Stocks extended their March surged this week as the major index ETFs moved to new highs. The AD Lines and AD Volume Lines confirmed these moves with new highs of their own. The Russell 2000 ETF (IWM), the Consumer Discretionary SPDR (XLY) and the Finance SPDR (XLF) are the leaders this year. It is hard to argue with new highs and this leadership trio. Large techs and several groups within the materials sector continue to lag. There is no change as the bulk of the evidence remains bullish.
- AD Lines: Bullish. The Nasdaq and NYSE AD Lines surged to new highs again this week. The late February lows mark key support.
- AD Volume Lines: Bullish. The Nasdaq and NYSE AD Volume Lines hit new highs again this week. The February lows mark key support.
- Net New Highs: Bullish. Net New Highs surged again in March and the cumulative Net New Highs lines moved to new highs.
- Bullish Percent Indices: Bullish. All nine sector Bullish Percent Indices are above 50%.
- VIX/VXN: Bullish. The S&P 500 Volatility Index ($VIX) and the Nasdaq 100 Volatility Index ($VXN) fell below their February lows and remain well below 15%.
- Trend-Structure: Bullish. DIA, IWM, MDY, QQEW and SPY all hit new 52-week highs this week.
- SPY Momentum: Bullish. RSI bounced back above 70, the MACD(5,35,5) is near its January high and the Aroon Oscillator moved back above 50.
- Offensive Sector Performance: Bullish. All offensive sectors are outperforming the S&P 500 on a three month timeframe. The Consumer Discretionary SPDR (XLY) and Finance SPDR (XLF) are outperforming on a one month timeframe. Note: I am using the Equal-weight Technology ETF (RYT) in place of the Technology SPDR (XLK).
- Nasdaq Performance: Bearish. The $COMPQ:$NYA ratio edged higher the last six weeks, but this is not enough to reverse the six to seven month downtrend.
- Small-cap Performance: Bullish. The $RUT:$OEX ratio rebounded in March and moved to its highest level since February 2012.
- Breadth Charts (here) and Inter-market charts (here) have been updated.
This commentary and charts-of-interest are designed to stimulate thinking. This analysis is
not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise).
We all need to think for ourselves when it comes to trading our own accounts. First, it is
the only way to really learn. Second, we are the only ones responsible for our decisions.
Think of these charts as food for further analysis. Before making a trade, it is important
to have a plan. Plan the trade and trade the plan. Among other things, this includes setting
a trigger level, a target area and a stop-loss level. It is also important to plan for three
possible price movements: advance, decline or sideways. Have a plan for all three scenarios
BEFORE making the trade. Consider possible holding times. And finally, look at overall market
conditions and sector/industry performance.
About the author:
Arthur Hill, CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London.
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