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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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  • Is The Bear Dead Yet? 0 comments
    Mar 10, 2014 3:33 AM

    If not dead, then for sure comatose. Check this weekly bear chart [SPXS] and note that this bear has been on a downward slide ever since March 2009 and still is sinking deeper into a deep hole at the bottom of a deep pit. Searching for the MACD momentum bars [where are they?] and the RSI strength indicator [there is none] and one can see that over the past five years the bull had a free ride all the way to the top.

    (click to enlarge)

    If you check these weekly charts of the SPX and the ACIM indexes you'll note that the rallies on Wall Street as well as the global markets are running out of steam. This is why the MACD momentum bars of both indexes have slipped into their respective negative territories. This means that for the past five years these markets have been soaring on nothing more but the fumes of empty gas tanks, and now these fumes are evaporating also.

    This tremendous advance over the past five years came about mainly because of the Fed's wide open easy-money spigot. This in turn financed Wall Street's favorites like share-buybacks and M&A activity [fumes] but not the kind of stuff that fires up genuine economic expansion.

    But now the market is realizing that the Fed is indeed tapering down its easy money flow, even though the economy is not quite strong enough to pick up the slack. But a streak of good luck for Wall Street could be the Russia/Ukraine conflict which is not about to end anytime soon. This fiasco is already sparking a renewed flight to safety tsunami of which Wall Street is the main recipient. This could keep this rally going until some genuine economic expansion takes hold.

    (click to enlarge)

    (click to enlarge)

    Next, these two bull-percent indexes give a good indication what kind of a market this is. Note that throughout 2013 these indexes were supported by bullish Moving Average configurations [green line below the red line] which have turned bearish so far this year [green line above the red.] Also, the MACD momentum bars have slipped into their respective bearish territories. These are the kind of things savvy market strategists pay attention to.

    (click to enlarge)(click to enlarge)

    Check the Troika and note that the bull is still very much in charge. Both bull components of this Troika [SPX] and [SPXL] are again displaying positive MA lines configurations [green lines below the red] and that is bullish for the market. So are the MACD momentum bars which are still in their respective bullish territories. But note that on the weekly SPX chart these bars have slipped into bearish territory, which means that the market is about to stall and hit the ceiling. As mixed-up volatile markets go, this is one of them and this is why Wall Street was mostly backing and filling last week without a clear-cut sense of direction. This is also why the DOW dropped triple digits on Monday, only to give it all back the following Tuesday. Meanwhile, the RSI strength indicator remains deep in bullish territory, which adds to the bullish stance of the market.

    Check the bear component of the Troika [SPXS] and note that it remains exceedingly bearish, which of course is bullish for the market. The negative MA lines configuration [green line above the red] is keeping the bear in check, and so do the MACD momentum bars and RSI strength indicator. So the bear presents no danger to the market, but the bulls fading upside momentum sure does.

    (click to enlarge)

    (click to enlarge)

    (click to enlarge)

    This market-forecasting junk bond canary [JNK] finally let some hot air out of the RSI bubble and in the process had to take a bearish haircut. Although its MA lines configuration remains strongly bullish [green line blow the red] its MACD momentum bars have faded to neutral, which explains the market's stalled upside momentum last week.

    (click to enlarge)

    This NASDAQ 100 index [NDX] gives a good reflection of what is going on inside the markets. Although strongly supported by its bullish MA lines configuration [green below the red] its MACD momentum bars have faded to neutral, and that is causing this index to stall out at the top. But with its RSI strength indicator still deep in bullish territory, it may take some time before it becomes clear if the market is beginning to keel over, or is just in the process of some backing and filling.

    (click to enlarge)

    The commodity market [GTX] is a stalling index, but well supported by an exceedingly bullish MA lines configuration [green line below the red.] While the RSI strength indicator is also bullish up in its positive territory, the MACD momentum bars are back in bearish territory and that can trigger a sharp pullback for the commodity market.

    (click to enlarge)

    [GOLD] is also stalling, even though this index is well supported by an exceedingly bullish MA lines configuration and ditto for the RSI strength indicator. But like other major indexes its MACD momentum bars have turned bearish, and that could spell the end of gold's rally.

    (click to enlarge)

    Although oil [WTIC] remains well supported by its strong MA lines configuration [green below red] and a positive RSI strength indicator, this index appears to be stalling out at the top. The reason could be its MACD momentum bars which have faded into negative territory.

    (click to enlarge)

    So all in all, this market still appears to be bullish. But it is also the kind of market to be weary of because there are just too many cross-currents whipping around among the indexes.

    There is no rush and sooner or later the time will be appropriate to enter the market on the up or down side.

    Meanwhile, keep track and on tap the favored ETFs featured in these series of blogs.

    Leveraged Bull ETFs:

    Russell 2000, 3x (NYSEARCA:URTY), Health Care 3x (NYSEARCA:CURE), Small Caps 3x (NYSEARCA:TNA), NASDAQ 3x (NASDAQ:TQQQ)

    S&P 500, 3x (NYSEARCA:UPRO), Mid Caps 3x (NYSEARCA:MIDU), Developed Markets 3x (NYSEARCA:DZK), Financials 3x (NYSEARCA:FAS), Technology 3x (NYSEARCA:TECL), Materials 2x (NYSEARCA:UYM), DOW 30, 3x (NYSEARCA:UDOW).

    Non-Lev Long ETFs:

    Internet (NASDAQ:PNQI), Biotech (NYSEARCA:PBE), Health Care (NASDAQ:PSCH), Pharma (NYSEARCA:PJP), Transports (NYSEARCA:XTN), Small Caps (NYSEARCA:RZV), Industrials (NYSEARCA:PRN), S&P 500 (NYSEARCA:RPV), Regional Banking (NYSEARCA:KRE), Capital Markets (NYSEARCA:KCE), Small Techs (NYSEARCA:DWAS), Discretionary (NYSEARCA:XLY).

    Leveraged Bear ETFs:

    Real Estate 3x (NYSEARCA:DRV), Emerging Markets 2x (NYSEARCA:EEV), DOW 30, 2x (NYSEARCA:DXD), Materials 2x (NYSEARCA:SMN), S&P 500 2x (NYSEARCA:SDS), Financials 2x (NYSEARCA:SKF), Energy 3x (NYSEARCA:ERY), NASDAQ 3x (NASDAQ:SQQQ), Russell 2000, 2x (NYSEARCA:TWM), Financials 3x (NYSEARCA:FAZ), Semis 3x (NYSEARCA:SOXS).

    Non-Leveraged Short ETFs:



    (click to enlarge)

    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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