MEDIUM TERM TRENDS FOR SPY AND MDY, HEALTHCARE PROVIDERS REMAIN STRONG, WEAK YEN AND EURO PROPEL DOLLAR, OIL AND ENERGY GET HIT, GOLD TESTS WEDGE TREND LINE, VIDEO EXTRAS

MAJOR INDEX ETFS PULLBACK WITHIN UPTRENDS... Link for today's video. Stocks came under selling pressure on Tuesday with small-caps, mid-caps and large-techs leading the way. At this point, today's decline is just a little noise within a bigger uptrend. The stock market has been working its way higher since early December and "working" is the key word here. Chart 1 shows the S&P 500 SPDR (SPY) with an 11% surge in just six weeks (Oct-Nov) and then a 9% surge in five long months (Dec-May). Momentum has clearly slowed since November, but there is still more upside momentum than downside momentum. The December trend line and March lows combine to mark support in the 203-205 area. The indicator window shows SPY outperforming the Equal-Weight S&P 500 ETF (RSP) as large-caps lead. Chart 2 shows the S&P MidCap SPDR (MDY) hitting a new high last week and falling back below 280 this week. The Raff channel and March lows mark support in the 267-271 area.

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Chart 1

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Chart 2

HEALTHCARE PROVIDERS ETF HITS NEW HIGH... The HealthCare Providers ETF (IHF) is one of the strongest industry group ETFs in the market right now. First, the ETF hit a new high last week and is in a strong uptrend. Second, the SCTR is above 90 and has been above 80 since October. Looking through the stocks in the ETF, I singled out three hospital stocks with bullish setups and these are featured in the video.

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Chart 3

WEAKNESS IN YEN AND EURO PROPELS DOLLAR... Weakness in the Yen ETF (FXY) and the Euro ETF (FXE) is helping the US Dollar ETF (UUP). Chart 4 shows FXY breaking descending triangle support with a decline below 80. The indicator window shows Dollar-Yen ($USDJPY) with an ascending triangle. Chart 5 shows the Euro ETF (FXE) hitting resistance in the 112 area from the February consolidation and breaking down last week.

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Chart 4

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Chart 5

Chart 6 shows the US Dollar ETF (UUP) breaking short-term resistance with a move above 25 and surging towards its next resistance zone around 25.5. Note that UUP recorded a multi-year high in March and the decline into May was viewed as a correction within a bigger uptrend. A breakout at 25.5 and bullish Aroon signal would end the correction and signal a continuation of the bigger uptrend. Looks like this break is happening today.

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Chart 6

OIL FORMS FALLING FLAG IN MAY... Chart 7 shows the USO Oil Fund (USO) peaking in early May and edging lower this month. The decline is not that drastic, but it is an immediate downtrend all the same. The red dotted lines mark a potential falling flag with last week's highs marking resistance. I am erring on the side of bearishness for oil because it hit a 52-week low in mid March and the long-term trend is down. This long-term downtrend is still the dominant force. In addition, I think Dollar strength is negative for oil.

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Chart 7

ENERGY SECTOR WEAKENS ALONG WITH OIL... Weakness in oil is negative for energy stocks. Chart 8 shows the Energy SPDR (XLE) hitting resistance in the 83-84 area and turning down in May. The long-term trend is clearly down because XLE hit new lows in December-January and the ETF is below the falling 200-day moving average. Chart 9 shows the Equal-weight Energy ETF (RYE) with similar characteristics. As noted in Friday's Market Message, XLE and RYE have the lowest StockCharts Technical Ranks (SCTR) of the sectors.

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Chart 8

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Chart 9

GLD TESTS WEDGE AS GDX BREAKS... Gold has been one volatile mess since late March. Chart 10 shows the Gold SPDR (GLD) crossing the 115 level over a dozens times since late March (red dotted line). Overall, the ETF fell sharply in February and early March, and then bounced with a rising wedge into May. Notice that this wedge retraced 50% of the prior decline. With the decline back to 114, GLD is testing wedge support. A break below support would signal a continuation of the prior decline and project a move to new lows. Chart 11 shows the Gold Miners ETF (GDX) breaking the wedge trend line and testing the early May low.

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Chart 10

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Chart 11

LITHIUM ETF FORMS CONTINUATION PATTERN... Chart 11 shows the Lithium ETF (LIT) with surge in April and an inverse head-and-shoulders breakout. The ETF stalled in May with a tight consolidation that looks like a "high and tight pennant". These are bullish continuation patterns and a break above 13 would open the door to the next resistance zone around 14-14.3.

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Chart 12

EXPANDED EDITION OF THE MARKET MESSAGE VIDEO... Today's Market Message is a combination of Art's Charts, the Market Message and the Webinar. The section below shows the timeline, topics and symbols for today's video, which is around 28 minutes long. Note that the video covers much more than today's written commentary. Link for today's video.
-- Timeline -- Topic and Symbols

-- 00:40 to 04:49 - Long and Medium Term Trends (SPY, MDY)
-- 04:50 to 07:35 - Key Groups to Watch (XLY, RCD, ITB, XRT)
-- 07:36 to 09:42 - Strong Industry Groups (MOO, XBI, XLK, IHF)
-- 09:43 to 12:10 - Return of King Dollar (FXE, FXY, UUP)
-- 12:11 to 14:20 - Oil and Energy Take Hits (USO, XLE, RYE)
-- 14:21 to 16:19 - Long-term Downtrend Weighs on Gold (GLD, GDX)
-- 16:20 to 17:47 - Base Metals Fall Sharply (JJC, JJU, DBB)
-- 17:48 to 19:14 - Commodity-Related ETFs (COPX, XME, SLX)
-- 19:15 to 20:57 - Three Non-correlated Commodity ETFs (NIB, BAL, LIT)
-- 20:58 to 27:14 - Individual Stocks (10)

Symbols Covered:

Consumer Discretionary SPDR (XLY)
Equal-Weight Consumer Discretionary ETF (RCD)
Retail SPDR (XRT)
Home Construction iShares (ITB)
Agribusiness ETF (MOO)
Biotech SPDR (XBI)
Base Metals ETF (DBB)
Copper ETN (JJC)
Aluminum ETN (JJU)
Metals & Mining SPDR (XME)
Steel ETF (SLX)
Cacao ETF (NIB)
Cotton ETF (BAL)
Stocks: ABBV, CYH, LPNT, THC, AEO, FIVE, UA, BRCD, FEYE and FNSR

Link for today's video.