ETF Trends: Overbought Market Conditions Improving

by: J Clinton Hill

ETF U.S. Equity Indexes: There were no changes to the trends for the major U.S. equity indexes. For the past couple weeks, I have reiterated the extremely overbought condition of the market. Oh well, the more things stay the same, the more they change.

On Wednesday, I observed that within the Russell 3000 universe, 28% of its components are overbought while only 35% of the 209 industry groups monitored by Hillbent are overbought. This is a significant improvement and could allow for another extended run without the danger of the market getting too far technically ahead of itself. The primary trends for the DIA, SPY, QQQQ, and IWM are up. Although these developments are recent, the longer the primary trends remain intact, the stronger support levels become in the event of a market pull-back. To underscore and quantify the current strength of these trends, another sampling from the Russell 3000 reveals that @ 67% of its components are signalling buys vs. @ 13% sells. For now the trend is a still a friend despite the seemingly irrational divergence between market technicals and fundamentals.

ETF Sectors and Key Industries: New 5 day highs (NYSEARCA:XLU). Short-term trend upgrades (XLP; XLK, OIH, SMH, SWH). Short-term trend downgrades (NYSEARCA:BBH); Long-term trend upgrades (NYSEARCA:XLF).

ETF International Equity Indexes: Short-term trend upgrades (EWU, EWG, EWQ, RSX, VGK, IEV, FXI, EWS, EWY, EWT, EEM, GUR, GMF). Short-term trend downgrades (NYSEARCA:EWX); Long-term trend upgrades (NYSEARCA:EWG).

ETF Commodities: New 5 day lows (NYSEARCA:UNG). Short-term trend upgrades (USO, GLD).

ETF Forex: Short-term trend upgrades (NYSE:FXC); Short-term trend downgrades (ICN, CEW); Intermediate term trend upgrades (NYSE:FXY).

ETF Bonds: Intermediate term upgrades (NYSEARCA:AGG); Short-term trend downgrades (NYSEARCA:TLT); Intermediate and Long term trend downgrades (NYSEARCA:TIP).

ETF Real Estate: Intermediate term trend downgrades (BATS:REM); Long term trend upgrades (XHB, ITB, FIO, RTL-OLD)

Signing off @ Hillbent for The Market Direction…

Support & Resistance Levels for U.S. Equity Indexes (for 08-13-2009)

Index ETF Ticker S3 S2 S1 Pivot R1 R2 R3
DJ-30 DIA 89.79 91.68 92.73 93.57 94.62 95.46 97.35
SP-500 SPY 96.52 98.57 99.69 100.62 101.74 102.67 104.72
NASDAQ-100 QQQQ 39.18 39.59 39.81 40.00 40.22 40.41 40.82
R2K IWM 53.91 55.49 56.31 57.07 57.89 58.65 60.23
VIX Futures ETF VXX 54.45 56.72 57.67 58.99 59.94 61.26 63.53

ETF Trend Monitor (08-12-2009)

U.S. Equity ETFs
Equity Indexes Short-term Intermediate Primary
DIA (DJ Industrials) up up up
SPY (S&P 500) up up up
QQQQ (Nasdaq 100) up up up
IWM (Russell 2000) up up up
VXX (S&P 500 VIX Futures) down down down
Major Sectors Short-term Intermediate Primary
XLY (Consumer Discrtn) up up up
XLP (Consumer Staples) up up up
XLE (Energy) up up up
XLF (Financials) up up lateral
XLV (Health Care) up up up
XLI (Industrials) up up up
XLB (Materials) up up up
XLK (Technology) up up up
IYZ (Telecom) down up down
XLU (Utilities) up up down
Key Industries Short-term Intermediate Primary
BBH (Biotech) lateral up up
OIH (Oil Services) lateral up down
PPH (Pharmaceuticals) lateral up up
RKH (Regional Banks) up up up
RTH (Retail) up up up
SMH (Semiconductors) lateral up up
SWH (Software) up up up
IYT (Transportation) up up up
International Equity ETFs
Americas Short-term Intermediate Primary
ISI (S&P 1500) up up up
EWC (MSCI Canada) down up up
EWW (MSCI Mexico) up up up
Europe Short-term Intermediate Primary
EWU (MSCI United Kingdom) up up up
EWG (MSCI Germany) up up up
EWQ (MSCI France) up up up
RSX (Mkt Vectors Russia) lateral up lateral
VGK (Vanguard Europe) up up up
IEV (S&P Europe 350) up up up
Asian-Pacific Short-term Intermediate Primary
EWA (MSCI Australia) up up up
FXI (FTSE China) lateral up up
EWH (MSCI Hong Kong) lateral up up
IFN (India Fund) down up up
EWJ (MSCI Japan) up up up
EWS (MSCI Singapore) lateral up up
EWY (MSCI South Korea) lateral up up
EWT (MSCI Taiwan) lateral up up
Emerging Markets Short-term Intermediate Primary
EEM (MSCI Emerging Mkts) lateral up up
GMF (Emerging Asia Pacific) lateral up up
GUR (Emerging Europe) lateral up up
GML (Emerging Latin America) up up up
GAF (Middle East & Africa) down up up
EWX (Emerging Small Caps) down up up
Alternative Assets
Commodities Short-term Intermediate Primary
GLD (Gold) lateral up up
SLV (Silver) up up up
DBB (Base Metals) up up up
JJC (Copper) up up up
USO (Oil) up up lateral
UNG (Natural Gas) down down down
UGA (Gasoline) up up up
DBC (Commodities) lateral up lateral
DBA (Agriculture) up up lateral
Forex Short-term Intermediate Primary
UUP (U.S. Dollar) up down down
FXE (Euro) lateral up up
FXY (Japanese Yen) lateral down lateral
FXB (British Pound) down up up
FXC (Canadian Dollar) lateral up up
FXA (Australian Dollar) lateral up up
FXM (Mexican Peso) up up lateral
BZF (Brazilian Real) up up up
CYB (Chinese Yuan) lateral lateral lateral
ICN (Indian Rupee) down lateral n/a
XRU (Russian Ruble) down lateral n/a
CEW (Emerging Currency) lateral up n/a
Bonds Short-term Intermediate Primary
SHY (1-3 Yr Tsy) lateral lateral lateral
IEF (7-10 Yr Tsy) lateral down down
TLT (20 Yr+ Tsy) lateral down down
TIP (Tsy Inflation Protect) lateral lateral down
AGG (Investment Grade) lateral up up
JNK (Hi Yld Bonds) up up up
HYG (Hi Yld Corp) up up up
EMB (Emerging Markets Bonds) up up up
MUB (Nat’l Muni Bond) lateral lateral lateral
Real Estate Short-term Intermediate Primary
IYR (DJ US Real Estate) up up up
XHB (Homebuilders) up up up
ITB (Home Construction) up up up
FIO (Industrial Office) up up up
REM (Mortgage Reits) lateral up up
REZ (Residential Index) up up up
RTL (Retail Index) up up up

Market Momentum Monitor (08-12-2009)

Market Momentum 20-Day MA 50-Day MA 200-Day MA
Today 75.89% 84.88% 89.53%
Yesterday 70.78% 82.68% 88.39%
Last Week 84.89% 86.44% 89.08%
Last Month 77.76% 70.34% 78.84%

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