ETFs

Over fourteen billion dollars have flowed out of bond funds so far in 2013, so MoneyShow's Tom Aspray goes bargain hunting in the stock market for money freed up by those bond sales.

Stocks put in another good performance on Tuesday as the market was acting well heading into the widely anticipated FOMC announcement and Bernanke press conference. The short-term downtrends in the Advance/Decline lines have now been broken suggesting that the correction is over.

Rates were higher on Tuesday making further outflows from bond funds likely as we head into the summer. This is consistent with more gains for stock holders and more nervous times for bond holders.

Though overall volume has been light, both the weekly and daily OBV are positive for the Spyder Trust (SPY), as well as the PowerShares QQQ Trust (QQQ). The confirming OBV signals are a positive for the market but that does not rule out more choppy and volatile trading. The action this afternoon could be wild.

It looks as though the technology sector and small-cap sectors are ready to lead the market higher. I have three picks that look like they should be part of all portfolios, especially those that have lots of cash.

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Chart Analysis: The Spyder Trust (SPY) shows that the June 10 highs were overcome on Tuesday's close.

  • There is next resistance for SPY at $166.59 and then at $167.78.
  • The all-time high is at $169.07 with the weekly starc+ band now in the $172 area.
  • The downtrend (line a) in the NYSE Advance/Decline line has been broken, and it is above its WMA.
  • There is good support now at the uptrend, line b.
  • The McClellan oscillator has broken its downtrend, line c, and according to Reuter's data made lower lows last week.
  • Two other data sources reflect higher lows but all show completed short-term bottom formations.
  • The 20-day EMA is now at $163.91 with the monthly pivot at $163.54.
  • More important support for SPY at $161.30 to $160.35.

Wal-Mart Stores Inc. (WMT) was a favorite profitable pick early in the year and the stop on the remaining position was just hit at the end of May. It has a current yield of 2.5%.

  • The weekly and daily charts show bottoming formations as WMT dropped between the 38.2% and the 50% support level at $73.55.
  • This typically sets up good buying opportunities for stocks that are in major positive trends.
  • The daily chart also shows that an HCD was triggered with Tuesday's close.
  • The relative performance is holding above its recent lows and a break of the downtrend, line d, would be positive.
  • The daily OBV has turned up from support at line e, and is back above its WMA.
  • A close above the recent weekly highs at $76.65 and $76.87 would be a further sign that a bottom was in place.

NEXT PAGE: Two More Summer Pick

Tickers Mentioned: Tickers: SPY, QQQ, WMT, INTU, IWM