Small Caps, Momentum Stocks Powered Equity ETFs Higher Last Week

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

The Diamonds ETF opened last week above my annual pivot of $246.52 which targeted my quarterly pivot of $252.89.

The Spiders ETF moved above my annual and quarterly pivots of $276.34 and $276.99, respectively, last week.

The QQQ ETF set a new all-time intraday high of $175.93 on June 7 with my monthly risky level for June at $179.19.

The Transports ETF moved above my quarterly pivot at $195.90 on Friday with my monthly risky level at $199.30.

The Russell 2000 ETF set its all-time intraday high of $167.23 on June 7 above my annual pivot of $165.04 with my quarterly risky level at $168.65.

Today's Market Cross-Currents

The G-7 meeting in Quebec Canada ended with President Trump leaving early for Singapore for the all-important summit with North Korea's leader Kim Jung-un.

President Trump refused to sign the joint communique. A tariff agreement would have been positive for stocks, a trade war is not! As a result, we have a Twitter war between the president and Canada's Prime Minister Justin Trudeau as President Trump says that the prime minister is "dishonest and weak."

Successful negotiations in Singapore could Trump the G-7 discord if the dialogue leads to a signed agreement to end the Korean War.

In addition, the Federal Reserve will likely raise the federal funds rate to 1.75% to 2.00% when it ends its FOMC meeting on Wednesday. Higher interest rates and continued unwinding of the Federal Reserve balance sheet will keep investors on edge.

Overseas, China's Shanghai Composite set its 2018 low of 3,041 on May 30, and remains deep into correction territory, 14.5% below its 2018 high of 3,587.03 set on Jan. 29.

As a market positive, the weekly charts for the five U.S. equity ETFs remain positive given Friday's closes above their five-week modified moving averages at $247.31 for Diamonds, $21.71 for Spiders, $168.63 for QQQs, $193.45 for Transports, and $160.42 for the Russell 2000. The transports and small-cap ETFs are overbought on their weekly charts.

Today's Equity ETF Scorecard

Scorecard For The Five Equity ETFs

SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA)

Daily Chart For Diamonds

Courtesy of MetaStock Xenith

The daily chart clearly shows how Diamonds gapped higher last Monday above my annual pivot of $246.52. My quarterly pivot of $252.89 was the target, and Friday's close was just above it. Traders should buy Diamonds on weakness to my annual pivot of $246.52 and to my semiannual value level of $230.11 and reduce holdings on strength to my monthly risky level of $266.69, which is above the all-time intraday high of $365.92 set on Jan. 26. My quarterly pivot is $252.89.

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 and is now also above its annual and quarterly pivots of $276.34 and $276.99, respectively. Holding these levels indicates upside potential to my monthly risky level of $284.79. Traders should buy Spiders on weakness to my semiannual pivot of $264.10 and reduce holdings on strength to my monthly risky level at $284.79, which 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 how the large momentum stocks continue to drive QQQs higher. Traders should buy QQQs on weakness to my quarterly, annual and semiannual pivots of $165.51, $156.14 and $154.54, respectively, and reduce holdings on strength to my monthly risky level for June at $179.19, which is above its all-time intraday high of $175.93 set on June 7.

iShares Transportation Average ETF (BATS:IYT)

Daily Chart For The Transports ETF

Courtesy of MetaStock Xenith

The daily chart shows that Transports has been trading back and forth around my quarterly pivot at $195.90 since May 21. Holding this key level targets my monthly risky level of $199.30. Traders should buy on weakness to my semiannual pivot of $188.79 and reduce holdings on strength to my monthly and annual risky levels at $199.30 and $204.61, respectively, which was tested at the Jan. 16 all-time intraday high of $206.73. My quarterly pivot of $195.90 should remain a magnet.

iShares Russell 2000 ETF (NYSEARCA:IWM)

Daily Chart For The Russell 2000 ETF

Courtesy of MetaStock Xenith

The daily chart shows that the small-cap ETF set another all-time intraday high of $167.23 on June 7. My annual pivot of $165.04 is thus a magnet for the remainder of 2018. Traders should buy IWM on weakness to my monthly and semiannual value levels of $161.32 and $144.99, respectively, and reduce holdings on strength to my quarterly risky level of $168.65.

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.