Seeking Alpha

George Simone's  Instablog

George Simone
Send Message
I'm a long-time Market Participant who has criss-crossed the Market for more years than I care to remember, and a few years ago I got hooked on studying and trading ETFs, especially the leveraged kind. Charts, good charts are an absolute necessity in this field, so the Linchpin of my ETF... More
My company:
ETF Advantage Report
My blog:
ETF Advantage Report
  • It Was All About The Fed, Quadruple Witching, Alibaba And The Scots

    So what else is new?

    Last week gave the market plenty of reasons to sway in all directions. Yet, Wall Street ended mostly flat as the market appears to be preparing for an eventual end to QE, which could be followed by a rate hike. The Fed is at an inflection point where non-traditional monetary policies will be replaced with more traditional once. Still, the major averages capped an upbeat week on the Fed's statement that short-term rates would remain near zero for a considerable time after the QE program ends in a few weeks' time. This suggests that rate-hikes will probably start by the middle of next year.

    The bullish mood in Wall Street was bolstered not only by the Fed's assurance of continued easy money policies, but also when investors snatched up the biggest ever Wall Street's public stock offering. That the Scottish voters rejected a referendum to break from the U.K. also added to the bullish tone in the market.

    Some market strategists note that U.S. economic data has been growing increasingly more positive. This could indicate smooth sailings for the markets in the months ahead. But then there comes October which for most of the time has some dark clouds overhanging the market. So let's check how the market sees things these days.

    Note that this weekly broker's index [IAI] has a pretty good record forecasting the way the S&P 500 and other major benchmarks will move in the weeks ahead. Although the gap of its Moving-Average configuration is narrowing precariously, [green line below the red line] so far it's still bullish. But note the difference in this configuration between the way it was last year and the way it is now. A sign of October clouds approaching over the market?

    Meanwhile the MACD momentum index and RSI strength indicator are both in their respective bullish territories and that bodes well for the market. So we'll see.

    (click to enlarge)

    The weekly charts of the Troika leave no doubt that this market remains solidly bullish. The two bull-components [RSP] and [SPXL] display strongly positive MA lines configurations [green lines below the red] and the [RSI] strength indicators are both in their respective bullish territories.

    The only fat fly in this bullish ointment are the MACD momentum indexes which are totally flat- lined. More signs of dark October clouds approaching the market?

    But check the weekly bear component of this Troika [SPXS] and note that this bear is still in hibernation in a deep hole at the bottom of a deep pit. So what could be more bullish than that?

    (click to enlarge)(click to enlarge)(click to enlarge)

    But check this bullish percent index [BPSPX] and note that even though there is not a bear in sight, the bulls still look a bit shaky. Maybe that steep nosedive by the end of August has something to do with it.

    What is keeping this index under pressure and thereby the market on alert, is the exceedingly bearish MA lines configuration [green line above the red.] That both the MACD momentum and RSI strength indicators are still in their respective bearish territories doesn't help the bullish psyche in Wall Street either. So, more warning signals.

    (click to enlarge)

    This weekly chart of the NASDAQ index [COMPQ] leaves no doubt whose sides that market is on. Its MA lines configuration [green line below the red] remains bullish and supportive of this rising index. The MACD momentum index and RSI strength indicator are still deep in their respective bullish territories, which augurs well for the cyclical sectors of the market, especially industrials, technology and financials.(click to enlarge)

    The weekly DOW chart shows that this market has no intentions giving up its romp to higher highs. The Dows' MA lines configuration [green line below the red] is strongly bullish in its support of this rising index. So are the MACD momentum index and RSI strength indicators, both of which remain solid in their respective bullish territories.

    But even here are signs of dark October clouds approaching the market. Note that the MACD momentum bars are fading, and that spells caution for the players in this game.

    (click to enlarge)

    The economic sensitive weekly transportation index [TRAN] shows that the U.S. economy is on a steadily expanding course. The MA lines configuration [green line below the red] is bullish in its support for this index. So are the MACD momentum and RSI strength indicators, both of which are deep in their respective bullish territories. But that the green MACD momentum bars appear to be unable to make it back on top of the demarcation line, is a sign that the economy is still struggling.

    (click to enlarge)

    With this MA lines configuration so exceedingly bullish [green line below the red] the insiders in this game [KNOW] appear to be playing this market to the upside. This index keeps consolidating while the MACD momentum index and RSI strength indicator remain in their respective bullish territories. But a question mark and caution signal are being flashed by the MACD momentum bars which appear to be stuck south of the demarcation line, and that is bearish.

    (click to enlarge)

    The commodity index [GTX] reflects the exact opposite of the general market's bullish scenario. This index keeps digging a hole deeper and deeper while its MA lines configuration [green line above the red] remains strongly bearish, and its MACD momentum index along with the RSI strength indicator appear to have given up the ghost. These gloomy conditions for the commodity market have exceedingly bearish implications for the economy, and therefore the markets generally. How all of this is going to play out, is anyone's guess.

    (click to enlarge)

    One glance at this yellow metal chart [GOLD] tells the story. It remains a disaster area without a chance of a turnaround.

    (click to enlarge)

    Oil tells a similar story. While this index [WTIC] keeps digging itself into a deeper hole, its MA lines configuration remains extremely bearish [large gap between the green line above the red] with its MACD momentum index along with the RSI strength indicator stuck deep in their respective bearish territories.

    What this implies is that the rallies in the markets as well as the advancement in the economy continue to be based mainly on the easy money flow by the Fed.

    This begs the question, what happens when this flow stops?

    (click to enlarge)

    It appears that all this market cares about are whispers from the Fed. Nothing else seems to matter, not the economy nor the international turmoil out there. Since the Fed's comments can be interpreted any-which way, expect increased volatility triggered by these different interpretations which could also determine the direction of the market.

    Yes, there is a downdraft brewing, but that could be a great buying opportunity. While for now the sidelines look good, here are some favoured ETFs in case the market comes your way.

    Leveraged Bull ETFs:

    Technology 2x (NYSEARCA:ROM), Industrials 2x (NYSEARCA:UXI), Health Care 2x (NYSEARCA:RXL), EAFE 2x (NYSEARCA:EFO), Consumer Services 2x (NYSEARCA:UCC), Semis 3x (NYSEARCA:SOXL), Technology 3x (NYSEARCA:TECL), Biotech 2x (NASDAQ:BIB), Small Caps 2x (NYSEARCA:SAA), S&P 500, 3x (NYSEARCA:UPRO), Health Care 3x (NYSEARCA:CURE), India 3x (NYSEARCA:INDL), S&P 500, 2x (NYSEARCA:SSO) DOW 30, 2x (NYSEARCA:DDM), Financials 2x (NYSEARCA:UYG), Financials 3x (NYSEARCA:FAS), Small Caps 3x (NYSEARCA:TNA), Regional Banking 2x (NYSEARCA:KRU).

    Non-Leveraged Long ETFs:

    Transports (NYSEARCA:IYT), Semis (NASDAQ:SOXX), Biotech (NYSEARCA:BBH), Large Caps (NYSEARCA:FBGX) Semis (NYSEARCA:XSD), Health Care (NYSEARCA:RYH), Technology (NYSEARCA:RYT), Technology (NYSEARCA:IYW), Semis (NYSEARCA:SMH), NASDAQ (NASDAQ:QQQ), Mid-Caps (NYSEARCA:JKG), India (NYSEARCA:INP) Industrials (NYSEARCA:EXI), Small Caps (NYSEARCA:IJT), Pharma (NYSEARCA:PJP), Financials (NYSEARCA:IYF).

    Leveraged Bear ETFs:

    Technology 2x (NYSEARCA:REW), Semis 3x (NYSEARCA:SOXS), Financials 3x (NYSEARCA:FAZ), Russell 2000, 2x (NYSEARCA:TWM), Biotech 2x (NASDAQ:BIS), Russell 2000, 3x (NYSEARCA:SRTY), Gold Miners 3x (NYSEARCA:DUST), Jr. Gold Miners 3x (NYSEARCA:JDST), DOW 30, 2x (NYSEARCA:DXD), Energy 3x (NYSEARCA:ERY), S&P 500,3x (NYSEARCA:SPXS), Technology 3x (NYSEARCA:TECS), Oil&Gas 2x (NYSEARCA:DUG).

    Non-Leveraged Short ETFs:

    Russell 2000 (NYSEARCA:RWM), Mid-Caps (NYSEARCA:MYY), Emerging Markets (NYSEARCA:EUM), DOW 30 (NYSEARCA:DOG), S&P 500 (NYSEARCA:SH), NASDAQ (NYSEARCA:PSQ), Active Bear (NYSEARCA:HDGE), Oil (NYSEARCA:SZO), Financials (NYSEARCA:SEF).

    GOOD LUCK!

    Sep 21 10:25 PM | Link | Comment!
  • Correction Inside The Bull-Run?

    After five straight weeks of gains, Wall Street ended lower by the end of last week's trade. Good economic news is once again bad news for the market. Solid U.S. retail data and rising bullish consumer sentiment added to concerns that the Fed could raise interest rates sooner than expected. That prospect caused benchmark U.S. bond yields to post their biggest weekly increase in over a year, and something like this can put the fear in the market real quick. But insiders' buying ticked up a notch, which helped to steady the market's wobbly behavior last week.

    As some savvy market strategists have it, U.S. stocks are in a correction mode even though the engulfing bull market remains intact. The reason for this is that as different sectors in the market correct and prices come down, it attracts more buying to come into the market because there are few attractive alternatives to take the market's place.

    Also, capital spending is finally emerging as an added incentive for new money to move into the market as companies are moving to replace aging infrastructure in order to boost productivity. While this has started a slight uptrend in interest rates, it is beginning to boost wage growth in the industrial sectors of the economy.

    Check this large-cap weekly chart [SPX] and note that there is no doubt that the bull-market remains intact. This index's Moving Average lines configuration [green line below the red line] remains as bullish as it has been since June of 2011. But note that the MACD momentum index has been totally flat since early August, a sign that the internals of this bull [stocks, sectors] have turned negative while the bull-run continues to higher highs.

    Also note that even though the RSI strength indicator has pulled back a bit, it still remains way up in its bullish territory. Put it all together, and it becomes clear that any pullback from here will be a buying opportunity.

    (click to enlarge)

    Check the weekly charts of the Troika and note that its two bull components [RSP] and [SPXL] both continue to sport bullish MA lines configurations [green lines below the red] meaning that all is well with this bull market. But with the MACD momentum bars inching into bearish territory south of the demarcation line, there are issues with the underlying stocks and sectors.

    While this may have a negative impact on the market, check the weekly bear component of this Troika [SPXS] and note that there is not a bear in sight that could do real damage to this bull market. This bear's negative MA lines configuration [green line above the red] keeps burying itself deeper in a deep hole at the bottom of a deep pit. Its MACD momentum bars remain stuck in dead neutral on their demarcation line as they have been since early 2013. Meanwhile, the bear's RSI strength indicator has given up the ghost, all of which makes for a bullish environment for the stock market.

    Yes, the individual sectors and stocks of this bull market are gearing up to some sort of a correction, and that would be a godsend to those investors who missed the gravy train and entry-point to this rally.

    (click to enlarge)(click to enlarge)(click to enlarge)

    Check the weekly NASDAQ chart [COMPQ] and at first glance it becomes obvious that this index needs a rest and consolidates its gains. Although it shot up too high too fast, its MA lines configuration remains remarkably bullish [green line below the red.] Not only that, the MACD momentum index along with the RSI strength indicator remained well up in their respective bullish territories. The implication here is that technology, industrials and financials will be among the leaders during the next leg of this bull-run.

    (click to enlarge)

    This weekly [GTX] chart reflects a commodity market mired in deep trouble. Although its MA lines configuration is still bullish [green line below the red] it is fading quickly. The MACD momentum bars are deep in bearish territory south of the demarcation line, and so is the RSI strength indicator. It is hard to see what could turn this thing around, but strong commodities are needed for this bull market to maintain its staying power.

    (click to enlarge)

    Although this market-forecasting junk-bond canary [JNK] continues to sport a strongly bullish MA lines configuration [green line below the red] the MACD momentum index and RSI strength indicator remain deep in their respective bearish territories.

    This is another indication that while the major market remains bullish, the internal stocks and sectors have mainly turned bearish. That spells caution for investors until such time that these internals turn bullish also.

    (click to enlarge)

    This consumer discretionary index [XLY] displays a bullish weekly chart for investors. The MA lines configuration [green line below the red] is bullish, and so are the MACD momentum index and RSI strength indicator both of which are well ensconced in their respective bullish territories.

    The implication here is that the cyclical, economic sensitive sectors of the market are gathering strength.

    (click to enlarge)

    Even though the insider index [NFO] is a bit wobbly, for as long as the MA lines configuration of this index remains bullish [green line above the red] the insiders in this game will remain bullish on this market.

    (click to enlarge)

    No change here as the yellow metal index [GOLD] remains dead in the water.

    (click to enlarge)

    Even though the MA lines configuration for oil [WTIC] remains bullish [green line below the red] its MACD momentum index and RSI strength indicator continue to be stuck deep in their respective bearish territories. For as long as that is the case it will put the kibosh on any oil rally.

    (click to enlarge)

    Ever since the middle of 2009 low interest rates, increasing earnings and an easy-money Fed have created a pretty good environment for this bull market. But with interest rates on the rise again and the Fed throttling its easy-money spigot, trading the markets "ain't gonna" be as easy as it used to be.

    Here are some favored ETFs and ETF sectors in case the market comes your way:

    Technology, Industrials, Financials, Biotech and Health-Care.

    Leveraged Bull ETFs:

    India 3x (NYSEARCA:INDL), Semis 3x (NYSEARCA:SOXL), NASDAQ 3x (NASDAQ:TQQQ), Technology 3x (NYSEARCA:TECL), Healthcare 3x (NYSEARCA:CURE), China 3x (NYSEARCA:YINN), Technology 2x (NYSEARCA:ROM), NASDAQ 2x (NYSEARCA:QID), Biotech 2x (NASDAQ:BIB), S&P 500, 3x (UPROW), Alerian 2x (NYSEARCA:MLPL), Financials 3x (NYSEARCA:FAS), Mid-Caps 3x (NYSEARCA:UMDD), S&P 500, 3x (NYSEARCA:SPXL), SOW 30, 3x (NYSEARCA:UDOW).

    Non-Leveraged Long ETFs:

    Biotech (NYSEARCA:FBT), India (NASDAQ:INDY), Solar Energy (NYSEARCA:TAN), Biotech (NYSEARCA:BBH), Semis (NYSEARCA:SMH), Technology (NASDAQ:QTEC), Pharma (NYSEARCA:PJP), Health-Care (NYSEARCA:RYH).

    Leveraged Bear ETFs:

    Inverse Silver 3x (NASDAQ:DSLV), Oil 2x (NYSEARCA:SCO), Nat-Gas 2x (NYSEARCA:KOLD), Gold 2x (NYSEARCA:GLL), Russell 2000, (NYSEARCA:TWM), Oil&Gas 2x (NYSEARCA:DUG), DOW 30, 2x (NYSEARCA:DXD), Energy 3x (NYSEARCA:ERY), Small-Caps 3x (NYSEARCA:TZA), Financials 2x (NYSEARCA:SKF), S&P 500, 2x (NYSEARCA:SDS), Gold Miners 2x (NYSEARCA:DUST), Jr. Gold Miners 3x (JDSST).

    Non-Leveraged Short ETFs:

    Russell 2000 (NYSEARCA:RWM), EAFE (NYSEARCA:EFZ), DOW 30 (NYSEARCA:DOG), Mid-Caps (NYSEARCA:MYY), Emerging Markets (NYSEARCA:EUM), S&P 500 (NYSEARCA:SH), Active Bear (NYSEARCA:HDGE), NASDAQ (NASDAQ:QQQ).

    GOOD LUCK!

    Sep 14 4:12 PM | Link | Comment!
  • Two Visions Of The Market.

    Although this was a lousy jobs report last Friday, it was covered by strong economic data showing that the North-American economic recovery is not only firmly in place, but poised to pick up bullish momentum as well. From jobs to manufacturing to retail-sales evidence is mounting that economic growth has picked up substantially during the last couple of months.

    So chances are that last Friday's weak jobs numbers were a one-time blip to the downside, soon to be reversed the other way. But that has some market strategists concerned that this could cause the Fed to raise rates quicker than anticipated, which could put a kibosh on this rally. But for now, when it comes to jobs it's still a goldilocks scenario. Neither too hot which could trigger a rate-hike, nor too cold to initiate an economic slowdown.

    So nothing has changed as the market enters September with higher highs and higher lows while remaining solidly geared to the upside.

    Note on this large-cap chart [SPX] that the important Moving Average configuration has turned bullish again [green line below the red line.] This means that during the consolidation period in the latter part of August the market was not forming a ceiling, but a new floor from which to advance further.

    But the dark cloud overhanging this market is the non-participation of the small-caps Russell 2000 index. Ever since the beginning of time [March 2009] this rally has been fed by the QEs of an easy Fed. So for this rally to finally become genuine, it needs to be led by the small-caps which react to the guts of the economy. But maybe, just maybe small-caps are coming back to life again. (click to enlarge)

    Although it is still too early to tell, it appears that the MA lines configuration of the small-caps [RUT] are showing signs of turning bullish again [green line sliding below the red.] If that's the case, then a genuine economy-fed rally could kick into gear.

    (click to enlarge)

    The daily XLP: XLY ration chart keeps sporting a bearish MA lines configuration [green line above the red.] This being contrarian indicator it means that for as long as this configuration stays bearish, the market stays bullish.

    But now check the same ratio on the weekly chart and note that here this configuration is bullish [green line below the red.] This means that the bears out in the distance are sharpening their claws, getting ready to tear this market down. This is a development that needs to be paid attention to.

    (click to enlarge)

    (click to enlarge)

    The next chart shows that the bullish percent index is struggling. Its MA lines configuration is extremely bearish [green line above the red] which implies that this bullish sentiment in the market isn't all that strong as it appears to be.

    (click to enlarge)

    This market-forecasting junk-bond canary [JNK] sure showed some negative volatility recently. But now that its MA lines configuration has turned bullish again [green line below the red] this little bird is back forecasting more of rising markets ahead.

    (click to enlarge)

    While consolidating, this inverse VIX bull [SVXY] is displaying a bearish MA lines configuration [green line above the red.] This implies that the market is forming a ceiling that may be tough to break trough to higher highs.

    (click to enlarge)

    Check the TROIKA and note that the two bull components [RSP] and [SPXL] are displaying renewed positive MA lines configurations [green line below the red.] Also, that the MACD momentum bars and RSI strength indicator appear to be solid in their respective bullish territories is another plus for the market.

    After trying hard to gain the upper hand in the market last August, the [SPXS] bear component of the Troika has given up trying and is back in a deep hole at the bottom of a deep pit. Ditto for the MACD momentum index and RSI strength indicator, both of which are stuck in their respective bearish territories. So as far as the Troika is concerned, it continues to be free sailing to higher highs for the bulls.

    (click to enlarge)

    (click to enlarge)

    (click to enlarge)

    Nothing new with the NASDAQ 100 index [NDX.] It was bullish [green MA line below the red] it is bullish and will remain bullish - amen.

    (click to enlarge)

    The commodity market as a whole remains a puzzle. The [CRB] commodity supply index remains extremely bearish. Its MA lines configuration is exceedingly negative with the green line way above the red line while the MACD momentum index and RSI strength indicator remain stuck in their respective bearish territories

    Then how come the commodity demand index [BDI] is so bullish? Its MA lines configuration is strongly bullish with the green line way below the red line, while both its MACD momentum index and RSI strength indicator are way up there in their respective bullish territories.

    But there are two caution signs for the commodity market. The MACD momentum bars have pulled back the neutral demarcation line, and the RSI strength indicator has blown a huge bubble that is about to pop.

    All in all, it appears that general commodity demand is feeding off huge stockpiles of stuff.

    (click to enlarge)

    (click to enlarge)

    Both the yellow metal [GOLD] and oil [WTIC] remain basket cases with their respective MA lines configurations extremely bearish as the green lines are way above the red lines. Meanwhile, their MACD momentum indexes and RSI strength indicators are deep in their respective bearish territories. It's anyone's guess when with these kind of bearish chart configurations gold and oil can rally again.

    (click to enlarge)

    (click to enlarge)

    Yes, there are concerns about the geopolitical fiascoes out there, but until the market begins to ratchet down with conviction and sustainability, any pullback continues to be a buying opportunity.

    Favored ETF sectors;

    Financials, Health Care, Technology, Biotech, Semis.

    Favored ETFs;

    Leveraged Bulls:

    Health care 3x (NYSEARCA:CURE), Small Caps 3x (NYSEARCA:TNA), Biotech 2x (NASDAQ:BIB), NASDAQ 100, 3x (NASDAQ:TQQQ), Semis 3x (NYSEARCA:SOXL), S&P 500, 3x (NYSEARCA:UPRO), Mid-Caps 3x (NYSEARCA:UMDD), Developed Markets 3x (NYSEARCA:DZK), Russell 2000, 2x (NYSEARCA:UWM), Technology 3x (NYSEARCA:TECL), DOW 30, 3x (NYSEARCA:UDOW), Materials 2x (NYSEARCA:UYM),

    Non-Leveraged Long ETFs:

    Transports (NYSEARCA:XTN), Discretionary (NYSEARCA:XLY), China (NYSEARCA:MCHI), (NYSEARCA:GXC) and (NYSEARCA:FXI), Biotech (NYSEARCA:PBE) Heath-Care (NASDAQ:PSCH), Pharma (NYSEARCA:PJP), Small-Caps (NYSEARCA:RZV), Regional Banking (NYSEARCA:KRE). Industrials (NYSEARCA:FXR);

    Leveraged Bears:

    Gold-Miners 2x (NYSEARCA:DUST), Oil 2x (NYSEARCA:DTO), Nat-Gas 3x (NYSEARCA:DGAZ), Oil&Gas 2x (NYSEARCA:DUG), DOW 30, 2x (NYSEARCA:DXD), Materials 2x (NYSEARCA:SMN), Emerging Markets 3x (NYSEARCA:EDZ), Financials 2x (NYSEARCA:SKF), Energy 3x (NYSEARCA:ERY), NASDAQ 2x (NYSEARCA:QID), Russell 2000, 2x (NYSEARCA:TWM), Small-Caps 3x (NYSEARCA:TZA), S&P 500, 3x (NYSEARCA:SPXS), Semis 3x (NYSEARCA:SOXS), Biotech 2x (NASDAQ:BIS);

    Non-Leveraged Short ETFs:

    Gold (NYSEARCA:DGZ), Emerging Markets (NYSEARCA:EUM), DOW 30 (NYSEARCA:DOG), S&P 500 (NYSEARCA:SH), NASDAQ (NYSEARCA:PSQ), Russell 2000 (NYSEARCA:RWM), Active Bear (NYSEARCA:HDGE), Oil (NYSEARCA:DNO);

    GOOD LUCK!

    Sep 07 10:01 PM | Link | Comment!
Full index of posts »
Latest Followers

StockTalks

More »
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.