Reversal Patterns Overhead Risky Levels Limit Upside On The Major Equity ETFs

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Includes: DIA, IWM, IYT, QQQ, SPY
by: Richard Suttmeier
Summary

The Diamonds ETF has held my annual pivot of $246.52 since May 10 with my quarterly risky level of $252.89.

The Spiders ETF has been between my semiannual pivot of $264.10 and my annual pivot of $276.34 since May 4.

The QQQ ETF is below an "Island Reversal" set between March 9 and March 16 with my monthly risky level of $170.94 at the base of the island.

The Transports ETF ended last week above my quarterly pivot at $195.90.

The Russell 2000 ETF set its all-time intraday high of $163.33 on May 22, then closed below the May 21 low for a "key reversal" day.

There are many cross-currents in the stock market that result in random up and down volatility from the Federal Reserve raising rates and reducing its balance sheet to the on again, off again to perhaps on again meeting between President Trump and North Korea's leader Kim Jong-un.

The five major equity exchange-traded funds have been consolidating first-quarter corrections with only the small-cap ETF setting a new all-time intraday high on May 22. This leadership has resulted in positive weekly charts for all five equity ETFs with the small-cap ETF overbought.

The weekly charts stay positive given closes this week above the five-week modified moving averages at $245.68 for Diamonds, $269.22 for Spiders, $165.78 for QQQs, $191.37 Transports, and $157.67 for the Russell 2000.

Today's Equity ETF Scorecard

Scorecard For The Five Major Equity Averages

SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA)

Dialy Chart For Diamonds

Courtesy of MetaStock Xenith

The daily chart clearly shows how Diamonds has held my annual pivot of $246.52 since May 10. Traders should buy Diamonds on weakness to my semiannual value level of $230.11 and reduce holdings on strength to my quarterly risky level of $252.89. My monthly risky level is $265.77 just below the all-time intraday high of $265.93 set on Jan. 26.

SPDR S&P 500 ETF Trust (NYSEARCA:SPY)

Daily Chart For Spiders

Courtesy of MetaStock Xenith

The daily chart clearly shows that Spiders has been well above its semiannual pivot of $264.10 since May 4. Traders should buy Spiders on weakness to my semiannual pivot of $264.10 and reduce holdings on strength to my annual and quarterly risky levels of $276.34 and $276.99, respectively. My monthly risky level at $282.73 is below the all-time intraday high of $286.62 set on Jan. 26.

PowerShares QQQ Trust ETF (NASDAQ:QQQ)

Daily Chart For QQQ

Courtesy of MetaStock Xenith

The daily chart clearly shows that QQQs are below the "island reversal" set between March 9 and March 16. My monthly pivot of $170.94 is at the base of this pattern. Traders should buy QQQs on weakness to my annual and semiannual pivots of $156.14 and $154.54, respectively. QQQs have been above my quarterly pivot of $165.51 since May 7. The all-time intraday high of $175.21 was set on March 13, which was a "key reversal" day with a close below the March 12 low.

iShares Transportation Average ETF (BATS:IYT)

Daily Chart For The Transports ETF

Courtesy of MetaStock Xenith

The daily chart shows that the transports ETF is above my quarterly pivot at $195.90. Traders should buy on weakness to my semiannual pivot of $188.79 and reduce holdings on strength to my annual risky level of $204.61 which was tested at the Jan. 16 all-time intraday high of $206.73.

iShares Russell 2000 ETF (NYSEARCA:IWM)

Daily Chart For Russell 2000 ETF

Courtesy of MetaStock Xenith

The daily chart shows that the small-cap ETF had a "key reversal" day after setting its all-time intraday high of $163.33 on May 22. The close that day was below the May 21 low of 162.36. Traders should buy IWM on weakness to my semiannual value level of $144.99 and to "sell strength" to reduce holdings on strength to my annual and quarterly risky levels of $165.04 and $168.65, respectively.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.