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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.  0 comments
    Jul 7, 2014 2:50 AM

    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.

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    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.

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    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!

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