While Diamonds And Spiders Set New Highs, The Nasdaq 100 And Russell 2000 ETFs Flash Warnings

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

Summary

The Diamonds and Spiders ETFs set new all-time intraday highs on Friday, but their weekly charts now show stochastic readings in "inflating parabolic bubble" formations.

The weekly chart for the Nasdaq 100 QQQ ETF faces a downgrade to negative given a close this week below $181.64.

The Transports ETF led Diamonds higher setting up the "old school" "Dow Theory Buy Signal".

The weekly chart for the Russell 2000 ETF faces a downgrade to negative given a close this week below $169.66.

Today I will show the weekly charts for the five major equity averages.

Here's Today's Scorecard

Scorecard For The Five EquityETFs

SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA)

The Diamonds ETF has a positive but overbought weekly chart with the ETF above its five-week modified moving average of $258.81. Its 12x3x3 weekly slow stochastic reading ended last week at 92.22, well above the overbought threshold of 80.00 and above 90.00, making the ETF an "inflating parabolic bubble".

Weekly Chart For Diamonds

Courtesy of MetaStock Xenith

My monthly, annual and semiannual value levels are $253.81, $246.52 and $243.29, respectively, with weekly and quarterly pivots at $265.20 and $264.99, respectively. DIA set its all-time intraday high of $267.61 on Sept. 21. To reach bull market territory, DIA needs to trade above $279.84.

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

The Spiders ETF has a positive but overbought weekly chart with the ETF above its five-week modified moving average of $286.88. The 12x3x3 weekly slow stochastic reading ended last week at 91.12, slipping from 91.58 on Sept. 14, with both readings above 90.00. This is a warning that SPY remains as an "inflating parabolic bubble".

Weekly Chart For Spiders

Courtesy of MetaStock Xenith

My annual and semiannual value levels are $276.34 and $270.84, respectively, with monthly and quarterly pivots at $285.45 and $288.57, respectively, with this week's risky level at $294.60 versus the all-time intraday high of $293.94 set on Sept. 21. To reach bull market territory, SPY needs to trade above $303.50.

PowerShares QQQ Trust ETF (NASDAQ:QQQ)

The Nasdaq 100 QQQ ETF has a positive but overbought weekly chart with the ETF above its five-week modified moving average of $181.64. The 12x3x3 weekly slow stochastic reading ended last week at 81.10, down from 84.23 on Sept. 14 with both readings well above the overbought threshold of 80.00. A close this week below $181.64 will pull the stochastic reading below 80.00 for a negative weekly chart.

Weekly Chart For QQQ

Courtesy of MetaStock Xenith

My semiannual and annual value levels are $169.40 and $156.14, respectively, with my quarterly pivot at $183.98 and my weekly and monthly risky levels at $187.29 and $188.50, respectively, versus the all-time intraday high of $187.53 set on Aug. 30. QQQ remains in bull market territory 22.4% above its Feb. 9 low of $150.13.

iShares Transportation Average ETF (NYSEARCA:IYT)

The Transports ETF has a positive but overbought weekly chart with the ETF above its five-week modified moving average of $203.12. The 12x3x3 weekly slow stochastic reading rose to 89.15 last week, up from 87.09 on Sept. 14 with both readings well above the overbought threshold of 80.00. Strength this week will push the stochastic reading for IYT above 90.00, making it an "inflating parabolic bubble".

This ETF set its all-time intraday high of $209.43 on Sept. 14, a week before Diamonds. This resulted in what "old school" technical analysis as a "Dow Theory Buy Signal". The concept is that transports have geared up to move more industrial goods, and industrials follow on an assumed stronger economy. Beware that this signal did not happen in 2008 as transports were the last to peak in May 2008.

Weekly Chart For IYT

Courtesy of MetaStock Xenith

My monthly and semiannual value levels are $196.57 and $181.19, respectively, with my annual pivot of $204.61 and weekly and quarterly risky levels of $212.79 and $215.57, respectively. To reach bull market territory, IYT needs to trade above $211.94.

iShares Russell 2000 ETF (NYSEARCA:IWM)

The small-cap ETF has a positive but overbought weekly chart with the ETF above its five-week modified moving average of $169.67. The 12x3x3 weekly slow stochastic reading slipped to 82.16 last week, down from 85.08 on Sept. 14 with both readings above the overbought threshold of 80.00. A close this week below $169.67 will pull the stochastic reading below 80.00 for a negative weekly chart.

Weekly Chart For IWM

Courtesy of MetaStock Xenith

My annual and semiannual value levels are $165.04 and $154.04, respectively, with my monthly pivot at $169.83 and my quarterly risky level at $177.79. IWM did not close last week above $171.00 so the ETF slipped out of bull market territory at 19.6%, above its Feb. 9 low of $142.50.

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.