Seeking Alpha

The Nasdaq 100 ETF Sets A New High As Transports Play Catch-Up

|
Includes: DIA, IWM, IYT, QQQ, SPY
by: Richard Suttmeier
Richard Suttmeier
Research analyst, banks, homebuilders, chartest
Summary

The Diamonds ETF continues to trade between its annual pivot at $257.94 and its semiannual pivot at $272.78.

The Spiders ETF remains above its semiannual pivot at $294.72 with the Sept. 19 all-time high at $302.63.

The QQQ ETF is above its semiannual pivot at $188.63 with the Oct. 25 all-time intraday high of $195.75 with this week’s pivot at $195.83.

The Transports ETF moved above its monthly and semiannual pivots at $192.99 and $193.47 buy is below its quarterly and annual pivots at $195.40 and$196.35.

The Russell 2000 ETF remains below its semiannual, annual and quarterly pivots at $156.14, $157.49 and $158.88.

Here’s Today’s Scorecard

Scorecard For The Five Equity ETFs

SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA)

Daily Chart For DiamondsCourtesy of Refinitiv XENITH

The Diamonds ETF is 24.3% above its 2018 low of $216.97 set on Dec. 26 and is just 1.6% below its all-time intraday high of $273.99 set on July 16. Diamonds has a positive weekly chart with the ETF above its five-week modified moving average at $267.58, with its 12x3x3 weekly slow stochastic reading rising to 68.85 last week, up from 67.98 on Oct. 18. Its annual pivot is $257.94 with its semiannual pivot at $272.78 and monthly and quarterly risky levels at $276.38 and $285.57, respectively, above the all-time high.

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

Daily Chart For SpidersCourtesy of Refinitiv XENITH

The Spiders ETF is 29% above its Dec. 26 low of $233.76 and set its all-time intraday high of $302.63 on Sept. 19 versus the July 26 high of $302.23 and is just 0.3% below the high. Spiders has a positive weekly chart with the ETF above its five-week MMA at $297.01, with its 12x3x3 weekly slow stochastic reading rising to 73.38 last week, up from 69.66 on Oct. 18. The annual pivot is $285.86 with a semiannual pivot at $294.72 and quarterly and monthly risky levels at $306.76 and $307.70, respectively, above the all-time high.

Invesco QQQ ETF (NASDAQ:QQQ)

Daily Chart For QQQsCourtesy of Refinitiv XENITH

The QQQ ETF is 36.4% above its 2018 low of $143.46 set on Dec. 24 and is just 0.1% below its all-time intraday high of $195.74 set on Oct. 25. QQQ has a positive weekly chart with the ETF above its five-week MMA at $190.89, with its 12x3x3 weekly slow stochastic reading rising to 71.53 last week, up from 65.57 on Oct. 18. The annual value level is $169.27 with a semiannual pivot at $188.63 and its monthly and quarterly risky levels at $200.59 and $203.80, respectively, above the all-time high.

iShares Transportation Average ETF (NYSEARCA:IYT)

Daily Chart for Transports ETFCourtesy of Refinitiv XENITH

IYT is 25.6% above its 2018 low of $155.24 set on Dec. 24 and is 6.9% below its Sept. 14, 2018 high of $209.43. The weekly chart for IYT is positive with the ETF above its five-week MMA at $187.72, with its 12x3x3 weekly slow stochastic reading rising to 49.96 last week, up from 44.48 on Oct. 18. Its 200-week simple moving average is $171.92 with monthly, semiannual, quarterly and annual pivots at $192.99, $193.47, $195.40 and $196.35, respectively, all below the all-time intraday high of $209.43 set on Sept. 14, 2018.

iShares Russell 2000 ETF (NYSEARCA:IWM)

Daily Chart For Russell 2000 ETFCourtesy of Refinitiv XENITH

IWM is 23.2% above its 2018 low of $125.81 set on Dec. 26 and is 10.6% below its Aug. 31, 2018 high of $173.39. IWM has a positive weekly chart with the ETF above its five-week MMA at $152.31, with its 12x3x3 weekly slow stochastic reading rising to 50.03 last week, up 46.89 on Oct. 18. Its 200-week simple moving average is $141.58 with semiannual, monthly, annual and quarterly risky levels at $156.14, $157.07, $157.49 and $158.88, respectively, all below the all-time intraday high of $173.39 set on Aug. 31, 2018.

How to use my value levels and risky levels:

Value levels and risky levels are based upon the last nine monthly, quarterly, semiannual and annual closes. The first set of levels was based upon the closes on Dec. 31. The original annual level remains in play.

The mid-year close resulted in the second half semiannual level.

The monthly level changes at the end of each month, the latest on Sep. 30. The quarterly level was also changed at the end of September.

My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in.

To capture share price volatility, investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before its time horizon expires.

How to use 12x3x3 Weekly Slow Stochastic Readings:

My choice of using 12x3x3 weekly slow stochastic readings was based upon back-testing many methods of reading share-price momentum with the objective of finding the combination that resulted in the fewest false signals. I did this following the stock market crash of 1987, so I have been happy with the results for more than 30 years.

The stochastic reading covers the last 12 weeks of highs, lows and closes for the stock. There is a raw calculation of the differences between the highest high and lowest low versus the closes. These levels are modified to a fast reading and a slow reading and I found that the slow reading worked the best.

The stochastic reading scales between 00.00 and 100.00, with readings above 80.00 considered overbought and readings below 20.00 considered oversold. Recently, I noted that stocks tend to peak and decline 10% to 20% and more shortly after a reading rises above 90.00, so I call that an “inflating parabolic bubble” as a bubble always pops. I also call a reading below 10.00 as being “too cheap to ignore.”

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.