Skip to main content

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.


Popular posts from this blog

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position.

This first post in the series starts at the beginning: getting good investment ideas.

Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets.

As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street professionals and …

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas.

Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing what to lo…

Free stock alerts, Trend Leaders, Bollinger Band Breakouts and Cash Flow Kings for Jan 16, 2009

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan over 7400 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. Our goal is to identify stocks or ETFs that are undergoing reversals, either to the upside or to the downside.

Wait, there's more...

We also use the Alert HQ process to generate more free lists of stocks and ETFs

The first byproduct of the Alert HQ process is the Trend Leaders list, our collection of stocks in strong up-trends. These stocks are registering strong signals using Aroon analysis, DMI and MACD. They are also above their 50-day exponential moving average. This week's list is now available at the TradeRadar site on the Trend Leaders page.

As another byproduct of the Alert HQ process we have generated a list of stocks that have broken either above their upper…