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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 Website... More
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  • This Bull Won't Quit. 0 comments
    Oct 28, 2013 2:14 PM

    Recently, a disappointing U.S. employment report showed that employers added fewer jobs, U.S. factory output declined for the first time since late 2009, Washington's policy blunders are slowing economic growth, consumers sentiment is getting to be more pessimistic and the prospect that Washington's debt ceiling fiasco will probably be repeated in a few months time would usually trigger a major selloff and even the beginning of a bear market - but not this time.

    Investors continue to see this bad news scenario as good news for the market, because it forces the Fed to keep its "easy-money" spigot wide open for well into 2014. This appears to be the main driver behind Wall Street's recent rallies which propelled the S&P 500 to an all-time high by last Friday's close.

    But because of the Fed's refusal to taper its easy money QE programs this continues to be a liquidity driven market, which is flying high on nothing more but the fumes of an empty gas tank.

    But, as some savvy market strategists have it, there has to be more to the bullish undercurrent and the extraordinary resiliency of the market than just an "easy-money" Fed.

    One of the several reasons that the momentum behind this bull-trend continues strong is because of broad market participation. Even so, records show that the world is profoundly underinvestment in U.S. equities, which implies that there is still plenty of cash waiting on the sidelines. This alone is a compelling reason for investing in the U.S. stock markets. Also, there are signs that the global economy is improving, especially in China and the euro-zone.

    Just let's hope that Washington's politicians will set aside party partisanship and do what is right for the country. That would get confidence to build in the believe that global economies and markets actually could find traction in 2014.

    When you check the charts in this blog you'll notice that while most indexes have shot too high too fast and need to come back in order to find traction on which to advance further, their underlying moving average configurations remain remarkable bullish [green lines below the reds] and that bodes well for strong market performances in the months ahead.

    Check this Troika combo and note that its bull components [SPX] and [SPXL] charged ahead too far and too fast. They did the same thing last May, July and September, only to get whacked down again. This time is not different and so the market will come down in order to correct this euphoric nonsense.

    But with the MA lines configurations of both indexes bullish [green lines below the reds] without blowing bubbles as these configurations did last May and August, this bull has a chance to keep on going and going just liked the "battery rabbit."

    Note that the bear component of this Troika [SPX] remains extremely bearish while digging a deep hole at the bottom of a deep pit, as its MA lines configuration [green above the red] keeps pushing the bear into the ground.

    As usual, for as long as this Troika remains bullish, so will the market.

    (click to enlarge)

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    Note that this "market forecasting" junk bond canary [JNK] was bearish in September only to turn extremely bullish this October. While this index has soared too high too fast and therefore is due for a pullback, its MA lines configuration is strongly positive [green line below the red] and that is a bullish forecast for the market.

    (click to enlarge)

    For as long as the MA lines configuration of this [X: X] index remains bearish [green line above the red] the market remains bullish.

    (click to enlarge)

    This [XLY] index shows that the consumers' discretion is very much on the side of the bulls. But this index did also shoot too high too fast and therefore is due for a pullback. But for as long as its MA lines configuration remains bullish, so will the discretion of the consumer.

    (click to enlarge)

    This next index shows that the insiders in this game [NFO] remain extremely bullish and have pushed this index to an unsustainable height too fast and so has to pull back. They did the same last June and August when the insiders blew bubbles that consequently burst, and took the market down. But this time there is no bubble, so when this index comes down the market and insiders' sentiment will remain bullish.

    (click to enlarge)

    This NASDAQ index [NDX] has also surged too high too fast and will have to pull back in order to find traction. But for as long as its MA lines configuration remains bullish, so will this market. Since the techs are among the main drivers behind NASDAQ, it follows that technology will be one of the main leaders in this bull market in the months ahead.

    (click to enlarge)

    The big fat fly in this bullish scenario is the commodity [GTX] market. For as long as this index keeps pressured down by its bearish MA lines configuration [ green line above the red] the U.S. economy just isn't up to par where it needs to be in order to pull the market to higher highs.

    (click to enlarge)

    Although [GOLD] has rallied sharply in recent weeks, for as long as its MA lines configuration remains bearish [green line above the red] so is gold.

    (click to enlarge)

    Oil [WTIC] also shows a sharply bearish MA lines configuration, which implies that its price will have to come down further.

    (click to enlarge)

    Here are some favoured ETFs in case the market comes your way.

    Keep in mind that with the looming Washington's budget and debt ceiling debates coming up in a few months, market action could be choppy. So while the Bull/Long ETFs will carry the day in the end, for now it is still best to stay on the sidelines and watch the market unfold.

    Leveraged Bull ETFs:

    Russell 2000, 3x (NYSEARCA:URTY), Small Caps 3x (NYSEARCA:TNA), CHINA 3x (NYSEARCA:YINN), Nat Gas 3x (NYSEARCA:GASL),

    NASDAQ 3x (NASDAQ:TQQQ), Semis 3x (NYSEARCA:SOXL), Mid Caps 400, 3x (NYSEARCA:UMDD), Health Care 3x (NYSEARCA:CURE),

    Financials 3x (NYSEARCA:FAS) S&P 500, 3x (NYSEARCA:UPRO), S&P 500, 3x (NYSEARCA:SPXL), Russell 2000, 2x (NYSEARCA:UWM),

    NASDAQ 100, 2x (NYSEARCA:QLD), Energy 3x (NYSEARCA:ERX) Technology 3x (NYSEARCA:TECL), Mid Caps 2x (NYSEARCA:MVV),

    Financials 2x (NYSEARCA:UYG), S&P 500, 2x (NYSEARCA:SSO), Japan 2x (NYSEARCA:EZJ), DOW 30 (NYSEARCA:UDOW),

    Basic Materials 2x (NYSEARCA:IYM), Technology 2x (NYSEARCA:ROM), Oil & Gas 2x (NYSEARCA:DIG), Alerian 2x (NYSEARCA:MLPL),

    DOW 30, 2x (NYSEARCA:DDM), Emerging Markets 3x (NYSEARCA:EDC), Real Estate 3x (NYSEARCA:DRN), Nat Gas 2x (NYSEARCA:BOIL),

    Real Estate 2x (NYSEARCA:URE), Mortgage REIT 2x (NYSEARCA:MORL), Silver 2x (NYSEARCA:AGQ) Nat Gas 2x (NYSEARCA:UGAZ).

    Non Leveraged Long ETFs:

    Solar (NYSEARCA:TAN), China Tech (NYSEARCA:CQQQ), Clean Energy (NYSEARCA:PBW), Social (NASDAQ:SOCL), Internet (NASDAQ:PNQI),

    Greece (NYSEARCA:GREK), Gaming (BSK), Biotech (NYSEARCA:PBE), Energy (NASDAQ:PSCE), Health Care (NASDAQ:PSCH),

    Spin-Offs (NYSEARCA:CSD), Euro (NYSEARCA:DFE), Aerospace (NYSEARCA:ITA), Biotech (NYSEARCA:BBH), Auto (NASDAQ:CARZ),

    Industrials (NYSEARCA:PRN), Internet (NYSEARCA:FDN), Leisure (NYSEARCA:PEJ), Mid Caps (NYSEARCA:VOT), Vanguard (NYSEARCA:VXF),

    Russell 3000 (IWZ), S&P 500 (NYSEARCA:RPG), NASDAQ (NASDAQ:QQEW), Mid Caps (NYSEARCA:IWP), Aerospace (NYSEARCA:PPA),

    Info Tech (NASDAQ:PSCT), Exploration (NYSEARCA:XOP), Small Caps (NYSEARCA:RZV), Small Caps (NYSEARCA:RZG),

    Small Caps Techs (NYSEARCA:DWAS), Transports (NYSEARCA:XTN), Small Caps Earnings (NYSEARCA:EES),

    Europe Financials (NASDAQ:EUFN)

    Leveraged Bear ETFs:

    Gold 3x (NASDAQ:DGLD), Gold 2x (NYSEARCA:GLL), Nat Gas 2x (NYSEARCA:KOLD), Gold Miners 2x (NYSEARCA:DUST), Oil 2x (NYSEARCA:DTO),

    Nat Gas 3x (NYSEARCA:DGAZ), Oil 2x (NYSEARCA:SCO), Real Estate 2x (NYSEARCA:SRS), Euro 2x (NYSEARCA:EUO), China 2x (NYSEARCA:FXP), DOW 30, 2x (NYSEARCA:DXD), Emerging Markets 2x (NYSEARCA:EEV), Oil & Gas 2x (NYSEARCA:DUG), DOW 30, 3x (NYSEARCA:SDOW),

    S&P 500 2x (NYSEARCA:SDS), Financials 2x (NYSEARCA:SKF), Technology 3x (NYSEARCA:TECS), Russell 2000, 2x (NYSEARCA:TWM),

    S&P 500 3x (NYSEARCA:SPXS), Energy 3x (NYSEARCA:ERY), Financials 3x (NYSEARCA:FAZ), Semis 3x (NYSEARCA:SOXS),

    NASDAQ 3X (NASDAQ:SQQQ), Small Caps 3x (NYSEARCA:TZA)

    Non-leveraged Long ETFs:

    Gold (NYSEARCA:DGZ), DOW 30, (NYSEARCA:DOG), S&P 500 (NYSEARCA:SH), EAFE (NYSEARCA:EFZ), Mid Caps (NYSEARCA:MYY), Oil (NYSEARCA:DNO),

    NASDAQ (NYSEARCA:PSQ), Russell 2000 (NYSEARCA:RWM), EAFE (NYSEARCA:EFU) Emerging Markets (NYSEARCA:EUM),

    Equity Bear (NYSEARCA:HDGE), Alerian (NYSEARCA:MLPS), Mid Caps (MYY), Real Estate (NYSEARCA:REK), Financials (NYSEARCA:SEF)

    GOOD LUCK!

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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