Which ETFs Have Changed Their Trends?

04/06/2015 10:10 am EST

Focus: ETFS

Thomas Aspray

, Professional Trader & Analyst

Several major ETFs started off the new quarter by closing below their quarterly pivots, so MoneyShow’s Tom Aspray examines the charts of four ETFs since two consecutive closes are often a more reliable indication of a trend change.

The much weaker-than-expected jobs report hit the futures hard on Friday but they are trading a bit higher in early Monday trading. The EuroZone markets are mostly closed because of the Easter Monday holiday.

In Friday’s technical review, I looked at the contrast between the positive weekly and the daily negative technical studies. A further decline early in the week is likely to signal a drop to the stronger support from earlier in the year. In addition to the start of earning’s season after the close Tuesday, the markets will be paying attention to Wednesday’s release of FOMC minutes.

Several of the major ETFs that I track have started off the new quarter by closing last week below their quarterly pivots. For the major averages, here are the 2nd
quarter pivots: SPY ($204.90), QQQ ($104.63), IWM ($121.39), and DIA ($176.58).

As I have noted previously, the Spyder Trust (SPY) in the past has dropped well below the quarterly pivot during the week, but then ended the week back above their pivot. This was the case in February 2014 (see chart) as this turn marked the end of the correction and a start of an impressive rally.

chart
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In this quarter’s pivot table, I have highlighted those ETFs in red that closed last Thursday below their 2nd quarter pivots. Those that just barely closed below their pivots last week should be watched closely this week since two consecutive closes are often a more reliable indication of a trend change.

Here are the charts of four of the most interesting ETFs.

chart
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Chart Analysis:  The decline in the iShares Nasdaq Biotechnology (IBB) has gotten quite a bit of attention in the past two weeks.

  • The 1st quarter’s projected pivot at $361.40 and the weekly starc- band were both overcome before the recent decline.
  • The close last week was above the quarterly pivot at $338.81 as IBB is holding above the recent lows at $333.78.
  • There is further support at $324.37 and the rising 20-week EMA.
  • A close above last week’s high at $353.04 would be encouraging with the starc+ band at $380.35.
  • The weekly RS line is still declining after confirming the recent highs.
  • The weekly OBV closed just barely below its WMA last week.
  • There is more important OBV support at line c.
  • The daily technical studies (not shown) are still negative suggesting the correction is not over yet.
  • In a recent article, I pointed out that IBB has a seasonal tendency to bottom on June 20.

 

The recent weak economic data has caused rates to decline but the iShares Barclay’s 20+ Year Treasury (TLT) is still well below the January high at $137.95.

  • The close last week was just 1 cent above the quarterly pivot at $130.72.
  • A weekly doji was formed last week so a close below the low at $129.91 would trigger a LCD sell signal.
  • The rising 20-day EMA is now at $127.02 with initial quarterly pivot support at $122.94.
  • The long-term uptrend is in the $121 area with the starc- band at $120.44.
  • The volume has been declining on the rally and was quite low over the past two weeks.
  • The OBV closed last week back below its WMA and has more important support now at line e.
  • The ProShares Ultrashort 20+ Year (TBT) closed the week below its quarterly pivot.

 

Next: Two More Interesting ETFs to Watch

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chart
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The market leading Sector Select Health Care (XLV) closed last Thursday at $71.99, just below the 2nd quarterly pivot at $72.05.

  • The weekly swing low is at $70.76 with the rising 20-week EMA at $70.18.
  • XLV closed last week 5.3% below its recent high at $76.01.
  • The weekly relative performance peaked with prices before turning lower.
  • The RS line is still well above its rising WMA and support at line a.
  • The volume was quite heavy on April 1, but the weekly OBV is still well above its WMA.
  • There is further support at the uptrend, line b.
  • The daily technical studies (not shown) are negative and show no signs yet of bottoming out.
  • There is short-term resistance at $74.17 with the daily starc+ band at $74.93.
  • There is initial quarterly resistance at $76.46.

 

The Sector Select Energy (XLE) closed last week above the pivot at $77.24. XLE closed September 12 at $91.88 which was below its 3rd quarter pivot.

  • It stayed below the quarterly pivot until February 13, but that only lasted one week.
  • XLE is in a short-term uptrend, line c, with weekly swing support at $73.32.
  • The still declining 20-week EMA is at $79.07 with the February high at $81.87.
  • The weekly RS line has moved back above its WMA but is still well below the downtrend, line d.
  • A move in the RS line above the resistance at line e will indicate it is becoming a market leader.
  • The weekly OBV shows no signs yet of bottoming as it made new lows in the middle of March. The OBV has major resistance at line d.

 

What it Means: The Sector Select Industrials (XLI), Sector Select Materials (XLB), and Sector Select Technology (XLK) also closed slightly below their quarterly pivots last week and will bear close watching, especially XLK.

The Sector Select Utilities (XLU) closed well below its quarterly pivot level but a weekly HCD buy signal was triggered three weeks ago.

The normal market leading iShares DJ Transportation (IYT) closed last week well below its quarterly pivot and this is a reason for concern.

How to Profit: No new recommendation.

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