This is the first of what will be a recurring series of posts where I publish the results of running a number of technical analysis screens against all of the ProShares ETFs. Below we have the list of those ETFs with the strongest technical underpinnings as well as a list of those ETFs that are the weakest.
Strongest BUY Signals --
The following chart lists only those ProShares ETFs where both DMI and Aroon evaluation indicates they are in reasonably strong up-trends.
After this past week, which saw the market drop by over 3%, it is not surprising to see the short and ultra-short ETFs on a list of gainers. What is significant is that the trend indicators for these ETFs are so strong. Given that these are all inverse ETFs, it indicates a sustained weakness in the underlying sectors.
It is interesting to see that the short and ultra-short international ETFs (EFU, EFZ) are on the list. Remaining bulls have been hoping that global economic activity will support a weak economy in the U.S. From the looks of this chart, that confidence may be eroding.
Also of significance are the ETFs that have not made this list. For example, we don't see the inverse NASDAQ ETFs (PSQ, QID) nor do we see the inverse small cap ETFs (SBB, RWM, SKK). The inverse mid-cap ETFs (MYY, SKD) are also absent. This does provide some small hope that, since the entire market has not broken down completely, perhaps the lagging sectors are close to a bottom.
Strongest SELL Signals --
The following chart lists only those ProShares ETFs where both DMI and Aroon evaluation indicates they are in reasonably strong down-trends.
In many ways this chart reflects the opposite of what is going on in the chart of strongest BUY signals but there are a couple of differences. Here we see that investors are fleeing from the Health Care, Basic Materials and Industrials sectors.
With stocks getting cheaper by the day lately, one would think that the value investing style might start to gain some popularity. We see, however, that the Ultra Russell 1000 Value ETF (UVG) has gotten hammered. Apparently, stocks aren't cheap enough yet.
Conclusion --
It is clear from looking at the sectors reflected in the two charts that large swaths of the market are out of favor. Worse, even the defensive sectors are not particularly strong. It appears that the majority of ProShares investors are betting heavily on a select number of sectors.
Does that mean we should rush in and buy the ETFs on the strongest list? If you believe in momentum then the answer is yes. I would caution, however, that it is dangerous to chase these ETFs, especially the ultra ETFs.
Oh, and by the way, the strongest ETF of all is the Ultra-Short Financials ETF (SKF).
Disclosure: none
Strongest BUY Signals --
The following chart lists only those ProShares ETFs where both DMI and Aroon evaluation indicates they are in reasonably strong up-trends.
| Symbol | Signal Type | Name | Category | 20-Day MA above 50-Day MA | DMI | Aroon |
|---|---|---|---|---|---|---|
| DOG | BUY | Short Dow30 | Short Market Cap | Yes | DMI: strong trend Up (ADX: 26 +DI: 33 -DI: 11) | Strong Up trend - Up: 100 Down: 8 Osc: 92 |
| DXD | BUY | UltraShort Dow30 | Short Market Cap | Yes | DMI: strong trend Up (ADX: 25 +DI: 32 -DI: 11) | Strong Up trend - Up: 100 Down: 8 Osc: 92 |
| EFU | BUY | UltraShort MSCI EAFE | Short International | Yes | DMI: strong trend Up (ADX: 24 +DI: 39 -DI: 17) | Strong Up trend - Up: 100 Down: 8 Osc: 92 |
| EFZ | BUY | Short MSCI EAFE | Short International | Yes | DMI: strong trend Up (ADX: 30 +DI: 54 -DI: 20) | Strong Up trend - Up: 100 Down: 24 Osc: 76 |
| SH | BUY | Short S&P500 | Short Market Cap | Yes | DMI: strong trend Up (ADX: 22 +DI: 30 -DI: 13) | Strong Up trend - Up: 100 Down: 8 Osc: 92 |
| SJF | BUY | UltraShort Russell1000 Value | Short Style | Yes | DMI: strong trend Up (ADX: 28 +DI: 37 -DI: 15) | Strong Up trend - Up: 100 Down: 8 Osc: 92 |
| SKF | BUY | UltraShort Financials | Short Sector | Yes | DMI: strong trend Up (ADX: 35 +DI: 25 -DI: 9) | Strong Up trend - Up: 100 Down: 4 Osc: 96 |
| SZK | BUY | UltraShort Consumer Goods | Short Sector | Yes | DMI: strong trend Up (ADX: 23 +DI: 34 -DI: 12) | Strong Up trend - Up: 100 Down: 8 Osc: 92 |
| TLL | BUY | UltraShort Telecommunications | Short Sector | No | DMI: strong trend Up (ADX: 43 +DI: 69 -DI: 26) | Strong Up trend - Up: 100 Down: 40 Osc: 60 |
After this past week, which saw the market drop by over 3%, it is not surprising to see the short and ultra-short ETFs on a list of gainers. What is significant is that the trend indicators for these ETFs are so strong. Given that these are all inverse ETFs, it indicates a sustained weakness in the underlying sectors.
It is interesting to see that the short and ultra-short international ETFs (EFU, EFZ) are on the list. Remaining bulls have been hoping that global economic activity will support a weak economy in the U.S. From the looks of this chart, that confidence may be eroding.
Also of significance are the ETFs that have not made this list. For example, we don't see the inverse NASDAQ ETFs (PSQ, QID) nor do we see the inverse small cap ETFs (SBB, RWM, SKK). The inverse mid-cap ETFs (MYY, SKD) are also absent. This does provide some small hope that, since the entire market has not broken down completely, perhaps the lagging sectors are close to a bottom.
Strongest SELL Signals --
The following chart lists only those ProShares ETFs where both DMI and Aroon evaluation indicates they are in reasonably strong down-trends.
| Symbol | Signal Type | Name | Category | 20-Day MA below 50-Day MA | DMI | Aroon |
|---|---|---|---|---|---|---|
| DDM | SELL | Ultra Dow30 | Ultra Market Cap | Yes | DMI: strong trend Down (ADX: 26 +DI: 11 -DI: 33) | Strong Down trend - Up: 8 Down: 100 Osc: -92 |
| RXL | SELL | Ultra Health Care | Ultra Sector | Yes | DMI: strong trend Down (ADX: 24 +DI: 12 -DI: 35) | Strong Down trend - Up: 56 Down: 100 Osc: -44 |
| SMN | SELL | UltraShort Basic Materials | Short Sector | Yes | DMI: strong trend Down (ADX: 24 +DI: 18 -DI: 24) | Strong Down trend - Up: 28 Down: 88 Osc: -60 |
| SSO | SELL | Ultra S&P500 | Ultra Market Cap | Yes | DMI: strong trend Down (ADX: 22 +DI: 13 -DI: 31) | Strong Down trend - Up: 8 Down: 100 Osc: -92 |
| UGE | SELL | Ultra Consumer Goods | Ultra Sector | Yes | DMI: strong trend Down (ADX: 24 +DI: 15 -DI: 44) | Strong Down trend - Up: 8 Down: 100 Osc: -92 |
| UVG | SELL | Ultra Russell1000 Value | Ultra Style | Yes | DMI: strong trend Down (ADX: 23 +DI: 21 -DI: 46) | Strong Down trend - Up: 4 Down: 100 Osc: -96 |
| UXI | SELL | Ultra Industrials | Ultra Sector | Yes | DMI: strong trend Down (ADX: 22 +DI: 18 -DI: 35) | Strong Down trend - Up: 8 Down: 100 Osc: -92 |
| UYG | SELL | Ultra Financials | Ultra Sector | Yes | DMI: strong trend Down (ADX: 37 +DI: 9 -DI: 27) | Strong Down trend - Up: 25 Down: 100 Osc: -75 |
In many ways this chart reflects the opposite of what is going on in the chart of strongest BUY signals but there are a couple of differences. Here we see that investors are fleeing from the Health Care, Basic Materials and Industrials sectors.
With stocks getting cheaper by the day lately, one would think that the value investing style might start to gain some popularity. We see, however, that the Ultra Russell 1000 Value ETF (UVG) has gotten hammered. Apparently, stocks aren't cheap enough yet.
Conclusion --
It is clear from looking at the sectors reflected in the two charts that large swaths of the market are out of favor. Worse, even the defensive sectors are not particularly strong. It appears that the majority of ProShares investors are betting heavily on a select number of sectors.
Does that mean we should rush in and buy the ETFs on the strongest list? If you believe in momentum then the answer is yes. I would caution, however, that it is dangerous to chase these ETFs, especially the ultra ETFs.
Oh, and by the way, the strongest ETF of all is the Ultra-Short Financials ETF (SKF).
Disclosure: none
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