Skip to main content

The trend may not be your friend this time...

I know that it really isn't proper to do technical analysis on leveraged ETFs. I know that it is always better to analyze an underlying index.

Nevertheless, I was struck by the fact that out of the 25 BUY signals on our Trend Busters list this weekend, fully 23 of them are inverse or inverse leveraged ETFs. In other words, they have all broken above downward-sloping trend lines and are threatening to initiate a new upward trend. Here they are listed below:

SymbolName
DPK DIREXION DAILY DEVELOPED MARKETS BEAR 3X SHARES
EDZ DIREXION DAILY EMERGING MARKETS BEAR 3X SHARES
ERY DIREXION DAILY ENERGY BEAR 3X SHARES
FAZ DIREXION DAILY FINANCIAL BEAR 3X SHARES
DRV DIREXION DAILY REAL ESTATE BEAR 3X SHARES
TYP DIREXION DAILY TECHNOLOGY BEAR 3X SHARES
SEF PROSHARES SHORT FINANCIALS
RWM PROSHARES SHORT RUSSELL2000
SBB PROSHARES SHORT SMALLCAP600
SPXU PROSHARES ULTRAPRO SHORT S&P 500
SMN PROSHARES ULTRASHORT BASIC MATERIALS
DXD PROSHARES ULTRASHORT DOW 30
SIJ PROSHARES ULTRASHORT INDUSTRIALS
EPV PROSHARES ULTRASHORT MSCI EUROPE
JPX PROSHARES ULTRASHORT MSCI PACIFIC EX-JAPAN
SJH PROSHARES ULTRASHORT RUSSELL 2000 VALUE
TWQ PROSHARES ULTRASHORT RUSSELL 3000
SDK PROSHARES ULTRASHORT RUSSELL MIDCAP GROWTH
SJL PROSHARES ULTRASHORT RUSSELL MIDCAP VALUE
SDS PROSHARES ULTRASHORT S&P500
SDD PROSHARES ULTRASHORT SMALLCAP600
SRS PROSHARES ULTRASHSORT REAL ESTATE
RSW RYDEX INVERSE 2X S+P 500

The knee jerk reaction here is to think the market is headed for a major fall if all these inverse ETFs are making such a concerted move upward.

Is there a confirmation found when looking at the SELL signals? In other words, are some of the ETFs based on some on the same underlying indexes showing up as Trend Busters on the SELL side of the equation?

Well, the answer here is yes and no. There are actually quite a few non-leveraged ETFs generating SELL signals on the Trend Busters list, 15 to be exact. The collection is, however, a bit of a hodgepodge. The list of ETF SELL signals is listed below and you can see that there isn't a clear correlation with the inverse ETFs in the list above.

SymbolName
DPD DOW 30 PREMIUM & DIVIDEND INCOME FUND, INC.
EOS EATON VANCE ENHANCE EQUITY INCOME FUND II
EOI EATON VANCE ENHANCED EQUITY INCOME FUND
IYG ISHARES DJ US FINANCIAL SERVICE INDEX
VNM MARKET VECTORS VIETNAM ETF
PKB POWERSHARES DYNAMIC BUILDING & CONSTRUCTION PORTFOLIO
PTJ POWERSHARES DYNAMIC HEALTHCARE SERVICES SECTOR PORTFOLIO
PRN POWERSHARES DYNAMIC INDUSTRIALS SECTOR PORTFOLIO
PWT POWERSHARES DYNAMIC SMALL CAP GROWTH PORTFOLIO
PJM POWERSHARES DYNAMIC SMALL CAP PORTFOLIO
UPRO PROSHARES ULTRAPRO S&P 500
RKH REGIONAL BANK HOLDRS TRUST
KME SPDR KBW MORTAGE FINANCE ETF
IPK SPDR S&P INTERNATIONAL TECHNOLOGY SECTOR
WMH WIRELESS HOLDRS TRUST

Unfortunately, there is enough of a correlation to make anyone worry. We see ETFs tracking the S&P 500, the Dow 30, small caps, financials, real estate and industrials on both lists with the underlying indexes generating the SELL signals and the inverse ETFs generating the BUY signals.

Unless stocks hold at their support levels, these new breakouts could create some ugly trends, ones that will not be friendly to investors.

Disclosure: no positions

Comments

Popular posts from this blog

Running TradeRadar on Windows 7 and Windows 8

Development of the original TradeRadar Stock Inspector software was begun back in the days before Windows 7 and Windows 8 were available.

As these newer versions of Windows have become more popular, we have heard from some users that they are having problems installing and running TradeRadar on their newer PCs.

The good news is that TradeRadar will work just fine on Windows 7 and Windows 8. All you have to do is adjust the Windows Compatibility Settings to ensure TradeRadar runs as intended.

It is recommended that you can apply Compatibility Settings when running the initial installation; however, it is also possible to apply Compatibility Settings after the program has been installed.

Prior to installation
After downloading the install program, go to the folder where you have stored the TradeRadarStkInsp_7_Setup.exe or TradeRadarStkInsp_7_PRO_Setup.exe executable. Right-click on the executable file and select Properties. Click the Compatibility tab. Adjust the Compatibility mode to …

Durable Goods report for Sept just so-so but Computer segment is on fire

The Durable Goods advanced report for September 2011 was released on Wednesday.

I like to dig into the Durable Goods report because it can be useful for seeing how tech in aggregate is performing and how the sector may perform in the future. I always focus on two particular measures: shipments and new orders. Let's see how it played out last month.

Shipments -- 

I generally give less importance to Shipments since this is a backward looking measure reflecting orders that have been confirmed, manufactured and shipped. It's similar to earnings reports -- it's good to know but the data is in the past and we're more interested in the future. The following chart shows how September shipments looked for the overall tech sector:


Results for the overall tech sector were a bit weak but take a look at the next chart which tracks the Computers and related products segment:


Results here were actually quite good and, to make things even better, the previous month was revised upward.

N…

Alert HQ has moved!

End of an era!

This site was started way back in 2006/2007 to showcase my blog posts and the Alert HQ buy signals and sell signals. Alert HQ grew to include other kinds of stock alerts including Swing Signals, Trend Busters, Trend Leaders, Cash Flow Kings and more.

In the meantime, I built a sister site, TradingStockAlerts.com and I started using some of the same Alert HQ content over there. As a result, I am discontinuing the Alert HQ data here at Trade-Radar.com

The good news, however, is that all the Alert HQ signals and stock screens are still completely free. In addition, the pages have been enhanced so that you can hover over a stock symbol and a small chart will pop up so you can get a quick look at the stock's recent price action. If you click on a symbol it will take you to a page with plenty of financial and technical analysis information (still free!) as well as a larger chart that you can play with in terms of adding or deleting indicators, moving averages, etc.

Click …