10-27-2009

U.S. Equities: Tuesday’s comments will be brief. The bears are returning from hibernation and prowling about for prey. With the exception of the Dow Industrials, all of the major U.S. equity indexes are now in short-term downtrends.

Technically, the market is approaching the boundaries of extremely oversold territory, but has ceded very little of its gains from the March lows. With support levels on the S&P 500 nearby at 1040 to 1020 levels, we will know rather soon the stamina of bulls and seriousness of bears.

Although this report monitors ETFs which mimic or represent various indexes, I must mention that the CBOE volatility index, i.e. VIX, has reversed its downtrends. The VXX, its proxy ETF, does not correlate as well and is still trending downward.

For international equities, commodities, forex, bonds, and real estate, refer to the trend tables below:

ETF 5 Day New Highs: U.S. Equties (VXZ); Forex (UUP); Bonds (MBB). (Note * denotes 250 day new high)

ETF 5 Day New Lows: U.S. Equities (DIA, SPY, QQQQ, IWM, IYZ, XLB, XLF, XLI, XLK, XLP, XLU, XLY, ITA, IYT, OIH, RKH, SEA, SMH); International Equities (EWC, EWW, EWZ, ILF, ISI, RSX, EWG, EWQ, IEV, VGK, EWA, EWH, EWJ, EWS, IF, IFN, VNM, GUR, GML, EEM, GMF, GAL, EWX); Commodities (CRBQ, DBA, DBC, GLD, JJG, SLV, UNG, USO); Forex (CEW, CYB, FXA, FXC, FXE, FXF, FXM, ICN, XRU); Bonds (HYG, JNK, WIP); Real Estate (ITB, REM, RTL, XHB). (Note * denotes 250 day new low)

Signing off at Hillbent on the Market Direction and ETF Market Trends™…

Hillbent Market Direction Resources

Economic Calendar Events: Refer to U.S. Calendar or International Calendar

Postive & Negative Earnings Surprises: Refer to Hillbent’s earnings summary report for a detailed analysis of positive & negative earnings surprises

ETF Market Trends™ Monitor (10-27-2009)

U.S. Equity ETFs
Equity Indexes	Price	%Chg	Vol%	PMI	ST	MT	LT
DIA (DJ Industrials)	98.82	0.01%	31.05%	37	up	up	up
SPY (S&P 500)	106.42	-0.46%	33.24%	21	down	up	up
QQQQ (Nasdaq 100)	42.34	-1.51%	20.17%	17	down	up	up
IWM (Russell 2000)	58.76	-1.28%	48.50%	6	down	down	up
VXX (VIX Futures)	43.18	-1.19%	25.94%	25	down	down	down
Major Sectors	Price	%Chg	Vol%	PMI	ST	MT	LT
XLY (Consumer Discrtn)	27.81	-0.96%	95.35%	54	down	up	up
XLP (Consumer Staples)	25.92	0.19%	14.08%	54	down	up	up
XLE (Energy)	57.85	0.89%	21.01%	52	down	up	up
XLF (Financials)	14.60	-0.75%	-2.01%	33	down	down	up
XLV (Health Care)	28.52	0.42%	49.62%	45	down	down	up
XLI (Industrials)	26.11	-1.36%	22.54%	0	down	up	up
XLB (Materials)	30.49	-0.81%	51.49%	9	down	down	up
XLK (Technology)	21.09	-0.47%	15.66%	28	down	up	up
IYZ (Telecom)	17.73	-0.39%	-54.38%	0	down	down	up
XLU (Utilities)	28.95	-0.31%	74.21%	17	down	down	up
Key Industries	Price	%Chg	Vol%	PMI	ST	MT	LT
ITA (Aerospace & Defense)	46.75	-0.79%	46.83%	3	down	up	up
BBH (Biotech)	93.34	-0.11%	-7.34%	5	down	down	up
OIH (Oil Services)	123.82	-0.29%	39.83%	50	down	up	up
PPH (Pharmaceuticals)	62.31	0.68%	107.77%	54	down	down	up
RKH (Regional Banks)	78.90	-0.45%	86.61%	38	down	down	up
RTH (Retail)	92.09	-0.56%	37.83%	68	down	up	up
SMH (Semiconductors)	25.00	-1.50%	9.17%	2	down	down	up
SWH (Software)	40.34	-0.35%	35.77%	38	up	up	up
SEA (Global Shipping)	12.93	-2.42%	156.51%	13	down	up	up
IYT (Transportation)	66.57	-1.80%	91.60%	15	down	down	up
International Equity ETFs
Americas	Price	%Chg	Vol%	PMI	ST	MT	LT
ISI (S&P 1500)	47.86	-0.37%	31.31%	35	down	up	up
EWC (MSCI Canada)	24.70	-1.63%	26.05%	15	down	down	up
EWW (MSCI Mexico)	44.93	-2.20%	48.77%	18	down	up	up
ILF (Latin America 40)	44.71	-2.38%	69.40%	4	down	up	up
EWZ( MSCI Brazil)	71.48	-2.96%	22.88%	7	down	up	up
Europe	Price	%Chg	Vol%	PMI	ST	MT	LT
EWU (MSCI United Kingdom)	15.97	-0.25%	-53.16%	15	up	up	up
EWG (MSCI Germany)	22.07	-1.47%	-25.53%	20	down	up	up
EWQ (MSCI France)	25.65	-0.89%	-62.38%	29	down	up	up
RSX (Mkt Vectors Russia)	29.86	-3.52%	33.42%	24	down	up	up
VGK (Vanguard Europe)	49.96	-0.64%	-15.70%	10	down	up	up
IEV (S&P Europe 350)	38.86	-0.74%	-11.12%	22	down	up	up
Asian-Pacific	Price	%Chg	Vol%	PMI	ST	MT	LT
EWA (MSCI Australia)	23.52	-1.22%	13.41%	30	down	up	up
FXI (FTSE China)	43.88	-0.16%	-11.96%	11	up	up	up
EWH (MSCI Hong Kong)	15.93	-0.99%	-12.99%	29	down	up	up
IFN (India Fund)	28.89	-3.47%	80.23%	8	down	up	up
EWJ (MSCI Japan)	9.62	-0.41%	-12.74%	22	down	down	up
EWS (MSCI Singapore)	10.83	-0.64%	28.00%	40	down	up	up
EWY (MSCI South Korea)	45.34	-0.85%	-24.44%	19	down	up	up
EWT (MSCI Taiwan)	12.21	-0.08%	-25.89%	18	down	up	up
IF (Indonesia Fund)	9.67	-2.32%	307.09%	24	down	up	up
EWM (MSCI Malaysia)	10.80	0.09%	-3.18%	75	down	up	up
VNM (Vietnam)	30.08	-1.92%	-33.23%	19	down	n/a	n/a
Emerging Markets	Price	%Chg	Vol%	PMI	ST	MT	LT
EEM (MSCI Emerging Mkts)	39.56	-1.71%	33.06%	1	down	up	up
GMF (Emerging Asia Pacific)	70.83	-1.01%	-48.44%	37	down	up	up
GUR (Emerging Europe)	42.95	-2.98%	-12.24%	16	down	up	up
GML (Emerging Latin America)	74.62	-1.88%	46.16%	32	down	up	up
GAF (Middle East & Africa)	59.42	-1.67%	-73.14%	-8	down	up	up
EWX (Emerging Small Caps)	45.12	-0.99%	-52.23%	30	down	up	up
Alternative Assets
Commodities	Price	%Chg	Vol%	PMI	ST	MT	LT
GLD (Gold)	101.85	-0.01%	21.33%	75	down	up	up
SLV (Silver)	16.34	-2.68%	48.30%	29	down	up	up
DBB (Base Metals)	20.36	0.05%	-25.06%	27	up	up	up
JJC (Copper)	41.54	0.87%	-26.74%	58	up	up	up
USO (Oil)	40.58	1.12%	-12.03%	80	up	up	up
UNG (Natural Gas)	10.83	0.74%	-59.56%	76	down	down	down
UGA (Gasoline)	37.77	1.42%	-23.99%	90	up	up	up
CRBQ (Global Commodities)	40.64	-0.61%	-52.48%	35	down	n/a	n/a
DBC (Commodities)	24.08	-0.74%	112.91%	31	up	up	up
JJG (Grains)	38.57	-1.61%	241.23%	25	down	up	down
DBA (Agriculture)	25.80	-1.26%	-4.00%	2	down	up	up
Forex	Price	%Chg	Vol%	PMI	ST	MT	LT
UUP (U.S. Dollar)	22.64	0.26%	133.15%	75	up	down	down
FXE (Euro)	147.77	-0.48%	57.37%	21	down	up	up
FXY (Japanese Yen)	108.11	0.38%	39.10%	68	down	up	up
FXF (Swiss Franc)	97.41	-0.41%	60.67%	34	down	up	up
FXB (British Pound)	163.53	0.42%	62.12%	87	up	up	up
FXC (Canadian Dollar)	93.56	0.03%	60.66%	61	down	up	up
FXA (Australian Dollar)	91.63	-0.02%	63.62%	42	down	up	up
FXM (Mexican Peso)	75.13	-0.60%	-40.59%	8	down	down	up
BZF (Brazilian Real)	26.44	-0.90%	30.92%	9	down	up	up
CYB (Chinese Yuan)	25.29	-0.04%	22.46%	33	lateral	lateral	lateral
ICN (Indian Rupee)	24.85	0.08%	-34.91%	92	down	up	up
XRU (Russian Ruble)	35.94	4.17%	217.10%	514	up	up	n/a
CEW (Emerging Currency)	21.73	-0.82%	22.67%	6	down	up	up
Bonds	Price	%Chg	Vol%	PMI	ST	MT	LT
SHY (1-3 Yr Tsy)	83.89	0.23%	38.52%	94	down	up	down
IEF (7-10 Yr Tsy)	91.46	0.85%	8.54%	94	down	up	down
TLT (20 Yr+ Tsy)	95.03	1.40%	18.95%	93	down	down	down
TIP (Tsy Inflation Protect)	103.54	0.80%	-19.94%	96	up	up	up
AGG (Investment Grade)	104.49	0.41%	-24.72%	91	up	up	up
MBB (Mortgage Bonds)	106.92	0.24%	0.23%	94	up	up	up
JNK (Hi Yld Bonds)	38.33	-0.54%	-8.67%	8	up	up	up
HYG (Hi Yld Corp)	86.27	-0.72%	105.64%	26	up	up	up
WIP (Int’l Inflation Protect)	56.48	-0.83%	47.85%	38	down	up	up
EMB (Emerging Markets Bonds)	102.43	-0.31%	-25.69%	8	down	up	up
MUB (Nat’l Muni Bond)	103.15	0.00%	-32.64%	63	up	down	up
Real Estate	Price	%Chg	Vol%	PMI	ST	MT	LT
IYR (DJ US Real Estate)	41.37	-1.50%	9.17%	15	down	up	up
ICF (Cohen & Steers)	47.09	-1.55%	5.46%	20	down	up	up
XHB (Homebuilders)	14.60	-1.35%	48.07%	14	down	down	up
ITB (Home Construction)	11.78	-1.17%	107.64%	11	down	down	up
FIO (Industrial Office)	21.32	-2.60%	55.83%	5	down	down	up
REM (Mortgage Reits)	14.44	-0.55%	45.52%	35	down	down	up
REZ (Residential Index)	27.84	-0.92%	-7.83%	0	down	up	up
RTL (Retail Index)	19.65	-3.34%	-50.81%	4	down	up	up

*PMI measures strength of % daily trading range on scale of 0 to 100

**ST = Short-Term Trend; MT = Intermediate Trend; LT = Long-Term or Primary Trend

***Vol% measures % change in daily volume vs. average daily volume

Market Momentum Summary: 10-27-2009

Market Momentum	20-Day MA	50-Day MA	200-Day MA
Today	33.51%	57.82%	88.03%
Yesterday	50.59%	67.90%	89.67%
Last Week	70.28%	78.66%	91.93%
Last Month	78.11%	83.03%	92.17%

Disclosures: Hillbent.com, Inc. or its affiliates may own positions in the equities mentioned in our reports. We do not receive any compensation from any of the companies covered in our reports.

Comments

[Mistrofan:]

Yes - and the bears will be squeezed by the end of the next week. This is a cyclical BULL market alright, and there are no signs of a serious correction in the next 2 years. Those who are looking to short the market here I am advising to be VERY quick in exiting the short.

Oct 28 08:25 AM

[logicalman:]

what is PMI?? thank you!!!

Oct 28 10:16 AM

[Bob'29:]

According to Tradingmarkets.com's expert at back-testing and quantifying market move's: Of the 58 times the market has been this oversold; it has rallied strongly within a few days 89.9% of the time. Also stated; There is a likely small cap liquidation by a large or several large hedge or mutual fund companies as determined by the number os unrelated small cap stocks that are getting trounced. When this has happened in the past small caps have rallied 20-30% within a few days. Position for the oversold bounce from these extremes!

Oct 28 10:37 AM

[J Clinton Hill:]

pmi or "power meter indicator" measures strength of a security

Oct 28 11:08 AM

[thiazole:]

I don't know about the market being "extremely oversold" (I would save that degree of terminology for what the market was in March), but if tomorrow's GDP data provides an upward surprise, I feel pretty confident that the rally will return with a vengence. I think even if the data meets expectations, the very fact that it proves that the recession is over will probably return the market to rally mode.

Oct 28 11:46 AM

[enigmaman:]

Every day we get conflicting reports that are slowly eating away at the green shoots scenario, it appears there is a negative bias forming concerning the economy and the big money traders are starting to hedge their bets

So where from here, what are the game plans, lets talk about "what is the opportunity" how do we play this market going forward, is the change coming the kind of change we can believe in and profit from, lets talk strategies

Oct 28 02:33 PM

[thiazole:]

Lol, like what? There is noise in the data, but for the most part, ALL the data is improving over the longer trend.


On Oct 28 02:33 PM enigmaman wrote:

> Every day we get conflicting reports that are slowly eating away
> at the green shoots scenario,

Oct 28 04:05 PM

[Carl Spackler:]

I am curious. You mention that after 5 out of the last 6 days were down the market is extremely oversold, however, in the last six months there were countless times the market was up 5 out of 6 days. Was the market then overbought? History says no. Movements can continue like this (and like the during the move up) for quite sometime.

Right now, we just find ourselves on the support levels of 1035-1040. If we break this, we could see another 5 out of 6 days down. If we hold, we could see more up days. Markets tend to sit on critical levels and wait for news to move them one way or another. If we see bad news over the next few days, you will know that aa new trend has emerged.

What is very apparent is your bullish bias. If a few bad days means a market is oversold, what does 6 months and 60% up mean - overbought? How can we be both?

Oct 28 06:08 PM

[J Clinton Hill:]

<img class="authors_reply" src="static.seekingalpha.co...">

carl,

no where in this post do i quantify the market being down "5 out of 6" days and/or associate or imply the market being oversold for this reason.

it is true, after today's close, the market is down 5 out of 6 days.

i state that the market is "approaching the boundaries of extremely oversold territory" which implies that this is not yet its current condition. however, it is moving towards "extremely oversold" based upon percentage qualifiers and historically tested models.

nothing is infallible, but if it makes you feel good to give yourself a pat on the back by saying "gotcha" to an analyst/writer, then god bless you...

my determination for the market being overbought or oversold is derived from proprietary technical indicators. during the extended rally, i have labeled the market overbought on several occasions.

when the facts change, i change my opinion. my investment bias is dictated by the trend tables that i have organized and if the trend is down for a short, intermediate, or long term basis then my bias corresponds appropriately with the market trends. you only need refer to the trend tables to learn my investment bias.

if you have followed any of my writings on technical analysis over the years, i continually caution readers that markets can stay overbought or oversold for extended periods of time.

statistically, a disproprotionate percentage of stocks are displaying oversold signals vs. overbought based upon proprietary oscillators and price-volume indicators.

1020 to 1040 is key support zone. if we break 1020, the odds favor us testing 990 levels. until the market arrives at this testing area, it is premature to call things one way or another. the only thing i know is that the short-term trend is down. after i conduct my analysis this evening, my conclusions may be better or worse... let's wait and see...

what i am trying to do is alert people to a potential anomaly and the vulnerability of getting bitch slapped by following the herds of sheeple. i find it quite unusual and disturbing for the market to advance for such a long period of time and flash oversold signals so early after only 5 trailing days of relatively small negative performance.

in terms of overbought or oversold, indicators can be applied to different time frames. Short-term the market is oversold. Intermediate term, the market still remains overbought.

also, if you read my reports regularly, then you should know that i am fundamentally bearish on the market while acknowledging that the technicals have been bullish...

in terms of logic, i am not always linear in my thinking or interpretation of the environments in which i interact...

hopefully this clarifies my investment bias for you and other readers...

thanks...

Oct 28 06:58 PM

[apirri:]

Clinton, Can you please offer your opinion on UNG?
Is it gas prices or is UNG broken?

Oct 28 07:26 PM

[Carl Spackler:]

Fair enough Mr Hill! I just believe that the action of the last few days hardly constitutes a major oversold condition. We have only corrected 5% from the recent highs - not exactly a thorough correction by any measure. If we were talking at least 10%, I would say we finally are seeing a meaningful minor correction. After a 60% up move, 5% is nothing but a random movement. A major up move like we have had should eventually see a 15% to 20% correction at a minimum. I am just saying that to say we are oversold might be right if we are trading with a horizon of two weeks, but on a longer term basis than that we are not really oversold.


On Oct 28 06:58 PM J Clinton Hill wrote:

> <img class="authors_reply" src="static.seekingalpha.co...">
>
>
> carl,
>
> no where in this post do i quantify the market being down "5 out
> of 6" days and/or associate or imply the market being oversold for
> this reason.
>
> it is true, after today's close, the market is down 5 out of 6 days.
>
>
> i state that the market is "approaching the boundaries of extremely
> oversold territory" which implies that this is not yet its current
> condition. however, it is moving towards "extremely oversold" based
> upon percentage qualifiers and historically tested models.
>
> nothing is infallible, but if it makes you feel good to give yourself
> a pat on the back by saying "gotcha" to an analyst/writer, then god
> bless you...
>
> my determination for the market being overbought or oversold is derived
> from proprietary technical indicators. during the extended rally,
> i have labeled the market overbought on several occasions.
>
> when the facts change, i change my opinion. my investment bias is
> dictated by the trend tables that i have organized and if the trend
> is down for a short, intermediate, or long term basis then my bias
> corresponds appropriately with the market trends. you only need refer
> to the trend tables to learn my investment bias.
>
> if you have followed any of my writings on technical analysis over
> the years, i continually caution readers that markets can stay overbought
> or oversold for extended periods of time.
>
> statistically, a disproprotionate percentage of stocks are displaying
> oversold signals vs. overbought based upon proprietary oscillators
> and price-volume indicators.
>
> 1020 to 1040 is key support zone. if we break 1020, the odds favor
> us testing 990 levels. until the market arrives at this testing area,
> it is premature to call things one way or another. the only thing
> i know is that the short-term trend is down. after i conduct my analysis
> this evening, my conclusions may be better or worse... let's wait
> and see...
>
> what i am trying to do is alert people to a potential anomaly and
> the vulnerability of getting bitch slapped by following the herds
> of sheeple. i find it quite unusual and disturbing for the market
> to advance for such a long period of time and flash oversold signals
> so early after only 5 trailing days of relatively small negative
> performance.
>
> in terms of overbought or oversold, indicators can be applied to
> different time frames. Short-term the market is oversold. Intermediate
> term, the market still remains overbought.
>
> also, if you read my reports regularly, then you should know that
> i am fundamentally bearish on the market while acknowledging that
> the technicals have been bullish...
>
> in terms of logic, i am not always linear in my thinking or interpretation
> of the environments in which i interact...
>
> hopefully this clarifies my investment bias for you and other readers...
>
>
> thanks...

Oct 28 09:15 PM

[untrusting ...:]

Sounds like a great buying opportunity for you. Are you going all in and maxing out your margin account also? Wouldn't want to you to miss any of those upside profits in the coming weeks, that you think are coming.


On Oct 28 08:25 AM Mistrofan wrote:

> Yes - and the bears will be squeezed by the end of the next week.
> This is a cyclical BULL market alright, and there are no signs of
> a serious correction in the next 2 years. Those who are looking to
> short the market here I am advising to be VERY quick in exiting the
> short.

Oct 28 11:02 PM