Tuesday, July 29, 2008

On the road...

For those who follow my scribblings on this site, I wanted to let you know that I will be traveling for a few days and there will be no new posts until the weekend.

The remainder of the week looks to be pretty interesting in the stock market and in the oil patch but I will be focusing more on family and the New York Yankees.



Monday, July 28, 2008

Yang almost gets it right

Jerry Yang has taken a lot of heat for rebuffing Microsoft and and Carl Icahn. He has been repeatedly called on the carpet for not looking out for the interests of shareholders.

The attitude of many critics is that it is management's sole responsibility to deliver cash to shareholders and that any buyout offer for a reasonable amount of money is good enough.

Yang claimed that Microsoft was undervaluing Yahoo! and held out for a higher price. Thus began the volleys back and forth between the two companies as talks broke down and started up again and alternative deals were proposed. Then Icahn jumped in, fresh from the debacle at Motorola, thinking that all he had to do was show up and Yahoo! would capitulate to Ballmer.

Yang was right to fend off these two.

Ballmer proposing to buy just the search business of Yahoo! as a variation of the original deal illustrates how clueless he is. Google is the dominant player in search and delivers by far the best search experience. Google is also the best by far at monetizing search. Why tilt at that windmill? Neither Yahoo! nor Microsoft come close to Google in search in terms of functionality or traffic. Why Microsoft values Yahoo! search is a mystery.

What Yahoo! does have is content. Yahoo! is truly a major destination on the Internet and Yang's ideas of making the site the starting point for the Internet's users is not as farfetched as Ballmer's idea of besting Google at search. With all the content at Yahoo! comes a significant amount of display advertising. Yet the content is not what Ballmer wanted!

Then we have Icahn. No plan other than to sell the company to a clueless Ballmer. Together, the two of them take cluelessness to a new level.

What would have happened to Yahoo! as part of Microsoft? Probably continued brain drain, atrophy of many aspects of the business, continued also-ran status of the search capability, reduced revenue from display advertising as content withers away, a setback for Yahoo!'s openness initiatives and who knows what else.

So is it management's duty to accept any offer that exceeds the current stock price? Or is it management's duty to do what is best for the company itself? I suspect that Yang couldn't stand thinking of how Ballmer would most likely squander the assets of Yahoo! Keeping Yahoo! independent at least gives the company an opportunity to get growth back on track on its own terms.

Nevertheless, Yang should indeed have taken Microsoft's offer to buy the search business. Get rid of search and let Microsoft distract themselves trying to beat Google. This would have allowed Yahoo! to concentrate on monetizing its content. With page views up 20% over the previous year and solid partnerships with major advertisers, that seems the path of least resistance. Yahoo! can always outsource search to Google and point to Microsoft to show that competition still exists in the search space.

So with Icahn now on the board at Yahoo!, maybe he can learn a little about how an Internet business works and provide some kind of value. And given a little breathing room, maybe Yang can reinvigorate Yahoo! and the shareholders will ultimately benefit after all.

Disclosure: none



Sunday, July 27, 2008

ProShares ETF Report - strongest BUY and SELL signals, 7-25-08

About one month ago I provided a list of the ProShares ETFs that were generating the strongest BUY signals and the strongest SELL signals (use this link to read that post). At that time, the BUY list was dominated by the UltraShort ETFs and it was a picture of a market in trouble. Most sectors and market-caps were represented.

We ran the scan again this week and the results were quite different. Below we have the list of those ProShares 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. This is confirmed by the fact that these ETFs are trading with their 20-day moving average above their 50-day moving average.

Symbol Name Category 20-day MA above 50-day MA DMI Aroon
DUG UltraShort Oil & Gas Short Sector Yes DMI: strong trend Up (ADX: 30 +DI: 32 -DI: 10) Strong Up trend - Up: 96 Down: 36 Osc: 60
EFU UltraShort MSCI EAFE Short International Yes DMI: strong trend Up (ADX: 27 +DI: 32 -DI: 23) Strong Up trend - Up: 72 Down: 16 Osc: 56
SMN UltraShort Basic Materials Short Sector Yes DMI: strong trend Up (ADX: 27 +DI: 24 -DI: 12) Strong Up trend - Up: 100 Down: 8 Osc: 92

Demand destruction seems to be the theme of the BUY list. All three of the ETFs are of the UltraShort variety. The Oil & Gas and Basic Materials sectors after displaying recent strength are showing major weakness now as investors perceive a worldwide economic slowdown will reduce demand for raw materials. As many of the countries represented in the EAFE ETF are big consumers of raw materials, it is reasonable to see this ETF weaken in the same manner as the underlying economies and along with the energy and basic materials sectors.

Another theme of this list is that it seems to reflect a market that is in the midst of change. Only a few ETFs have emerged as leaders. The remaining ETFs have seen their trends weaken to the point where they no longer make it to this list.

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. For all but two, it is confirmed by the fact that these ETFs are trading with their 20-day moving average below their 50-day moving average.

Symbol Name Category 20-day MA below 50-day MA DMI Aroon
DIG Ultra Oil & Gas Ultra Sector Yes DMI: strong trend Down (ADX: 28 +DI: 11 -DI: 31) Strong Down trend - Up: 36 Down: 96 Osc: -60
RXD UltraShort Health Care Short Sector Yes DMI: strong trend Down (ADX: 24 +DI: 21 -DI: 31) Strong Down trend - Up: 8 Down: 80 Osc: -72
SJH UltraShort Russell2000 Value Short Style No DMI: strong trend Down (ADX: 28 +DI: 16 -DI: 29) Strong Down trend - Up: 68 Down: 92 Osc: -24
TWM UltraShort Russell2000 Short Market Cap No DMI: strong trend Down (ADX: 23 +DI: 19 -DI: 21) Strong Down trend - Up: 68 Down: 92 Osc: -24
UPW Ultra Utilities Ultra Sector Yes DMI: strong trend Down (ADX: 37 +DI: 11 -DI: 39) Strong Down trend - Up: 12 Down: 96 Osc: -84
UYM Ultra Basic Materials Ultra Sector Yes DMI: strong trend Down (ADX: 26 +DI: 14 -DI: 27) Strong Down trend - Up: 8 Down: 100 Osc: -92

This list of strong SELL signals has at least more candidates than the list of strong BUY signals. In this list we see a confirmation of the demand destruction theme discussed above.

We also see that small cap stocks may not be strong BUYs but, according to our analysis, they are not strong SELLs either. This is indicated by the presence of the two UltraShort Russell ETFs on this SELL list. Indeed, we saw the Russell 2000 gain 2.5% this past week. Still we see a lack of confirmation from the moving averages. For these two ETFs, the 20-day MA is not yet below the 50-day MA.

Conclusion --

This week's list couldn't be more different than the list we presented a month ago. There are far fewer ETFs represented on this week's list and they indicate that completely different sectors are attracting the most interest. This confirms the change in market sentiment we have seen in the last two weeks. Last month's list reflected almost indiscriminate selling. This week's list is much more focused.

On the other hand, the fact that we don't see any Ultra long ETFs on the BUY list is an indication of a market where the rally has not yet had enough time to make an impact on the trends of these kinds of ETFs. Without that kind of confirmation, it is appropriate to take a "wait and see" attitude before subscribing to the concept that the rally of the last two weeks is the real thing.

By the way, a month ago the UltraShort Financial ETF (SKF) was the strongest on the list. This time, it is no where to be seen.



Saturday, July 26, 2008

Weekly review - small-caps lead the way but red flags remain

If you only look at the Dow or the S&P 500, one might be tempted to say that stocks didn't do much this week. In actuality, there was a lot of movement in the broader market.

This week saw a divergence between the large-cap stock indexes and the small cap indexes. The Dow finished down 1.1% and the S&P 500 finished down 0.2%. This is in contrast to the NASDAQ which finished up 1.2% and the Russell 2000 which finished up a big 2.5%.

Events that moved markets this week included further drops in the price of oil, bad earnings reports from Ford and American Express and weak housing data. Many stocks are beating what are turning out to be extremely pessimistic earnings estimates. For the majority of companies, however, forward guidance has been cautious which has, in some cases, driven sell-offs.

Against this backdrop, many stocks were able to continue the momentum of the previous week's rally but red flags remain. Our technical analysis of the market follows.

Looking at daily data --

An overview of the short-term technical picture is presented in the following chart of market statistics based on daily data collected by our Alert HQ process. Each weekend we scan over 7200 stocks and ETFs looking for BUY and SELL signals. We also collect various technical information that we roll up into a chart like the one below:

Stock Market Statistics, week ending 7-25-2008
Moving average analysis --

We have three weeks in a row now where the short-term moving averages have been climbing. The number of stocks above their 20-day moving average increased again though the rate of increase has slowed down. At a level of 3275, it is greatly improved but still doesn't even include half of all stocks we track.

The number of stocks above their 50-day moving average moved up and has reached a level of almost 2300, less than a third of all stocks. This metric has finally reached a level above what was registered at the March low.

Finally, we see that the number of stocks whose 20-day moving average is above their 50-day moving average has increased over the prior week's reading for the first time since the middle of May. At a level under 1540, however, it is still well under the number we hit at the March lows.

Looking at buying and selling pressure --

The Aroon analysis we do shows stocks in strong up-trends or down-trends. This week's chart shows the number of stocks found to be in strong up-trends has increased again and has hit a level of 1500. Though better than the level at the March low, it is still less that 21% of all stocks we track.

The number of stocks determined to be in a strong down-trend, though, really decreased rapidly this week. This is the third decline we have seen since mid-May and these last two have been big ones. The number has dropped from the previous week's 52% of all stocks we examined to about 25%. According to Aroon, then, only about one quarter of the stocks in the stock market remain in strong down-trends.

We also plot the results of Chaikin Money Flow analysis. This indicator is slow moving but at least it is moving in a bullish direction. The number of stocks undergoing strong accumulation or buying has now moved up to 600. Not shown on the chart is the number of stocks shown to be undergoing strong distribution or selling. This indicator has fallen for the third week in a row and is now at 620.

Weekly data --

We also present market statistics based on weekly data in the chart below.

Stock Market Statistics based on weekly data, week ending 7-25-2008
The weekly statistics, by their nature are more slow moving than the statistics based on daily data. The chart above throws some cold water on the positive tone of the daily data. When viewing the weekly data, it looks much more like the market has barely gotten up off the floor. Though some of the moving average and Aroon up-trend analysis are now positive, it is clear that a major bull market move has not yet been signaled.

The major averages --

The following chart of the S&P 500 shows how, despite improvement in the broad market, large caps making up this index have not made sufficient progress to even challenge the 50-day moving average. Further compounding the bearish outlook, the 50-day MA is still pointing downward and increasing its distance below the 200-day MA which is also pointing down.

Chart of SP500
The following chart of the Russell 2000 shows that small-caps are having a much better time of it than the large-caps. As our market statistics based on daily data indicate, there is definitely some positive action going on in the broad market. We see that the Russell 2000 has crossed above its 50-day MA. The index almost challenged the 200-day MA but fell back before reaching it. Neither moving average is heading downhill as steeply as those of the S&P 500.

Chart of Russell 2000
Conclusion --

The markets are displaying a confusing number of technical indications. Short term metrics are positive (those based on daily data) but longer-term metrics show that the overall trend is still clearly bearish. Large-caps are under-performing small-caps despite the gains in big financial stocks recently. Until the indexes move above their 200-day moving averages, it is difficult to feel that the downward trend has really changed. Our data shows that even when market statistics seem quite positive, as they were in May, it may not be enough to reverse the bearish trend.

Coming up on Monday, investors will need to react to the passage of the housing bill and the failure of two more banks. Other events driving the markets this week will include jobs numbers, advance GDP, consumer confidence, auto sales (bound to be lousy), Chicago PMI, ISM index and lots more earnings reports.

Caution is still the overriding principle that should guide us through these next weeks.



Alert HQ for the week ending 7-25-2008

This post is to announce that the latest list of stock alerts is up and available at Alert HQ. Each week we scan over 7200 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move.

After a big rally in the previous week, this week saw mixed results. The Dow and the S&P 500 ended a bit below the previous week's close, the NASDAQ and the Russell 2000 nicely above.

This week's action saw stocks continue to advance sufficiently to begin triggering numerous BUY signals. What a list we have this week! Based on daily data we have 146 BUY signals and only 5 SELL signals. This is the most lopsided I have seen these numbers since we began running the Alert HQ process.

Before getting too excited, though, it is useful to step back and look at the signals based on weekly data. Here, the situation isn't nearly so giddy: 20 BUY signals and 23 SELL signals.

Many analysts are saying we are seeing a "feel-good" rally in a bear market. Our daily signals certainly bear out the strength of the "rally" part of this concept. Our weekly signals, however, indicate things could go either way.

In any case, 194 signals for $1.99 is still a bargain. Build your watchlist and be ready to take action.



Thursday, July 24, 2008

Bond market looks vulnerable - two ProShares ETFs to play the move

"The cycle repeats viciously
While I smile outwardly"

-- Bracken Courage from the song The Cycle

When it comes to the ProShares ETFs, most of the attention is devoted to the ones that track various stock-related indexes such as the Dow, NASDAQ, S&P 500, Russell 2000 as well as a number popular sector indexes such as financials, REITs, tech, etc. Lately, the ETFs that track oil are getting some action, too.

What many individual investors may be missing is that the bond market, in particular the Treasuries, is not doing especially well. And ProShares offers a way to take advantage.

Bond market fundamentals --

There are several reasons for the situation in the bond market.

The one that most investors are worrying about is inflation. Bonds typically decline in price as inflation increases or as the perception of impending inflation increases. This is because investors know that the typical Fed response to inflation is raising interest rates. This implies that bonds issued in the future will have higher yields than those currently being traded in the market. This expectation makes current bonds less valuable and tends to put pressure on bond prices.

Taking a long term view, interest rates, as represented by the target Fed funds rate, are currently at a fairly low level. It is not unreasonable to assume that, over time, there will be a reversion to mean; ie, rates will rise from here as part of the natural business cycle. With bond prices moving inversely to rates, this implies Treasury prices could soon hit a down-trend.

What is less often considered is the supply/demand dynamic in the Treasury market. The government is actively trying to provide support to the economy. This is taking the form of economic stimulus checks, bailouts for Fannie Mae and Freddie Mac, insuring home loans, etc. All of this takes money, lots of it, and the government raises money by selling bonds. Issuing large quantities of new bonds to support new government programs will increase supply and may well exceed demand.

To summarize the fundamental backdrop, bond prices are likely to drop due to creeping inflation, rising interest rates and a growing supply of bonds issued by the government.

Technical analysis --

Looking at the technical situation, we have the following chart of the iShares Lehman 20+ Year Treasury Bond Fund (TLT). You can see that the ETF's 50-day moving average has fallen below its 200-day moving average. The price of the ETF itself, despite a jump today, remains a penny less than the 50-day MA. This is a very "toppy" looking chart pattern.

TLT 2-year chart
Pulling back to include the period from 2002 to the present, we have this next chart. As you can see, there is quite a bit of cyclicality in this ETF's price action. Based on this long term view, it can be assumed that TLT is coming down from a peak and soon we will be seeing the mean reversion discussed above followed, more than likely, by the continuation of the cycle down to where TLT trades below its mean value.

TLT 6-year chart
ProShares offers two ETFs that allow an investor to play this trend:

  1. UltraShort Lehman 7-10 Year Treasury (PST), based on the Lehman Brothers 7-10 Year U.S. Treasury Index
  2. UltraShort Lehman 20+ Year Treasury (TBT), based on the Lehman Brothers 20+ Year Treasury Index
These ETFs were only introduced in May of this year so their track record is not very long; nevertheless, they are already proving to be quite popular. Both ETFs are in the top 50% of all ProShares ETFs in terms of average daily volume. (Read why this is important: ProShares ETFs - why trading volume makes a difference)

If you have read this far, you might be asking why bonds were up so strongly today if the longer term trend is down. "Flight to quality" is a term often used to describe how investors move into Treasuries when the stock market is in trouble. We have been seeing this over the last few months. Despite the perception of rising inflation, funds have poured into bonds whenever a major jolt hit the financial sector and the stock market plunged. As the stock market stabilized, the bond market weakened. Today, the stock market tumbled as investors received new evidence that real estate has not yet recovered. Keep in mind this just made PST and TBT cheaper. The cycle will repeat, get ready to ride it.

Disclosure: none



Tuesday, July 22, 2008

Taiwan Semiconductor - today's pullback a buying opportunity?

Taiwan Semiconductor (TSM) fell over 4% today, more or less in sympathy with the drop in large-cap semiconductor stocks instigated by the poor showings of Texas Instruments (TI) and SanDisk (SNDK).

There may indeed be some near-term pressure on TSM but looking longer term, the company is benefiting, and in the future will increasingly benefit, from the "go fabless" trend in the semiconductor industry.

What "going fabless" means is that a semiconductor company outsources the manufacturing of the physical chips while maintaining the intellectual property of the chip designs in house.

This approach has two major benefits:

  1. Paying for a semiconductor foundry is not necessary. This can save the semiconductor company several billion dollars in capital investment.
  2. Since a foundry does not need to be built from scratch, the semiconductor company enjoys faster time to market.
These benefits can be useful to mature companies but in these days can be crucial for a semiconductor start-up.

As the biggest of the companies engaged in providing outsourcing services to the semiconductor industry, including selling critical foundry capacity, TSM is well positioned to benefit from the trend described above.

At current levels, the stock is not particularly expensive. It has a PEG of only 0.79 and a PE under 14, quite reasonable for a tech stock. With a $50B market cap, this is a solid company that maintains a strong position in its industry. Management continues to declare that the company will meet consensus analyst expectations despite the turmoil in the markets. TSM has just finished buying back about 1% of outstanding shares and will be buying back another 1% during 2008.

The chart is a bit of a mess and it looks like the stock is on the way down to about $9. Given TSM's potential, that wouldn't be a bad entry point.

Disclosure: none



Monday, July 21, 2008

ProShares - this week's link list

As I strive to be the prime source for information and commentary on the ProShares family of ETFs, I thought I should widen the net to pull in blog posts from other financial writers.

This post is the first to contain a list of links, a "linkfest" as Barry Ritholtz would say. To my surprise, it is a little more difficult than I expected to find posts on the ProShares ETFs.

The following list is comprised of posts that appeared on Seeking Alpha over the course of the last week or so:

Stock Markets Nearing Important Bottom
Aggresive Investors Should Ante Up with ProShares Ultra Financial ETF
ETF Update: Focus on Health
Five Strategies to Survive the Markets
Short Oil as a Long Investment
Protecting Your Wealth and Profit During the 2008 Crash
Notes on a Schizophrenic Market Week
ETF Pick of the Week: ProShares UltraShort Oil &Gas
Why It's Time to Invest in Domestic Banks
June Best Month for Short Selling in 7 Years
The S&P 500 Hits the 1200 Target. Now What?
Why Is Large-Cap Value Underperforming?
Chinese Monetary Policy: U.S. Treasury's Best Friend?
A U.S./China Comparison
Calling Today A Short-Term Bottom for Financials
Is This Financial Armageddon or the Greatest Buying Opportunity Since 2002?
Dow's Next Move: A Technical and Fundamental Look
Sharp Short Covering Rally Due During Options Expiration
ETF Update: Time for Biotech?
US Economy Still Has a Ways to Go
Can the Dow and S&P Last 15 Rounds?
ProShares' Financial ETFs vs. Real Estate ETFs - Which Should You Own?

In order to go beyond what Seeking Alpha has to offer, I am providing this link to the Google "Search Blogs" feature that will return any blog post that includes the symbol for one of the ProShares ETFs. Bookmark this post and come back to use this link at any time. There may be some overlap with the content from Seeking Alpha.



S&P 500 - weekly sector analysis: caution is the word

"Caution is not cowardly. Carelessness is not courage" -- Unknown source

Each week we gather some technical analysis statistics on the overall stock market and in particular the S&P 500. This week's post provides some insight into the sector rotation going on in the S&P 500 and details the performance of the various industry sectors represented in the index.

The following chart is for the week ending July 11, 2008. It gives a breakdown of the industry sectors and the results of running a number of technical indicators on the stocks in each sector.

SP500_stats_07-11-2008
This next chart is for the week ending July 11, 2008. We'll discuss some of the differences below.

SP500_stats_07-18-2008
The most marked change is in the Energy sector. The last few weeks have seen a real change in the trends for most of the stocks in this sector. Looking at the chart above, we see the sector has fallen to the weakest state it has been in in months. Both Aroon and DMI analysis indicate that no stocks in the sector are currently in strong uptrends.

All the excitement has been around the Financial sector lately. Certainly, some of the stocks in the sector have made tremendous gains over the past week; however, it has not been enough to establish solid up-trends in a majority of the stocks in the sector. Still, the momentum seems to be in favor of the Financials at this time and there is a definite improvement that can be seen when comparing the current data to the previous week's.

Health Care is turning in a surprising performance. The sector is in even better shape this week than it was last week despite the rally that saw a move away from defensive sectors.

Consumer Discretionary has also perked up over the last week, in keeping with the move away from defensive sectors. With oil prices falling, confidence in the consumer is returning.

Tech and Industrials get a lot of attention but these sectors seem to be muddling along with faily lackluster performance. Materials aren't doing any better.

Overall, the picture shows that almost all sectors are basically not doing especially well. The previous top sector, Energy, has taken a hard fall. The new heroes, the financials, are moving up but have not yet established durable up-trends. Some say we have put in a bottom. That may be but the current situation shows a market that is very early in establishing any kind of up-trend. Caution is still the word of the day.



Sunday, July 20, 2008

Traders might like this market; investors, not so much

This past week started off with more of the same: selling of everything and especially the financials. Wednesday, that all turned around as the market began a surprisingly strong two day rally.

Strength came from the financials in an unlikely turnaround in investor sentiment toward this downtrodden sector. On Wednesday, Wells Fargo reported earnings. Though down from the previous year's quarter, the company was nevertheless profitable and even increased their dividend. Weary investors took this as a sign that all was well with the banks and began buying financials like crazy. Added to the mix was the announcement that the SEC was prohibiting the use of naked shorts when shorting a list of selected financial stocks. Everyone held their breath waiting for Citi to report on Friday. Investors sighed with relief when Citi announced losses not as awful as had been feared.

Against this backdrop, investors decided to embrace the concept of demand destruction in the oil markets. No one wondered whether this is an admission that economic growth is slowing and consumers are strapped. In any case, oil futures tumbled to under $130 a barrel and this, too, fed the rally.

Tech stocks however turned in a mixed performance this week. In contrast to the banks, which have horrible year-over-year earnings and are congratulated when they lose a few billion dollars less than expected, several tech stocks were punished for strong growth that was slightly below analyst expectations. Google and Microsoft fall into this category. IBM and Intel, however, showed that they are weathering the economic slowdown pretty well and their stocks were rewarded accordingly.

With all this going on, the markets managed to break a six-week losing streak. From a technical analysis point of view, this week's action lit a fire under the moving averages.

Looking at daily data --

An overview of the short-term technical picture is presented in the following chart of market statistics based on daily data collected by our Alert HQ process. Each weekend we scan over 7200 stocks and ETFs looking for BUY and SELL signals. We also collect various technical information that we roll up into a chart like the one below:

Stock Market Statistics based on daily data, week ending 7-18-2008
Moving average analysis --

We now have two weeks in a row where the short-term moving averages have been climbing. This week showed a steep increase in the number of stocks trading above their 20-day moving average. In two weeks the number has gone from below 1000 to over 2900. After spending a few weeks below the March lows, this is heartening news for the bulls.

The number of stocks above their 50-day moving averages also moved up for the second week in a row, from 1100 two weeks ago to over 1770 now. Despite the improvement, this number remains lower than at the time of the March lows.

Even though things are looking better with the shorter-term moving averages, the number of stocks whose 20-day moving average is above their 50-day moving average dropped yet again and also remains at a level below what we saw at the March lows.

Looking at buying and selling pressure --

The Aroon analysis we do shows stocks in strong up-trends or down-trends. This week's chart shows the number of stocks found to be in strong up-trends began to increase; nevertheless, it remains under 12% of all stocks.

The number of stocks determined to be in a strong down-trend, though, decreased nicely this week, the second decline we have seen since mid-May. The number has dropped from the previous week's 62% of all stocks we examined to about 52%. According to Aroon, then, only about half the stocks in the stock market are in downtrends.

We also plot the results of Chaikin Money Flow analysis. The number of stocks undergoing strong accumulation or buying has now stalled at just under 400. Not shown on the chart is the number of stocks shown to be undergoing strong distribution or selling. This indicator has fallen for the second week in a row and is now under 1000.

Weekly data --

This week we also present market statistics based on weekly data in the chart below.

Stock Market Statistics based on weekly data, week ending 7-18-2008
Looking at this chart, enthusiasm is more difficult to muster. Though the 20-week and 50-week moving averages are turning up, all the other indicators are flat to down, the exception being the Aroon Down-Trend indicator which continues to increase.

Conclusion --

Though we had a powerful rally on Wall Street this week, it is not clear that the stock market is out of the woods.

From a technical point of view, the short-term moving averages are signaling a change in sentiment but most other indicators suggest maintaining a "wait and see" attitude might be the best strategy. The fact that a number of these indicators have not even managed to exceed the levels we saw during the March lows gives me pause.

Most stocks have been beaten down quite a bit and waiting to see if this rally is for real should not prevent investors from profiting over the long term. Better to wait and leave a few dollars on the table than to be too quick and loose a bundle.

For those who are looking for a quick trading opportunity, however, the set up is looking a lot like a short-term bottom has been put in place. Place your bets, folks.



Saturday, July 19, 2008

Alert HQ for the week ending 7-18-2008

This post is to announce that the latest list of stock alerts is up and available at Alert HQ. Each week we scan over 7200 stocks and ETFs looking for fresh BUY and SELL signals.

Stocks staged a strong rally this week led by financials of all things! All the major indexes showed respectable gains as earnings season is turning out to be decent despite some mixed results in the Tech sector.

Oil dropped a significant amount this week and that accelerated the rotation we had seen from energy stocks to other sectors and provided another big boost to the stock market.

As a result of all these positive feelings running rampant through the markets, we have a big change in what we are seeing in the TradeRadar daily signals. For the first time in weeks we have more BUY signals than SELL signals. We actually have 65 BUY signals and only 31 SELL signals based on daily data. Unfortunately, the signals based on weekly have not been so quick to turn around. We have only 7 BUY signals and 22 SELL signals based on weekly data.

So this week we have a big selection of stocks to choose from. Add to your watchlist and be ready to move.



Thursday, July 17, 2008

Does change in ProShares BUY signals indicate sector rotation?

Sometimes it is as instructive to see what sectors are out of favor as it is to see what sectors are in favor.

Recently we posted a list of the strongest BUY and SELL signals found in the family of ProShares ETFs. This earlier post found mostly inverse ETFs generating the strongest BUY signals. This was interpreted as a display of a very negative outlook on the stock market as nearly every sector was represented.

The following list shows those ETFs which, over the last two weeks, have fallen off the earlier list of strong BUY signals

FXPUltraShort FTSE/Xinhua China 25Short International
RXLUltra Health CareUltra Sector
SMNUltraShort Basic MaterialsShort Sector
SZKUltraShort Consumer GoodsShort Sector
SJHUltraShort Russell2000 ValueShort Style
SKK UltraShort Russell2000 GrowthShort Style
SRS UltraShort Real EstateShort Sector
SSGUltraShort SemiconductorsShort Sector

The fact that the UltraShort funds are falling off the BUY list indicates that those sectors are at least showing some improvement. This may not yet signal that investors should buy the corresponding Ultra Long ETFs but it does indicate that this is something that bears watching.

Some of the more interesting aspects of the above list are that small caps, as represented by the Russell 2000 ETFs are perhaps finding some favor among investors as are REITs (SRS) and China (FXP).

Health Care was seeing some favor as a defensive sector but now we see that the Ultra Health Care ETF (RXL) is no longer generating a strong BUY signal. This could also signify that investors are becoming less defensive and more inclined to take on some risk.

And when semiconductors are attracting buyers, you know that risk-taking is definitely back. Witness the UltraShort Semiconductor ETF (SSG) now falling off the BUY list.

As a final word of caution, this list shows ETFs that are no longer generating strong BUY signals. This does not necessarily imply that they are now generating strong SELL signals. This list is meant primarily as an indicator of a potential changing of the guard in terms of leading sectors. Investors should be alert, especially after the rallies we have seen in the last two days.



Wednesday, July 16, 2008

More trouble in store for OmniVision?

OmniVision (OVTI) is a California semiconductor company that makes solid state image sensor devices, or camera chips, for cell phones and other consumer products. Though design is carried out in the United States, chip fabrication occurs in Taiwan.

DigiTimes has reported news of "CMOS image sensor supplier OmniVision planning on reducing its order volumes to Taiwan Semiconductor Manufacturing Company (TSMC) in the third quarter". Instead of increasing orders by 10% it will reduce orders by 10%.

A weakening in the handset market is said to be the cause of the reduction in orders. OmniVision apparently increased inventory too rapidly based on overly optimistic expectations for cell phone orders.

This comes after the company disappointed investors last quarter, missing analyst expectations for both sales and earnings. In the company's fiscal fourth quarter ending in April, sales fell 25%. EPS came in at $0.27, shy of analyst estimates of $0.32. The stock has fallen from over $19 in April to under $12 today.

This may add a question mark to a recent bullish recommendation by Caris chip analyst Betsy Van Hees who recently came out favorably on the company based on long-term strength in the image sensor market and a higher margin product mix.

On a side note, OmniVision's higher margin products will increasingly put it in more direct competition with Aptina Imaging, a spin off from Micron Technology and a company that has been successful targeting the mid-range to high-end of the CMOS image sensor space.

Disclosure: none



Tuesday, July 15, 2008

Why is large cap value underperforming?

Today I did a comparison of value versus growth funds using the ProShares family of ETFs. ProShares provides a selection of Ultra-long ETFs as follows:

Ultra Russell 1000 Value (UVG)
Ultra Russell 1000 Growth (UKF)
Ultra Russell MidCap Value (UVU)
Ultra Russell MidCap Growth (UKW)
Ultra Russell 2000 Value (UVT)
Ultra Russell 2000 Growth (UKK)

They also provide a selection of Ultra Short ETFs as follows:

UltraShort Russell 1000 Value (SJF)
UltraShort Russell 1000 Growth (SFK)
UltraShort Russell MidCap Value (SJL)
UltraShort Russell MidCap Growth (SDK)
UltraShort Russell 2000 Value (SJH)
UltraShort Russell 2000 Growth (SKK)

Looking at the relative performance of the Ultra Long ETFs, it is clear that large cap value is underperforming by a wide margin. The following chart shows how UVG, the Ultra Russell 1000 Value ETF, is doing significantly worse than the other ETFs.

UltraLong-Russell-Growth-versus-Value-ETFs
In looking at the constituent holdings of the Ultra Russell 1000 Value (UVG) ETF, we see that the ETF contains lots of financial stocks, 165 of them to be exact. Many of these stocks are the same names that have been written about in the financial media due to write-offs, recapitalizations, sagging balance sheets, quarterly losses and every other kind of shoe dropping bad news that has befallen the financial sector.

Also included are a large number of REITs. Of the 165 financial stocks in the underlying index for the UVG ETF, 37 are REITs.

Value investors seek not just make a profit but to have as large a margin of safety as possible. After a prolonged market downturn, it is reasonable for value investors to look at certain beaten down stocks as ripe for a rebound. The other part of the value analysis is to determine if the stock in question actually has the potential for earnings growth to justify a future higher price and, given the current price and financial situation, whether the likelihood of a near term price decline is small. Many value investors also feel that the more obscure a stock is, the more of an edge the value investor has over the general market.

In the case of the Russell 1000 Value index and ETF, the stocks are all well-known large-caps. This violates the last principle mentioned in the previous paragraph. More seriously, many of the constituent stocks, though certainly low priced on a price to book basis, for example, have very uncertain futures. In particular, I'm talking about the financial stocks

In conclusion, the Russell 1000 Value ETF (UVG) is clearly over-sold; however, an investor buying this ETF has to be comfortable with owning a large proportion of financials, many of whom may see depressed earnings for many more quarters to come, are facing increased regulation and are seeing certain lucrative lines of business like mortgage backed securities and leveraged buyouts disappear.

Value investing as a methodology remains valid but investors need to know what they are getting into when buying the Russell 1000 Value ETF.

Disclosure: none



Monday, July 14, 2008

Part 2 - Time to get conservative with your 401K

Back in January when the market was going through its first set of gyrations and hitting a serious low I wrote a post titled "Time to get conservative with your 401K".

In that post I suggested that, in the interest of preserving capital, it might be a good idea to move approximately half of your 401K holdings into a stable value fund. It's true, this does have an element of market timing. On the other hand, there is nothing wrong with being defensive when it is clear that the market is in a serious downtrend. In fact, the post was somewhat inspired by the writing of Random Roger who advises that investors avoid allowing their portfolios to go "down a lot" though "down a little" is probably unavoidable in a down market.

With the Fed and the Treasury moving to support Fannie Mae and Freddie Mac, it is time to discuss this strategy again. At the time of the original post, there was a debate about the nature of the holdings of stable value funds. The funds are typically not very forthcoming on the specifics of their holdings. It is generally accepted, though, that most of these funds hold bonds, known as agency debt, issued by Fannie or Freddie. Agency debt generally holds the highest ratings, but investors have demanded a nominal spread over Treasury debt for perceived credit risk. These slightly higher spreads contribute to the higher interest rates offered by the stable value funds as compared to money market funds. As an indication of the safety of agency debt, however, the spreads are less than for other publicly traded companies since investors see government ties representing an implicit guarantee.

With Freddie and Fannie under pressure and accusations of insolvency being thrown about, I began to worry that stable value funds and some of the other so-called "cash" funds offered in 401K plans were perhaps not as safe as advertised. The stocks of the two GSEs have been decimated but the debt has been holding its value with spreads over Treasuries staying in a reasonable range.

Today, Freddie Mac offered $3 billion of short-term notes. This was not an unusual transaction but against the current backdrop it was looked at as somewhat of a test of investor confidence in the agency's debt. I was relieved to see that Freddie drew higher-than-average demand for the notes as the U.S. Treasury's rescue plan seemed to assure that the government will back the company's debt. The bid-to-cover ratio at Freddie's bill auction, gauging demand by comparing total bids with the amount of securities offered, was more than 50 percent above the average of the past three months.

In addition, the spreads have narrowed, showing that the market is pleased with the actions of the Treasury rather than alarmed.

So far, then, the stable value fund strategy is still safe. The debt of Freddie and Fannie retains its high rating and investor confidence. It may be wise, however, to dig into the stable value fund offered by your 401K plan to better ascertain the nature of its holdings. And just to be cautious, it would be reasonable to look at alternatives. For typical "flight to safety" purposes, a fund holding short-term treasuries or TIPS would be appropriate. You won't make much money in these kinds of investments but at least you can be pretty sure you will preserve capital.

For more on this topic, read Part 3.



Saturday, July 12, 2008

The market hesitates - too soon to call the bottom?

It was all about Fannie, Freddie and oil this past week. The major indexes dropped but we saw a small glimmer of strength in the broad market.

A rumor driven market --

Financials again took it on the chin as rumors swirled about Fannie Mae and Freddie Mac facing insolvency, government bailouts, Fed intervention, etc. As the financials go, so go the Dow and the S&P 500 and to a lesser extent, the rest of the market.

Oil dropped earlier in the week only to rise to a new intra-day record after more rumors about conflict with Iran and Israel's willingness to stage a preemptive attack on Iran's nuclear facilities. Political disturbances in Nigeria also contributed to oil's resurgence. Against this background, gold also rose solidly on the week.

Tech stocks were hit by a downbeat assessment on the technology environment delivered by a Cisco's John Chambers. A positive statement from Intel only helped a little to dispel the gloom settling over tech.

In spite of all this, it was a pleasant surprise when looking at the results of our technical analysis to see that at least a few stocks rose over the course of the week.

An overview of the short-term technical picture is presented in the following chart of market statistics collected by our Alert HQ process. Each weekend we scan over 7200 stocks and ETFs looking for BUY and SELL signals. We also collect various technical information that we roll up into a chart like the one below:

Stock Market Statistics for week ending 7-11-2008
We plot six different indicators. This week, they are showing that a battered and bruised market may be taking a breather in its recent decline.

Moving average analysis --

There is actually some decent news in the moving averages this week. The number of stocks trading above their 20-day moving average moved up from below 1000 to almost 1500. As welcome as this bounce is, it is still hovering at a level that is even lower than at the time of the March lows.

The number of stocks above their 50-day moving averages moved up from 1120 to just over 1300, also lower than at the time of the March lows. It is now up to 18% of the total number of stocks we evaluate and remains at a historically low value.

Despite the somewhat good news in the previous paragraphs, the number of stocks whose 20-day moving average is above their 50-day moving average continued to drop though at a slightly slower rate and has also reached a level below what we saw at the March lows.

Looking at buying and selling pressure --

The Aroon analysis we do shows stocks in strong up-trends or down-trends. The chart shows the number of stocks found to be in strong up-trends dropped yet again last week. It remains under 8% of all stocks.

The number of stocks determined to be in a strong down-trend, though, actually decreased this week, the first decline we have seen since mid-May. The number has dropped from the previous week's 70% of all stocks we examined to 62%.

We also plot the results of Chaikin Money Flow analysis. The number of stocks undergoing strong accumulation or buying has now increased from under 290 to just under 400. Not shown on the chart is the number of stocks shown to be undergoing strong distribution or selling. This indicator has fallen from over 2000 to under 1160.

S&P 500 Sector Analysis --

The following chart summarizes how the various sectors that comprise the S&P 500 are performing technically.

SP500 Sector Analysis, week ending 7-11-2008
The surprise in this week's results is weakness in the energy sector. Though oil prices have stayed strong, weakness in the broad market is finally bringing down the some of the star stocks in the energy sector. This is seen in the Aroon and DMI numbers which have fallen to single digits. Based on moving averages, however, the energy sector is still maintaining leadership.

Sectors that have shown general improvement since last week include Consumer Staples and Healthcare while Utilities are holding their own.

Tech continues to slowly wilt and is now reaching the same levels we have seen in Industrials and Materials. As always, Financials and Consumer Discretionary are bring up the rear.

Conclusion --

The 20-day and 50-day moving averages are showing that some stocks are enjoying a bit of a bounce. Aroon shows that some downward trendlines are moderating. Chaikin Money Flow shows that selling is not as strong and widespread as it has been recently.

The S&P Sector analysis shows the defensive sectors taking the lead while former leaders like Energy begin to show weakness.

What we seem to have is a market that is hesitating. It has marched steadily downhill since peaking in May. Now we are seeing some positive signs in a few of the technical indicators. Or maybe we should say they are less negative signs.

We see some sector rotation as defensive stocks finally come into more favor. The fall of the last strong sector, Energy, might be seen as a capitulation (even good stocks are getting sold) or maybe a bet that oil is peaking. Either interpretation might lead one to believe a bottom is near. Importantly, there has been a stirring in non-financial stocks, especially among the small-caps, that actually resulted in a gain in the Russell 2000 this week.

As much as bulls want to grab onto some good news, though, the general trend for now remains decidedly down until proven otherwise.

Earnings, rumors and news and will determine the course of action. Earnings season is now upon us. Investors are clearly worried that earnings could take the markets down another notch. The news remains grim. How will investors react to the failure of IndyMac? Is this just the tip of the iceberg? What new rumors regarding Lehman, Freddie or Fannie or an unexpected company or situation will panic investors next?

In any case, we must all stay alert. It will be a busy week on the economic calendar with PPI, CPI, retail sales, Empire State Index, industrial production, crude inventories, initial claims and Fed minutes. As for earnings, we will see a good number of large and small banks reporting this week and surprises of sufficient magnitude could indeed move the market.



Alert HQ for the week ending 7-11-2008

This post is to announce that the latest list of stock alerts is up and available at Alert HQ. Each week we scan over 7200 stocks and ETFs looking for fresh BUY and SELL signals.

This week's market action showed that wherever the financials are, indexes go down. The Dow and the S&P 500 showed 1.7% and 1.9% declines. Financials make up a significant percentage of those indexes even though their weight has been reduced compared to other sectors. Where the financials do not predominate, indexes actually saw some gains or at least a very small loss: Midcap 400 up 0.1%, Russell 2000 up 1.4% and the NASDAQ down only 0.3% on the week.

Nevertheless, it is a tough market for holding stocks. With rumors swirling around Fannie Mae and Freddie Mac, investors have been especially skittish. As a result, markets have traded in wide ranges each day. Throw Iran/Israel and the price of oil into the mix and you have the makings of a spicy stew indeed.

As I have been saying for weeks now, the market turmoil is making it difficult to find good stock alerts on the BUY side and is putting tremendous pressure on previous BUY signals. This week we see at least a slowing of the carnage as, based on daily data, there are only 21 SELL signals. This is two thirds less SELL signals when compared to last week and, with 9 BUY signals this week we increased the number of BUY signals by one. Before we get too excited however, we need to keep in mind one data point does not make a trend. Also this week, we have 2 BUY signals and 23 SELL signals based on weekly data.

What to do with all these SELL signals? If you are not disposed to trading on the short side, you may take a contrarion approach and look through our list of SELL signals for good companies that are beginning to trade at bargain prices. Build that watchlist and be ready to move when price levels are attractive.



Friday, July 11, 2008

ProShares Financial ETFs versus Real Estate ETFs - which should you own?

In looking at the constituent holdings of the ProShares Ultra Financials ETF (UYG) I noticed that there seemed to be a good number of REITS included.

To investigate further, I took the holdings of the ProShares Ultra Real Estate ETF (URE) and did a direct compare to the holdings of UYG.

To my surprise, every single one of the holdings in the Ultra Real Estate ETF, comprising a variety of 80 different REITs, was also included in the Ultra Financials.

Relative performance --

It is interesting to see how real estate underperformed the combined financials until March of 2008 when the situation turned around and financials became the one that underperformed.


Chart of UYG vs. URE
In the first part of the chart, you can see URE begin to weaken as the news about troubles in the real estate sector began to take a toll. During this time, the idea that the problems in real estate wouldn't spill over into the rest of the financial sector or the general economy was still in vogue. By last October reality began to set in and as URE continued its severe down-trend, UYG began to drop at a faster rate. By March of this year, UYG overtook URE on the down side as bank stocks crumbled. That situation continues today.

For the ultra-short ETFs, SKF and SRS, the charts would, of course, be the inverse.

Conclusion --

To review, the Financial ETF holds a diversified mix of banks, brokers and investment houses, mutual fund management companies, commercial and consumer lenders, insurance companies, etc. as well as REITS.

The Real Estate ETF holds all the same REITs as found in the Financial ETF and nothing else. The REITs do fall into a number of different categories including health care, apartments, retail, hotels, etc.

The primary conclusion is that it may not make sense to simultaneously own both UYG and URE. If you want to invest in diversified financials, you can buy UYG and get the holdings of URE as part of the package.

Similarly, it may not make sense to simultaneously own both of the ProShares Ultra-Short ETFs, the Ultra-Short Financials (SKF) and Ultra-Short Real Estate (SRS). If you want to bet against a diversified basket of financial stocks, buy SKF and get the holdings of SRS as part of that package.

As always there is an exception to the rule. If an investor wishes to overweight the real estate sector beyond what the long or short Financial ETFs offer then it is reasonable to add some of the Real Estate ETF to the investment mix.

On the other hand, if an investor wants to concentrate solely on REITs, clearly the ultra-long URE or the ultra-short SRS are the appropriate ETFs.

Disclosure: none



Thursday, July 10, 2008

Options or ETFs - which is better for the individual investor?

It is generally agreed that the ProShares long/short and ultra-long/ultra-short ETFs are good vehicles for both hedging and short term trading.

One voice of dissent is from those who are adept at trading options. Their point is that options are cheaper and can provide more leverage. The variety of option strategies (puts, calls, butterflies, straddles, buy/write, LEAPs, etc.) can provide more flexibility. There are also a much larger number of stocks, each with an associated options chain, to choose from while there are only 64 ProShares ETFs, for example, currently on the market.

For the individual investor, though, the ease of use derived from the ETF approach may outweigh the benefits of using options. In the case of the ETF, an investor does not need to choose an expiration date or a strike price.

Now that ProShares has expanded their offerings with ultra-long/ultra-short sector ETFs in addition to the ETFs that track major market averages, investors now have the choice of choosing numerous different types of indexes against which to hedge or speculate. Still, compared to the nearly overwhelming choice of options, ETFs make the selection of the appropriate vehicle much more straightforward.



Wednesday, July 9, 2008

Solar wafer prices on the rise again?

When considering solar stocks, the conversation always turns to the cost of silicon and solar wafers, the raw materials that go into solar cells and photovoltaic solar panels.

For some time now, the industry has suffered a shortage in silicon. This has driven up prices and led to PV panel manufacturers implementing long-term contracts to assure adequate supply in the future.

Many have thought that with new silicon suppliers coming online the shortage would soon ease and prices would begin to come down.

An article today in Digitimes suggests that the price optimists are a little ahead of themselves. To quote the article:

"Solar silicon wafer suppliers Sino-American Silicon Products (SAS) and Green Energy Technology are considering raising their contract manufacturing quotes soon because of rising production costs..."

What is driving the rise in prices? The increased prices "reflect the rising costs of materials - such as steel wire -and electricity which has been driven up by the hikes in oil prices."

The article goes on to say that prices will increase 5%-10% and further suggests that the silicon shortage is still with us.

This might be a time to reevaluate LDK Solar (LDK). As many solar investors know, LDK has been building a polysilicon plant. It is intended to provide an in-house source of wafers as well as a revenue stream based on selling directly to solar end-product manufacturers. There has been spirited debate as to whether this strategy made sense given the significant investment required to bring the plant online and the risk that silicon prices might crash just as the plant began to ramp up production.

In a recent statement released on July 2, LDK Chairman Xiaofeng Peng said the company expected to produce between 100 and 350 tons of polysilicon this year.

So it looks like silicon prices will remain stable and may even move somewhat higher this year. LDK's gamble on building a polysilicon wafer capability seems to be on the verge of paying off. Investors should be able to expect an increase in revenue and fatter margins as the plant begins to produce meaningful quantities of silicon. As for increased costs, LDK Solar has secured a subsidized capped electric rate from the local government for wafer production and polysilicon production.

Analyst consensus is that LDK earnings will be flat for the next couple of quarters at $0.42, slightly less than the previous two quarters. Given a favorable pricing environment and the new plant coming on line, LDK could surprise to the upside. With the stock now down to $32.38, LDK is worth a look.

Disclosure: author is long LDK

Sources: Digitimes: Solar wafer suppliers Green Energy and SAS may raise quotes



Tuesday, July 8, 2008

ProShares ETFs fail to track NASDAQ properly today - is this rally meaningful?

Some numbers to consider from today's trading:

NASDAQ Composite up 2.28%
NASDAQ 100 ($NDX) up 2.43%
PowerShares QQQ (QQQQ) up 2.38%

ProShares has a couple of ETFs that track the NASDAQ 100 on the long side and on the short side. One would have expected the double long ETF to move up nearly 5% and the double short ETF would have moved down nearly 5%.

What we saw instead is the following:

ProShares Ultra QQQ (QID) up 3.54%
ProShares Ultra-Short QQQ (QID) down 3.74%

Does this mean that ProShares was not able to deliver the expected returns and failed to track their underlying indexes properly? Or does it mean that investors did not completely buy into today's rally in the NASDAQ and, as a result, did not sell off the ultra-short ETF or bid up the ultra-long ETF as much as expected?

I see this happen periodically. Is it a tell? Is it an indication we can't trust today's rally? Stayed tuned.

Strongest Technical Performance in ProShares ETFs --

In the meantime, what can we deduce from the technical situation with the other ProShares ETFs?

The following table lists the ETFs generating the strongest technical signals based on moving averages, DMI and Aroon.

Symbol Signal Type Name Category 20-Day MA over 50-day MA DMI Aroon
DOG BUY Short Dow30 Short Market Cap Yes DMI: strong trend Up (ADX: 47 +DI: 31 -DI: 7) Strong Up trend - Up: 96 Down: 12 Osc: 84
DXD BUY UltraShort Dow30 Short Market Cap Yes DMI: strong trend Up (ADX: 46 +DI: 30 -DI: 7) Strong Up trend - Up: 96 Down: 12 Osc: 84
EEV BUY UltraShort MSCI Emerging Markets Short International Yes DMI: strong trend Up (ADX: 30 +DI: 32 -DI: 13) Strong Up trend - Up: 100 Down: 4 Osc: 96
EFU BUY UltraShort MSCI EAFE Short International Yes DMI: strong trend Up (ADX: 32 +DI: 34 -DI: 12) Strong Up trend - Up: 100 Down: 4 Osc: 96
EFZ BUY Short MSCI EAFE Short International Yes DMI: strong trend Up (ADX: 42 +DI: 47 -DI: 12) Strong Up trend - Up: 100 Down: 8 Osc: 92
EUM BUY Short MSCI Emerging Markets Short International Yes DMI: strong trend Up (ADX: 32 +DI: 40 -DI: 14) Strong Up trend - Up: 100 Down: 4 Osc: 96
EWV BUY UltraShort MSCI Japan Short International Yes DMI: strong trend Up (ADX: 27 +DI: 35 -DI: 17) Strong Up trend - Up: 92 Down: 16 Osc: 76
FXP BUY UltraShort FTSE/Xinhua China 25 Short International Yes DMI: strong trend Up (ADX: 25 +DI: 31 -DI: 21) Strong Up trend - Up: 96 Down: 4 Osc: 92
MYY BUY Short MidCap400 Short Market Cap Yes DMI: strong trend Up (ADX: 38 +DI: 39 -DI: 9) Strong Up trend - Up: 100 Down: 12 Osc: 88
MZZ BUY UltraShort MidCap400 Short Market Cap Yes DMI: strong trend Up (ADX: 36 +DI: 35 -DI: 9) Strong Up trend - Up: 100 Down: 12 Osc: 88
PSQ BUY Short QQQ Short Market Cap Yes DMI: strong trend Up (ADX: 24 +DI: 26 -DI: 18) Strong Up trend - Up: 96 Down: 12 Osc: 84
QID BUY UltraShort QQQ Short Market Cap Yes DMI: strong trend Up (ADX: 24 +DI: 25 -DI: 18) Strong Up trend - Up: 96 Down: 12 Osc: 84
REW BUY UltraShort Technology Short Sector Yes DMI: strong trend Up (ADX: 23 +DI: 27 -DI: 16) Strong Up trend - Up: 92 Down: 12 Osc: 80
RXL BUY Ultra Health Care Ultra Sector No DMI: strong trend Up (ADX: 23 +DI: 26 -DI: 24) Strong Up trend - Up: 100 Down: 50 Osc: 50
SBB BUY Short SmallCap600 Short Market Cap Yes DMI: strong trend Up (ADX: 25 +DI: 39 -DI: 20) Strong Up trend - Up: 96 Down: 12 Osc: 84
SCC BUY UltraShort Consumer Services Short Sector Yes DMI: strong trend Up (ADX: 30 +DI: 30 -DI: 14) Strong Up trend - Up: 96 Down: 12 Osc: 84
SDK BUY UltraShort Russell MidCap Growth Short Style Yes DMI: strong trend Up (ADX: 30 +DI: 34 -DI: 11) Strong Up trend - Up: 100 Down: 44 Osc: 56
SDS BUY UltraShort S&P500 Short Market Cap Yes DMI: strong trend Up (ADX: 38 +DI: 31 -DI: 8) Strong Up trend - Up: 96 Down: 12 Osc: 84
SFK BUY UltraShort Russell1000 Growth Short Style Yes DMI: strong trend Up (ADX: 26 +DI: 31 -DI: 16) Strong Up trend - Up: 100 Down: 16 Osc: 84
SH BUY Short S&P500 Short Market Cap Yes DMI: strong trend Up (ADX: 38 +DI: 32 -DI: 8) Strong Up trend - Up: 96 Down: 12 Osc: 84
SIJ BUY UltraShort Industrials Short Sector Yes DMI: strong trend Up (ADX: 27 +DI: 30 -DI: 14) Strong Up trend - Up: 92 Down: 16 Osc: 76
SJF BUY UltraShort Russell1000 Value Short Style Yes DMI: strong trend Up (ADX: 35 +DI: 31 -DI: 13) Strong Up trend - Up: 100 Down: 12 Osc: 88
SJH BUY UltraShort Russell2000 Value Short Style Yes DMI: strong trend Up (ADX: 32 +DI: 32 -DI: 7) Strong Up trend - Up: 96 Down: 12 Osc: 84
SJL BUY UltraShort Russell MidCap Value Short Style Yes DMI: strong trend Up (ADX: 42 +DI: 42 -DI: 13) Strong Up trend - Up: 100 Down: 12 Osc: 88
SKF BUY UltraShort Financials Short Sector Yes DMI: strong trend Up (ADX: 45 +DI: 33 -DI: 12) Strong Up trend - Up: 96 Down: 12 Osc: 84
SKK BUY UltraShort Russell2000 Growth Short Style Yes DMI: strong trend Up (ADX: 25 +DI: 28 -DI: 11) Strong Up trend - Up: 96 Down: 16 Osc: 80
SMN BUY UltraShort Basic Materials Short Sector No DMI: strong trend Up (ADX: 27 +DI: 36 -DI: 12) Strong Up trend - Up: 100 Down: 44 Osc: 56
SRS BUY UltraShort Real Estate Short Sector Yes DMI: strong trend Up (ADX: 28 +DI: 28 -DI: 20) Strong Up trend - Up: 100 Down: 12 Osc: 88
SSG BUY UltraShort Semiconductors Short Sector Yes DMI: strong trend Up (ADX: 23 +DI: 28 -DI: 15) Strong Up trend - Up: 92 Down: 12 Osc: 80
SZK BUY UltraShort Consumer Goods Short Sector Yes DMI: strong trend Up (ADX: 30 +DI: 26 -DI: 24) Strong Up trend - Up: 84 Down: 12 Osc: 72
TLL BUY UltraShort Telecommunications Short Sector Yes DMI: strong trend Up (ADX: 43 +DI: 68 -DI: 19) Strong Up trend - Up: 100 Down: 4 Osc: 96
TWM BUY UltraShort Russell2000 Short Market Cap Yes DMI: strong trend Up (ADX: 31 +DI: 31 -DI: 13) Strong Up trend - Up: 96 Down: 12 Osc: 84

There are 32 ETFs in the list above. Everyone is in the short or ultra-short category.

What this shows is that today's rally has not yet affected a change in the primary trend which, based on the strength of these bearish ETFs, is still clearly down.

Disclosure: at time of writing author is long QID and MZZ




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Disclaimer: This site may include market analysis. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.




 
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