ETFS

US equity ETFs have seen outflows in 2015 of $16.9 billion, the highest level since the market low in 2009, so MoneyShow’s Tom Aspray examines the daily technicals to see whether this is bearish sign for the US markets.

The stock market selling continued Wednesday but most of the major averages closed well above the day’s lows. The March S&P 500 futures closed 10 full points above its lows and they are higher in early trading Thursday.

Many are expecting that today’s Factory Orders will reverse the five month decline but the key is likely to be latest update on the ECB’s quantitative easing plan and Friday’s monthly jobs report. The euro slid to an eleven year low in early trading as the 1.10 level is now being tested.

The recent market weakness has reduced some of the bullish sentiment as the percentage of bullish investors, according to AAII, dropped from 45.37% last week to 39.80% this week. The lowest five month reading was 35.49% and came on February 2 as the markets were making their lows.

According to Markit, the US equity ETFs have seen outflows in 2015 of $16.9 billion which is the highest level since the market low in 2009. Funds have been flowing into both Japan and the European ETFs, but I am not convinced this is bearish sign for the US markets.

Others are pointing to the Nasdaq Composite’s failure at 5000 to support a bearish case. But the daily technical studies do suggest that a bit more selling is needed to bring more bears out of hibernation and to complete the market’s correction.

chart
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Chart Analysis: The NYSE Composite dropped below its 20-day EMA during Wednesday’s session but then closed the day above it.

  • The NYSE has been able to hold above the monthly pivot at 10,900 and the support at line a.
  • A retest of the breakout level is quite typical with further support at 10,750.
  • The quarterly pivot is at 10,597.
  • The NYSE A/D line has pulled back to its rising WMA and is well above the support at line c.
  • The McClellan oscillator has dropped back below the zero line, closing at -45.
  • There is next support now in the -130 area, line d.
  • A close back above Monday’s high at 11,103 would be positive.

The Spyder Trust (SPY) was down 0.42% after dropping down to the $208 area.
There is further support in the $207.50-$208 area with the monthly pivot at $206.92.

  • The S&P 500 A/D line peaked on February 24 and formed a slight negative divergence at Monday’s high.
  • The A/D line has dropped below its WMA with next support at the January highs.
  • The A/D line has more important support at line f.
  • The weekly A/D line (not shown) did make a new high in February and is still above its rising WMA.
  • The daily on-balance volume (OBV) has dropped back below its WMA after forming lower highs, line g.
  • The support at line h is now more important.
  • There is short-term resistance now in the $210.60-$211.20 area.

Next: Two More Major Averages to Watch

Tickers Mentioned: Tickers: SPY, QQQ, IWM