A LOOK AT THE QQQ 5 YEAR RALLY -- QQQ BOUNCES OFF TREND LINE SUPPORT -- GOOG LOSES $100 IN 6 TRADING DAYS -- S&P SECTOR PERF CHARTS SHIFT TO DEFENSIVE SECTORS -- TOBACCO INDUSTRY IS #1 CONSUMER STAPLES INDUSTRY GROUP
QQQ � A LOOK AT THE 5 YEAR RALLY ... QQQ has recently touched the top of the channel trend line as shown in Chart 1. We have been rubbing it for 4 months now. We have not visited the lower channel line since the 2011 October lows. I want to show the SCTR line at the top which is the reason I did not use the actual index. We can see historically that when the SCTR is above 70, everything is good. The switch from above 70 to below 70 seems to be a very timely sell signal. While there were some whipsaws, the data points were valuable in protecting gains. This is a weekly 4 year log scale chart.
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Chart 1
On Chart 2, we see a view of the last 20 months. QQQ has been in a tighter uptrend channel recently. It could pull back to 85 and maintain the tight channel on the big picture. It could also get down to 75 and still maintain the larger 4 year channel. One of the reasons I would expect a deeper pullback is the SCTR ranking has not stayed above 70 this time, where previously it has. A typical corrective period might be 6 weeks if that plays out. We can see on the log scale shown in Chart 2 it is not touching yet.
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Chart 2
QQQ TOUCHES THE ARITHMETIC SUPPORT TREND LINE... Chart 3 shows an arithmetic chart rather than a log scale chart. We are testing the blue trend line now on this chart. We could still pull back to the gray dotted trend line and still keep the tight channel. The bottom line here is the market wants to test lower based on the price action we are seeing. Will this lower area be enough of a test before bouncing into month end?
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Chart 3
GOOG LOSES $100 IN 6 TRADING DAYS WHERE IS SUPPORT?... GOOG was a leader all the way up. It has now put in its biggest down candle in the whole rally. With GOOG already down $125 or 10% with most of the move in 2 big black weekly candles, it would appear something is changing. Just below the current levels is a low of $1080. I would expect some serious buying interest � support - at the 200 DMA, which is in the $1020 area and still rising. Notice the touch of the 200 DMA in October before the earnings move up. There should be some support at the $1000 level as well if $1020 does not hold.
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Chart 4
S&P SECTOR PERF CHARTS SHIFT TO DEFENSIVE SECTORS... The regular market rotation of strong energy stocks in April may still take place. It looks like the Health Care, Consumer Staples and Financials are outperforming the $SPX over the last 3 months. Chart 5 is the 3-month view.
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Chart 5
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Chart 6
Chart 6 is the 1-month view. Cyclicals are clearly out of favor and the growth industry sectors like Industrials, Materials, and Energy are following the $SPX. Health Care has pulled back significantly. Notice the change in Consumer Staples recently compared to the change over 3 months above. Now let's drill in to find where the strength in the sector is showing up. From the Home page, we want to click on the Sector Summary under the little price plot on the left. It should produce a screen shot like you see below in Chart 7 if you look at the one month view. (select from the drop down list above the table.) While Financials have been performing well for a while, Consumer Staples is moving up.
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Chart 7
TOBACCO INDUSTRY IS #1 CONSUMER STAPLES INDUSTRY GROUP... Here is the sector summary breakdown for the one-month view of the Consumer Staples Sector. You arrive at this table by clicking on the Consumer Staples hyperlink in the table shown above. Tobacco is also showing some strength and is the leader in the Consumer Staples. Chart 8 details the list in order based on which industry group had the most change in the month. By clicking on Tobacco, we can then go see the companies that make up the Tobacco Industry.
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Chart 8
SOME TOBACCO STOCKS JUMP 10% THIS MONTH LO VGR AOI ... When we drill in, we can see the performance of the industry group by company name. Chart 9 shows the stocks in the Tobacco Industry. Lorillard, Vector Group and Alliance One are all up 10% in a month. Chart 10, Chart 11 and Chart 12 show the moves in the individual stocks.
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Chart 9
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Chart 10
Lorillard has broken through 70 on the SCTR and now is performing better than 90% of the stocks in the SCTR ranking group. With this top performing stock behavior, we can see the stock is clearly moving higher and found support at previous resistance. Next is the Vector Group.
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Chart 11
The Vector Group has been in a beautiful uptrend. With the large number of stocks just being added to the SCTR listings, we can see that VGR has a short SCTR line but is definitely a top performing stock. Lastly is Alliance One.
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Chart 12
Alliance One has been trading in a consolidation range for a while. We can see that the SCTR ranking is improving now and if this push into Tobacco Industry stocks continues, we could expect to see a breakout. Nice to know before the break out.
MUNICIPAL BONDS PUSH HIGHER... The Municipal and well as the treasury notes are showing strength here. PWZ is an ETF investing in California Municipal Bonds which is shown in Chart 13. It has maintained a nice uptrend off the September lows. MYI is a Municipal Bond fund shown in Chart 14. It recently broke out on Monday above a 2-month consolidation zone.
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Chart 13
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Chart 14
TLT BREAKS OUT TO NEW HIGHS ... TLT is an ETF representing the long bond. We can see the SCTR showing us that the price action is behaving better than 2/3 of the ETFs in the rankings. This breakout combined with the Nasdaq weakness demonstrates the rotation from equities into the safety of bonds. The price is clearly breaking above previous resistance yesterday and today.
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Chart 15
GLD P&F CHARTS GIVE SELL SIGNALS.... On the 60 Minute GLD shown in Chart 16, the price action has pulled down and broken below the uptrend support line on the PnF chart shown on Chart 15. This support line has been in play since the December low. You may notice the head/shoulders structure on the 60 minute chart. It is mot as clear on the daily chart.
While the 60 minute is a short view, the daily chart shows it quite a bit differently. Our next area for support would be around 122 on the PnF daily chart shown in Chart 17 if it doesn't hold up here above 124. On the PnF daily chart, GLD has not reversed a downtrend yet. It is still on a sell with the red line above. Without question, this is consolidating here in this 124 - 130 range. For $GOLD investors it doesn't feel as gentle as the daily PnF chart might suggest.
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Chart 16
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Chart 17
Good trading,
