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ProShares ETF Report - Strongest BUY and SELL Signals

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.

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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