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George Simone
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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
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  • Bulls Have No Conviction And Bears Are Comatose.

    But lucky for the bull, he keeps finding overhead air-pockets to float into and because there is no significant downdraft to speak of the bull is in a position to meander sideways to higher highs. This is why Wall Street is experiencing some of the flattest trading sessions in years, and it remains to be seen if June's strong jobs report will finally put some moxie into the upside momentum which has gone totally flat since early June.

    But check the Troika and note something interesting. In early May the Moving Average configurations for the two bull components [RSP] and [SPXL] were at an inflection point and ready to push the market in either direction. At that time, the green and red moving average lines were totally neutral, but by the middle of May these lines had turned decidedly bullish with the red lines rising above the green lines. This caused the MACD momentum bars to get in on the act by rising strongly above their respective demarcation lines in early June, which in turn pushed the RSP and SPXL into nosebleed territories.

    This is why a pullback by the market at this stage is not only probable, but also desirable. It would give the market a chance to find some traction for a genuine and solid rally, which could have some decent and participating volume behind it and anchor momentum to the upside.

    Meanwhile, the bear-component [SPXS] of this Troika continues to hide in a deep hole at the bottom of a deep pit. The MACD upside momentum for this bear is zilch and so is its RSI strength indicator. The MA lines configuration [green line above the red] continues to be exceedingly bearish for the bears and so present no danger for the bulls in this game. This means that the only way for this market to come down, is for the bull to stumble.

    (click to enlarge)

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    (click to enlarge)

    Now, some market strategists believe that the upcoming second-quarter earnings season is poised to deliver some substantial upside surprises in which most S&P 500 companies would return to double digit growth for the first time in nearly three years. This could give the market the incentive to keep climbing further into record territory, and for the economy to create more jobs. But that could spur the Fed to tighten monetary policies and raise rates sooner than anticipated, and the market surely wouldn't like that.

    But one big plus for the market are the small-caps [RUT] which are poised to take over the leadership in this game. This index not only continues to be well supported by its exceedingly bullish MA lines configuration [green line below the red] but finally and for the first time this year the weekly MACD momentum bars managed to climb above the demarcation line. That is bullish for the small caps and also for the RSI strength indicator which is back solidly in bullish territory.

    (click to enlarge)

    The weekly NASDAQ index [COMPQ] also reflects solid support for the overall bull market. Sure, this index shot up too far and too fast and that is putting its RSI strength indicator into nosebleed territory. Obviously, a pullback here would be positive for the market.

    Meanwhile, this index remains well supported by its bullish MA lines configuration [green line below the red] and its MACD momentum bars which for the first time this year managed to climb above the demarcation line into bullish territory.

    (click to enlarge)

    This commodity producers' index [CRB] is slipping while its RSI strength indicator and MACD momentum bars have both entered bearish territories. But for as long as its MA lines configuration [green line below the red] remains bullish, commodities generally could enter a consolidation phase, and not decline further to any extent.

    Yet, this index's twin the [BDI] demand index is still bearish and reflects the lack of demand for commodities especially the metals, even though the metal indexes are spiking as reflected by the copper index [CU.] Go figure.

    The bearish MA lines configuration [green line above the red] for the BDI, as well as its bearish RSI and MACD indicators suggest that the commodity markets will stay flat at best.

    (click to enlarge)

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    (click to enlarge)

    The yellow metal [GOLD] appears to be catching bottom now that its weekly MA lines configuration [green line below the red] appears finally to turn bullish again. But the MACD momentum bars will have to stay above the demarcation line before gold can kick into a sustainable rally. We'll see.

    (click to enlarge)

    For the first time this year oil [WTIC] is sporting a bullish weekly MA lines configuration [green line below the red.] This means that oil is forming a base around the 105 level from which to mosey sideways for a while, or get a renewed rally going. In any event, there appears to be no downside risk for oil. With its MACD momentum bars steady above the demarcation line, the momentum for oil continues to be to the upside.

    (click to enlarge)

    Over the last four years this rally was fuelled by the fumes of an empty gas tank, aka the Fed's QE programs. Now that the Fed is tapering the money flow of these programs, the market is demanding the real stuff like steady economic growth.

    This transition will probably cause some selling squalls in the market along the way. But that would be buying opportunities, especially for the leveraged bull and non-leveraged long ETFs.

    A proven way to find these things is to check back on the ETFs featured in these blogs that go with the flow of the market, and show steady price appreciation over time. The following ETFs fall into that category.

    Leveraged Bull ETFs:

    India 2x (NYSEARCA:INDL), Semis 3x (NYSEARCA:SOXL), Nat Gas 2x (NYSEARCA:GASL), Energy 3x (NYSEARCA:ERX), Jr. Gold Miners 3x (NYSEARCA:JNUG), NASDAQ 3X (NASDAQ:TQQQ), Health-Care 3x (NYSEARCA:CURE), Technology 3x (NYSEARCA:TECL), Biotech 2x (NASDAQ:BIB), S&P 500, 3x (NYSEARCA:UPRO), Technology 2x (NYSEARCA:ROM), S&P 500, 3x (NYSEARCA:SPXL), Oil/Gas 2x (NYSEARCA:DIG), Mid-Caps 3x (NYSEARCA:UMDD), Real Estate 3x (NYSEARCA:DRN), NASDAQ 3x (NYSEARCA:QLD), Healthcare 2x (NYSEARCA:RXL), China 3x (NYSEARCA:YINN), Materials 2x (NYSEARCA:UYM), Emerging Markets 3x (NYSEARCA:EDC), Financials 3x (NYSEARCA:FAS), S&P 500 2x (NYSEARCA:SSO), Russell 2000, 3x (NYSEARCA:URTY), DOW 30, 3x (NYSEARCA:UDOW), Small-Caps 3x (NYSEARCA:TNA), Mid-Caps 2x (NYSEARCA:MVV), Financials 2x (NYSEARCA:UYG).

    Non-Leveraged Long ETFs:

    Consumer Services (NYSEARCA:IYC), Oil Services (NYSEARCA:IEZ), Consumer Goods (NYSEARCA:IYK), Technology (NYSEARCA:IYW), Pharma (NYSEARCA:IHE), Industrials (NYSEARCA:IYJ), Financials (NYSEARCA:IYF), Small-Caps (NYSEARCA:JKL), S&P 500 (NYSEARCA:IVE), S&P 100 (NYSEARCA:OEF), Russell 2000 (NYSEARCA:IWM), Semis(NASDAQ:SOXX), EAFE (NYSEARCA:EEV), Large-Caps (NYSEARCA:JKE), Industrials (NYSE:EXL), Discretionary (NYSEARCA:RXI), Mid-Caps (NYSEARCA:EZM), Small-Caps (NYSEARCA:VIOO), Russell 2000 (NASDAQ:VTWO), Mega-Cap (NYSEARCA:MGK), Van-Value (NYSEARCA:VTV).

    Leveraged Bear ETFs:

    Nat-Gas 3x (NYSEARCA:DGAZ), DOW 30, 2x (NYSEARCA:DXD), Emerging Markets 3x (NYSEARCA:EDZ), Emerging Markets 2x (EEV), Financials 3x (NYSEARCA:FAZ), NASDAQ 2x (NYSEARCA:QID), Oil 2x (NYSEARCA:SCO), DOW 30, 3x (NYSEARCA:SDOW), S&P 500, 2x (NYSEARCA:SDS). S&P 500, 3x (SPX), S&P 500, 3X (NYSEARCA:SPXU), Energy 2x (NYSEARCA:DUG), NASDAQ 3x (NASDAQ:SQQQ), Real Estate 2x (NYSEARCA:SRS), Russell 2000 3x (NYSEARCA:TZA), Financials 3x (FAZ), China 2x (NYSEARCA:FXP), Gold 2x (NYSEARCA:DZZ), Gold Miners 3x (NYSEARCA:DUST), Russell 2000, 3x (NYSEARCA:SRTY).

    Non-Leveraged Short ETFs:

    Gold (NYSEARCA:DGZ), Small-Caps (NYSEARCA:SBB), Emerging Markets (NYSEARCA:EUM), DOW 30 (NYSEARCA:DOG), EAFE (NYSEARCA:EFZ), Financials (NYSEARCA:SEF), Russell 2000 (NYSEARCA:RWM), U.S. Oil (NYSEARCA:DNO), Equity-Bear (NYSEARCA:HDGE), Real Estate (NYSEARCA:REK), EAFE (EFZ), S&P 500 (NYSEARCA:SH), Mid Caps (NYSEARCA:MYY).

    GOOD LUCK!

    Jul 07 2:50 AM | Link | 1 Comment
  • Watch It!

    Wall street is doing a double-take as last week's disappointing economic data has investors concerned that corporate profits won't live up to their expectations, especially since corporate guidance isn't much to crow about either. So it is no surprise that the recent large-cap selloff squalls reflect a change in investors' behavior.

    Up to now, large-cap companies' stocks have been star performers during this year's market rally. But a recent weak GDP report for the U.S. along with sluggish consumer data have put the long-expected second quarter economic rebound into question, and is hitting large-caps especially hard. All in all, it appears that the economy is still struggling to find traction after last winter's hard conditions, and that is making the market vulnerable after reaching recent record highs.

    Yet, market participants have repeatedly shrugged off weak economic numbers under the assumption that the economy would start picking up speed in the spring. Well, spring has come and gone and the economy is still down in the dumps, although recovering slowly.

    That has some savvy market strategists wondering about the longevity of this rally, and so are advising their clients to take a "watch it" stance in the market.

    From a technical standpoint, check this weekly DOW chart and note that this index is sporting a double-top which rivals the peaks of Kilimanjaro. Keep in mind that double-tops in this game are most of the time a precursor to a steep market selloff. Also note the negative MACD momentum bars which indicate that so far since May this rally was fuelled by nothing more but the fumes of an empty gas tank.

    Meanwhile, the NASDAQ safe-haven for small and mid-cap stocks [NDX] has reached nose-bleed territory and could do with a bit of a consolidating pullback. But this index remains exceedingly bullish and continues to be well supported by its positive Moving Average configuration [green line below the red line] as well as its RSI strength indicator and MACD momentum bars, both of which are in their respective bullish territories. This reflects a renewed risk appetite by investors, who are heading back to the more volatile small and medium type sectors.

    (click to enlarge)

    So what is the most likely scenario for the market in the weeks and months ahead? First the impending selling squalls, triggered by the high stock evaluations and lack of upside momentum by the large-cap sectors. This will leave the space free for the small-cap and mid-cap sectors to kick into gear and recapture the upside-leader ship in the market.

    Check this Troika and note that while the large-cap sectors [SPX] and [SPXL] remain well supported by their respective bullish MA lines configurations [green lines below the red] as well as their respective RSI strength indicators which are well in bullish territories. But for as long as the respective MACD momentum bars keep south of the demarcation lines; this large-cap rally has no legs.

    But with the Troika's bear component [SPXS] showing a completely negative MA lines configuration [green line above the red] this bear doesn't have what it takes to bring the bull to its knees, and so the market will continue to mosey sideways in see-saw fashion, until a sharp but short-lived selloff will clears the air.

    (click to enlarge)

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    Meanwhile, the small-cap sector [SML] continues to be well supported by its bullish MA lines configuration [green line below the red] and the RSI strength indicator which is solid in bullish territory. Also, for the first time this year, the MACD momentum bars are making an effort to rise above the demarcation line again. This would give the small-caps the moxie needed to resume the leadership in this market.

    (click to enlarge)

    This commodity index [GTX] is struggling to keep from keeling over. It's a tough go, but for as long as its MA lines configuration remains bullish [green line below the red] commodities generally still have a chance to rally again, after a brief consolidation period.

    (click to enlarge)

    Although [GOLD] had itself a pretty good rally, it is now topping out. While its MA lines configuration appears beginning to turn bullish [green line sliding below the red] its MACD momentum bars remain neutral, and so the rally attempt is fading.

    (click to enlarge)

    After consolidating for a week or so, oil [WTIC] appears to have lost its upside momentum as its MACD momentum bars have slipped south of the demarcation line. But with its RSI strength indicator still in bullish territory, oil could continue to consolidate around the 105 level. That the MA lines configuration for oil remains bullish [green line below the red] indicates that the bias for oil continues to be to the upside.

    (click to enlarge)

    Wall Street's fear index [VIX] has hit rock bottom, an indication that there is very little of it if any, fear that is. Also, the MA lines configuration [green line on top of red] is adding downside pressure on the VIX and on any investors' fear that may still be in the market. But here it is well to keep in mind that not only does "irrational exuberance" signal a market's top, so does "irrational complacency." In both instances many investors assume that there is no downside to the upside.

    Note that the MACD momentum bars are totally negative south of the demarcation line, so there is no weight to keep the VIX down. This means that the slightest pretext opposite to the VIX could catapult this fear-index to the upside and trigger a steep selloff.

    (click to enlarge)

    Putting it all together, it is still best to let small gains slip away and continue waiting on the sidelines for more advantageous setups to come along.

    Meanwhile, here are some favored sectors and ETFs to keep track of, while waiting.

    Small-Caps, Mid-Caps, Technology, Telecoms and Oil-Services.

    Leveraged Bull ETFs:

    Nat-Gas 2x (NYSEARCA:GASL), Semis 3x (NYSEARCA:SOXL), India 2x (NYSEARCA:INDL), Energy 3x (NYSEARCA:ERX), Jr. Gold-Miners 3x (NYSEARCA:JNUG), NASDAQ 100, 3x (NASDAQ:TQQQ), Health-Care 3x (NYSEARCA:CURE), Technology 3x (NYSEARCA:TECL), Biotech 2x (NASDAQ:BIB), S&P 500, 3x (NYSEARCA:SPXL), Mid-Caps 3x (NYSEARCA:MIDU), Small-Caps 3x (NYSEARCA:TNA), Alerian 2x (NYSEARCA:MLPL)

    Materials 2x (NYSEARCA:UYM), DOW 30, 3x (NYSEARCA:UDOW).

    Non-Leveraged Long ETFs:

    India (NYSEARCA:INXX), Solar Energy (NYSEARCA:TAN), Pharma (NYSEARCA:XPH), Nat-Gas (NYSEARCA:FCG), Semis (NYSEARCA:XSD), Biotech (FBE), Oil/Gas Exp. (NYSEARCA:XOP), Biotech (FBE), Transports (NYSEARCA:XTN), Technology (NASDAQ:QTEC), Discretionary (NYSEARCA:VCR), Canada (NYSEARCA:EWC), Small Caps (NYSEARCA:VB).

    Leveraged Bear ETFs:

    DOW 30, 2x (NYSEARCA:DXD), Financials 2x (NYSEARCA:SKF), Gold 3x (NASDAQ:DGLD), Russell 2000, 2x (NYSEARCA:TWM), Emerging Markets 2x (NYSEARCA:EEV), Oil 2x (NYSEARCA:SCO), S&P 500, 2x (NYSEARCA:SDS), Financials 3x (TUV), NASDAQ 100, 2x (NYSEARCA:QID), Small Caps 3x (NYSEARCA:TZA), Nat-Gas 2x (NYSEARCA:KOLD), Semis 3x (NYSEARCA:SOXS), Gold Miners 2x (NYSEARCA:DUST), Jr. Gold Miners 3x (TDST),

    Non-Leveraged Short ETFs:

    DOW 30 (NYSEARCA:DOG), Russell 2000 (NYSEARCA:RWM), EAFE (NYSEARCA:EFZ), Emerging Markets (NYSEARCA:EUM), S&P 500 (NYSEARCA:SH), Active Bear (NYSEARCA:HDGE), NASDAQ 100 (NYSEARCA:PSQ), Mid-Caps (NYSEARCA:MYY), Oil/Gas (NYSEARCA:DDG).

    GOOD LUCK!

    Jun 30 10:01 AM | Link | Comment!
  • Return Of The Small-Caps.

    Although the market is still grinding higher on nothing more but the fumes of its empty momentum gas tank, the steadily improving economic outlook has market participants feeling at ease buying the market any time it pulls back a bit. A strong breakout by the small-cap sectors could mean that investors' risk appetite is returning, and that could put some upside momentum back into this rally.

    Also, neither troubles in Iraq and Ukraine nor a whiff of inflationary pressures seem to be able to derail this bull-walk, even though it has slowed to a crawl. But now that the economic sensitive small caps are showing some moxie again, this rally is bound to pick up some steam as well.

    Check this weekly small-cap chart [IJR] and note that after a downdraft between March and May, this index is again in a rally mode while being well supported by a continued and strongly bullish Moving Average configuration [green line below the red line.]

    While the RSI strength indicator is also well within its bullish territory, the MACD momentum bars still remain at dead neutral, after being exceedingly bearish below the demarcation line ever since last January. Only when these bars rise above the D-line, will the market be able to rally strongly.

    (click to enlarge)

    Everything about this daily small-cap chart [RUT] is bullish, especially with the MA lines configuration positive again [green line below the red.]

    These two indexes show that the small-caps are regaining the leadership in this game, and that bodes well for the market in the weeks and month ahead.

    (click to enlarge)

    When you check the Troika charts you'll note that the two bull components [RSP] and [SPXL] had themselves a pretty good rally ever since early 2013, while being strongly supported by their respective bullish MA lines configurations [green lines below the red.]

    But what fuelled this rally was not resurgence in economic strength, but monetary manipulations by the Fed. This is why the MACD momentum bars of these two indexes were mostly negative since last June. But now that these bars are rising above their respective demarcation lines again, we can expect renewed strength and upside momentum for this rally. But this time the rally will be supported by an increasing strength in the economy and less by the Fed's manipulations, which are in the process of being phased out anyway.

    Meanwhile, it's more of the same with the bear component of the Troika. This bear remains stuck in a deep hole at the bottom of a deep pit, held down by the strongly negative for the bear MA lines configuration [green line above the red.] MACD momentum and RSI strength are nowhere to be found and for as long as that is the case, the bear is unable to inflict any real harm to the bull for weeks, and maybe even months ahead.

    (click to enlarge)(click to enlarge)

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    Last week, the commodity index [CRB] closed at its highest level so far this year and appears to be gaining upside momentum. The reason is energy prices spiking higher on increased tension in Iraq and Ukraine. For the same reason gold and silver rose sharply as well. At the same time the U.S. consumer price index jumped to its highest level in a year, while the Fed announced that they will keep rates lower longer than the market had anticipated, all of which sparked a pretty good rally in the commodity indexes. But unless the MACD momentum bars start sliding into bullish territory above the D-line, this rally won't last.

    (click to enlarge)

    O.K., so where is the physical demand for all that commodity stuff? According to this CRB's twin the [BDI] commodity demand index, nobody needs it. Its MA lines configuration [green line above the red] is strongly negative. The RSI strength indicator remains stuck inside its bearish territory and so are the MACD momentum bars. Sure, global economies are expanding, but not at the rate needed to make a decent dent on the commodity stockpiles.

    (click to enlarge)

    Last week, gold had its best performance in a month as traders rushed to cover their piles of short positions in the yellow metal. Expecting the Fed to announce the beginning of rate-hikes which would pressure the price of gold, the Fed went the other way and is keeping interest rates lower for longer, and up shot the price of gold. But does this rally have legs?

    At this point it's hard to tell because gold is at an inflection point. Note that the green and red moving-average lines for gold have totally merged, and it all depends how these two lines will "unmerge" that will point to the direction of the gold price. If the green line rises back above the red line, gold will stay down or sink even lower. But if the green line slides below the red it will signal support for gold and the rally will continue, especially if the MACD momentum bars rise above the demarcation line.

    (click to enlarge)

    With its MA lines configuration turning bullish [green line below the red] the price of oil [WTIC] remains biased to the upside.

    (click to enlarge)

    For the first time since last January this NASDAQ 100 index [NDX] has its MACD momentum bars rising above the demarcation line, and that is bullish. Combine that with the strong support of its MA lines configuration [bullish with the green line below the red] and its RSI strength indicator solid in its bullish territory, all of which puts the NASDAQ in pretty good shape to keep rallying from here.

    (click to enlarge)

    This market-forecasting junk-bond canary [JNK] is suffering from a split personality. While this rising index remains strongly supported by its bullish MACD lines configuration [green line below the red] its MACD momentum bars are sitting totally neutral on the demarcation line, and that is bearish. Also, if the bubble on top of the RSI Channel deflates slowly - no problem. But should this bubble keep blowing larger and burst, expect NASDAQ to take a steep nosedive, along with the rest of the market.

    (click to enlarge)

    As this index [KNOW] on the next chart indicates, the insiders in this game who supposedly know which way the wind blows marketwise, are sure in a bullish frame of mind. This rising index is well supported by a very positive MA lines configuration [green line underneath the red] and ditto by an equally strong RSI strength indicator. Also, for the first time since last January the MACD momentum bars for this index are back in bullish territory above the demarcation line. So, as these insiders have it, this market will keep on reaching for higher highs. We'll see.

    Put all of that stuff together and you're looking at a market that is certainly bullish, but still lags the momentum to match its bullishness, although this is slowly beginning to make its presence felt. Another week or two should tell the story.

    (click to enlarge)

    Meanwhile, keep track of these favored ETFs that show a steady price appreciation over time.

    Favored sectors:

    Small-Caps, Mid-Caps, Energy, Healthcare, Materials, Biotech, Transports, Financials.

    Favored ETFs, Leveraged Bulls:

    Small-Caps 2x (NYSEARCA:SAA), Healthcare 2x (NYSEARCA:RXL), Energy 3x (NYSEARCA:ERX), Semis 3x (NYSEARCA:SOXL), Russell 2x (NYSEARCA:UWM), Small-Caps 3x (NYSEARCA:TNA), Oil & Gas 2x (NYSEARCA:DIG), Materials 2x (NYSEARCA:UYM), Nat-Gas 3x (NYSEARCA:GASL), Mid-Caps 2x (NYSEARCA:MVV), S&P 500, 3x (NYSEARCA:SPXL), Financials 3x (NYSEARCA:FAS), DOW 30, 3x (NYSEARCA:UDOW), NASDAQ 2x (NYSEARCA:QLD).

    Non-Leveraged Long ETFs:

    India (NYSEARCA:SCIN), Solar-Energy (NYSEARCA:TAN), Nat. Gas (NYSEARCA:FCG), Oil/Gas Expl. (NYSEARCA:XOP), Energy Infrastructure (NYSEARCA:MLPX), Semis (NYSEARCA:XSD), India (NYSEARCA:INP), Pharma (NYSEARCA:XPH), Semis (NASDAQ:SOXX), Biotech (NYSEARCA:PBE), Transports (NYSEARCA:IYT), Mid-Caps (NYSEARCA:IWR), Small-Caps (NYSEARCA:DWAS), S&P 500 (NYSEARCA:IVE).

    Leveraged Bear ETFs:

    DOW 30, 3x (NYSEARCA:SDOW), Technology 3x (NYSEARCA:TECS), Gold 2x (NYSEARCA:GLL), Silver 3x (NASDAQ:DSLV), Oil 2x (NYSEARCA:SCO), Financials 3x (NYSEARCA:FAZ), Healthcare 2x (NYSEARCA:RXD), Semis 2x (NYSEARCA:SSG), S&P 500, 3x (NYSEARCA:SPXS), DOW 3O, 2x (NYSEARCA:DXD), S&P 500, 2x (NYSEARCA:SDS),

    Non-Leveraged Short ETFs:

    S&P 500 (NYSEARCA:SH), Equity Bear (NYSEARCA:HDGE), DOW 30 (NYSEARCA:DOG), NASDAQ (NYSEARCA:PSQ), Russell 2000 (NYSEARCA:RWM), Mid-Caps (NYSEARCA:MYY), Gold (NYSEARCA:DGZ), Emerging Markets (IUM).

    GOOD LUCK!

    Jun 23 7:14 PM | Link | Comment!
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