Overall, the major index ETFs remain in no man's land. Put another way, the market is between a rock (bigger downtrend) and a hard place (smaller uptrend). The bigger trend turned down with the August breakdown and broken resistance represents the rock around 2050. Short-term, the S&P 500 is battling resistance in the 2000 area and RSI is hitting momentum resistance in the 50-60 zone. I would not get too excited with a breakout at 2000 because the rock is just 50 points higher.
Trading has become quite volatile of late so one could not be chastised for sitting on the sidelines until the dust clears. Just to keep trading on their goes, earnings season starts on Thursday, the energy sector is energizing again and the healthcare sector is looking rather ill. The laggard is suddenly leading and the leader has turned into the laggard. With such a mixed bag, I am featuring a hodgepodge of stocks today with five bearish charts and five bullish charts.
As noted in Tuesday's webinar, short-term breadth indicators have become overbought and we now have a setup to go along with the bigger downtrend. Just to recap, my trading style involves three steps: conditions, setup and trigger. The current condition is bearish because the major index ETFs broke down in August and the bigger trends are down. A setup occurs after a bounce within this downtrend. As the first chart shows, the percentage of stocks above the 20-day EMA moved above 70% to become overbought for the second time since the bearish condition started. A subsequent move below 60% would indicate that these breadth indicators are turning back down and this would be the first bearish trigger to watch.
Stocks to Watch
Note! Earnings season is around the corner and this could increase volatility (risk).
Webinar Details
The image below shows the timeline for Tuesday's webinar. Click here to watch the recording.
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Thanks for tuning in and have a good day!
--Arthur Hill CMT
Plan your Trade and Trade your Plan
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