Art's Charts

Non-confirmations show Creeping Correction that Could Expand

Arthur Hill

Arthur Hill

Chief Technical Strategist, TrendInvestorPro.com

The S&P 500 SPDR hit a new high last week, but it was alone at the top because several other major index ETFs did not confirm. In fact, these non-confirmations have been building since March as fewer groups participated. Of note, several tech-related ETFs peaked in mid February, small-caps peaked in mid March, SMH peaked in early April and QQQ peaked in mid April.  

The chart above shows SPY hitting a new high last week and remaining well above its 50-day SMA. QQQ fell the last few weeks and is one penny above its 50-day SMA. The Semiconductor HOLDRS (SMH) fell the last five weeks and is below its 50-day. The Russell 2000 ETF (IWM) has gone nowhere since its March peak and moved below its 50-day. The Software ETF (IGV) formed a lower high from February to April and moved below its 50-day last week.

Small-caps and techs represent the higher risk end of the stock market and money is moving out of these areas. This shows risk-aversion that could foreshadow a broad market correction. Keep in mind that SPY advanced 31% from the late October low to the early May high. Corrections are normal and can lead to the next opportunity.

I put out a note and video today covering correction targets for SPY, seasonal patterns for May-June, lower highs in tech ETFs, the failed breakout in IWM, the breakouts in IJR and KRE, the inability of bonds to bounce and a bearish setup in Bitcoin. Click here to get immediate access and take your analysis to the next level.

---------------------------------------------

Choose a Strategy, Develop a Plan and Follow a Process

Arthur Hill, CMT

Chief Technical Strategist, TrendInvestorPro.com

Author, Define the Trend and Trade the Trend


Want to stay up to date with Arthur's latest market insights?

– Follow @ArthurHill on Twitter

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More