The S&P 500 SPDR is down around 6% this month and QQQ is down around 8%. These two hit new highs on September 2nd, plunged the next three trading days and then worked their way lower. Both are below their 50-day moving averages for the first time since April.
Chartists looking for stocks or ETFs that held up relatively well can compare the month-to-date Rate-of-Change (18-day ROC) and the relationship of price to the 50-day SMA. Names that fell less and held above their 50-day SMAs show relative strength. We can also look for ETFs that held above their September 8th lows, which SPY and QQQ broke.
The chart below shows the Home Construction ETF (ITB) and the Homebuilders ETF (XHB) with signs of relative strength. They both held above their September 8th lows last week and their rising 50-day SMAs. They could also be forming pennants, which are consolidations within an uptrend (bullish continuation patterns).
Looking for a few more ETFs that held up well in September? Check out TrendInvestorPro.com for four tech-related ETFs that held up well and several with bullish continuation patterns. Subscribe today for immediate access to our Weekend Video, Saturday Chart Notes, Breadth Models and Annotated ETF ChartBook. Click here to take your analysis process to the next level!
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Arthur Hill, CMT
Chief Technical Strategist, TrendInvestorPro.com
Author, Define the Trend and Trade the Trend
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