THE BOND AND EQUITY MARKETS HIT KEY FIB LEVELS -- THE NASDAQ COMPOSITE MAINTAINS ITS CHANNEL -- THE MARKET SECTOR LEADERSHIP IS CHANGING -- THE SCTR RANKINGS SHOW MARKET LEADERSHIP CHANGES AS WELL MFL -- CHW RNP NKX JPI PUSH TO BECOME TOP QUARTILE
THE BOND AND EQUITY MARKETS HIT KEY FIB LEVELS... After the market has worked to get back above most of our common retracement levels, it hovers in one crucial spot today. I have opened the chart John posted yesterday and added Fibonacci retracements. In Chart 1 the bonds have retraced 38.2% and the $SPX has retraced 76.4%. I have stretched the Fib's on the $SPX in the opposite direction to use the extended fib level of 23.6%. One of the reasons that Fibonacci levels are so interesting is how well often they measure the height of retracements.
We do know the oversold condition of the stock market has been rectified.
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Chart 1
THE NASDAQ COMPOSITE MAINTAINS ITS CHANNEL... If the $COMPQ shown in Chart 2 can make it back up to the previous highs at 4246, the bulls and bears will have a battle there. The Nasdaq has led the rallies, which is common in a bull market. This looks like the next test.
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Chart 2
THE MARKET SECTOR LEADERSHIP IS CHANGING.... THE MARKET SECTOR LEADERSHIP IS CHANGING. Chart 3 shows the Relative Performance chart for the nine sectors. The three sectors on the right have started to improve in relative performance. This is a shift to defensive sectors.
While this is not a surprise over the recent market pullback, other internals point to a bigger pullback coming.
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Chart 3
THE SCTR RANKINGS SHOW MARKET LEADERSHIP CHANGES AS WELL - MFL ... One of my favorite levels to look at is approximately the 75% SCTR level in the ETF's. As an ETF reaches the 75% level, they are becoming " top Quartile" ETF's that are outperforming 75% of the ETF's. When the market makes major shifts we see it show up in these rankings with broad participation from multiple ETF's. A great example of the trend change is shown in the SCTR on MFL as shown in Chart 4.
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Chart 4
CHW RNP NKX JPI ALSO PUSH TO BECOME TOP QUARTILE ETF'S... Notice how the SCTR was sleeping while the market was in growth mode. Even though this recent pullback in the market was only slightly larger than the previous ones, the SCTR is showing a dramatic change in relative positioning of these defensive ETF's. I don't know if RNP was used to say Rest 'N Peace as the market corrects? The SCTR compares the technical price action against the rest of the ETF community. These are very compelling moves on the SCTR's in very defensive sectors. Generally speaking, the SCTR moves did not occur on the last push up on these charts.
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Chart 5
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Chart 6
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Chart 7
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Chart 8
UUP SNAPS A TREND LINE...
The UUP is gapping down today as sown in Chart 9. The Euro is also pushing higher which is supporting the move in $GOLD. There is more information in this Linked Blog. The Euro and GOLD dance the Tango. "Art's charts " blog has covered the Euro/Gold link extensively. A big drop in the UUP shows the move outside the channel.
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Chart 9
LINKED IN REQUESTS A CONNECTION...
Channel traders will be looking at buying the dip in LNKD today. With a $35 channel and a tight stop, that is a pretty tasty trade.
