ETF HQ Report – Semi Fail

April 04, 2011 – 08:10 am EDT

The broad market continued higher over the last week and into the 2nd quarter of 2011.  But on a negative note SMH failed at resistance from its 50 Day SMA and fell back.  Is this is sign of coming weakness or just a bump on the way to new highs?  Lets take a closer look…

 

**** We grow by word of mouth, please continue to spread the word. Thanks!

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ETF % Change Comparison

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ETF % Change Comparison

As you can see the Semis (SMH) gave back 1.42% over the last week which is never a positive sign because the semis tend to lead the broad market.  What is good however is that the Transports (IYT) and the small caps (IWM) finished at new highs and both had a very strong week.  Now, the broad market can’t make much ground without participation from the SMH but while IYT and IWM continue to show such strength there is no immediate cause for concern.

 

Learn moreETF % Change Comparison

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A Look at the Charts

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SPY

Volume is improving but a test of $130 would be healthy before further advances.

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QQQQ

QQQ really needs the close above its 50 Day SMA to be confirmed by SMH doing the same before it can carry any weight.

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SMH

SMH is suddenly offering a bearish argument.  Simply avoiding a close below its 100 Day SMA would be very encouraging.

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IWM

Very strong volume combined with new highs from the small caps (IWM) and we have reason for faith in the bulls.

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IYT

When the Transports (IYT) are leading the market to new highs there is rarely reason for concern.

 

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OM3 Weekly Indicator

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OM3 Indicator

Weak signals indicate indecisiveness and the lack of a strong trend.

Learn moreThe OM3 Indicator

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TransDow & NasDow

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TransDow & NasDow

TransDow – After two weeks the Transports remain dominant over the Dow and the current trade is showing a profit of 6.22%.

NasDow – The Dow remains dominant of the the NASDAQ and the NasDow remains in cash.

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What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

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LTMF 80 & Liquid Q

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LTMF 80 & Liquid Q

LTMF 80 is showing a profit of 1.63% on its open position in QQQ after one week.  Liquid Q on the other hand continues to show a loss after 42 days although the loss has gotten much smaller.

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Historical Stats:

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LTMF 80 & Liquid Q Stats

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How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

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Summary

The sudden under performance of SMH raises warning bells that should not be ignored.  However while SMH remains above its 100 Day SMA and IYT above $95 there is no immediate cause for concern.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

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Cheers

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

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Quote Of The Week:

“Do not go where the path may lead, go instead where there is no path and leave a trail.” – Ralph Waldo Emerson

ETF HQ Report – Political Confusion, Technical Clarity

March 28, 2011 – 07:02 am EDT

The market bounced quite impressively off support over the last week and did so on strong volume.  New highs in the not too distant future remain likely but over the short term things are more uncertain so lets take a closer look…

**Note QQQQ has been changed back to QQQ.  Why?  Just to annoy us all and mess up our programming I am certain.

 

**** We had a big jump in subscribers this week so welcome to our new readers.  Thanks for continuing to spread the word.

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ETF % Change Comparison

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ETF % Change Comparison

This is very healthy; the leaders for the week were SMH and QQQQ followed by IWM and IYT.  These are four highly economically sensitive ETFs so when they are picking up the bid during a bounce off support it shows confidence from the smart money.  Plus despite SMH being the furthest from its peak it has also bounced the hardest from its recent low.  All of this indicates that the bull market has plenty of life left in it.

 

Learn moreETF % Change Comparison

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A Look at the Charts

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SPY

Don’t get too excited about SPY being back above its 50 Day SMA, another test of support is a real possibility.  If it happens then we want to see it occur on light volume.

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QQQ

QQQ is a touch below its 50 Day SMA, while a close above this level would be great there is no harm in a bit of consolidation first.

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SMH

SMH has had strong volume behind the recent bounce however if we see some profit taking and OBV moves to a new low then the market will be in trouble.

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IWM

IWM is ever so close to its Feb high and if it can lead the market into new highs this would be an epic vote of confidence for the bulls.

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IYT

The Transports have lacked direction for the last 4 months but they have also established great support.  A new high would be a real jewel in the bullish crown.

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OM3 Weekly Indicator

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OM3

The OM3 indicator is confused and mostly providing no signal.

Learn moreThe OM3 Indicator

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TransDow & NasDow

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TransDow & NasDow

TransDow – The Transports remain dominant over the Dow after 7 days during which time they have advanced 3%.

NasDow – The Dow remains dominant over the NASDAQ after 105 days, during this time the Dow and NASDAQ have advanced 7.10% and 4.00% respectively.  In theory the dominant index should outperform, as it has in this case.

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What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

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LTMF 80 & Liquid Q

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LTMF 80  & Liquid Q

LTMF 80 just opened a new position in QQQ on Friday.

Liquid Q continues to hold a position in QQQ that is showing a loss of 3.09% after 35 days.

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Historical Stats:

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LTMF 80 & Liquid Q Stats

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How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

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Summary

From a political and economic perspective there are a multitude of reasons to be concerned.  But this newsletter is not about using politics or fundamentals for trading, it is about technical analysis.

From a technical perspective there are few reasons for concern.  Support levels held across the board, the market then bounced off that support and on solid volume was lead higher by the more economically sensitive ETFs.

I will not be concerned if we see some profit taking or another test of support over the short term.  However there will be reason for concern if we see OBV on these ETFs making lower lows and our friends like SMH, IWM and IYT behaving comparatively badly.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

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Cheers

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

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Hypocrite of the Week:

“The president does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.” Obama Bin Lyin’ December 20, 2007

ETF HQ Report – Back To Normal

March 21, 2011 – 08:34 am EDT

Does anyone else get the feeling that the market has returned to something that feels more like home?  I am not sure if that makes sense but it is like things are all of a sudden returning to a more normal pattern of behavior.

Over the last week every single one of the targets we set were reached (or very nearly so).  Most importantly however; every single one of the support levels have held strong.  Where to from here?  Lets take a closer look…

 

**** We grow by word of mouth, please continue to spread the word.  Thanks!

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ETF % Change Comparison

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ETF % Change Comparison

The two best performers over the last week were IWM and IYT; both are highly economically sensitive ETFs so to see them showing relative strength is a positive sign.  Also notice how SMH declined less than QQQQ?  The companies in SMH supply components that are particularly integral to many of the companies in QQQQ.  When things are bad SMH should lead QQQQ lower so to see the opposite is a show of confidence from investors.

 

Learn moreETF % Change Comparison

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A Look at the Charts

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SPY

Volume was strong behind the declines but support has been found.  Keep an eye on $125, it would be very positive if this level holds.

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QQQQ

Support has been found on the November high and indications are this level will hold.

 

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SMH

Volume is very bearish but important support has been found around $32.  This is a MUST HOLD level for the bulls!!

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IWM

This chart should inspire confidence and belief in the longer term prospects of the market.

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IYT

The Transports keep holding their head above $90 and to continue to do so would be very bullish.

 

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OM3 Weekly Indicator

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OM3 Indicator

For the first time in about 6 months we have a clean sweep of sell signals.  However while support remains, now is not the time to be selling.

Learn moreThe OM3 Indicator

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TransDow & NasDow

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TransDow & NasDow

TransDow – The Transports became dominant over the Dow on Friday and initiated a new long position.

NasDow – The Dow remains dominant over the NASDAQ after 98 days, during this time the Dow and NASDAQ have advanced 3.93% and 0.23% respectively.  In theory the dominant index should outperform, as it has in this case.

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What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

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LTMF 80 & Liquid Q

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LTMF 80 & Liquid Q

LTMF 80 has shifted to cash after 182 days in QQQQ and locked in a profit of 13.67%.  This is well off the high of around 22%.  It will be interesting to see if this sell signal was well timed or not.

Liquid Q continues to hold a position in QQQQ that was initiated almost at the very top of the market and currently shows a loss of 7.29%.

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Historical Stats:

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LTMF 80 & Liquid Q Stats

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How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

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Summary

All of the declines so far have been healthy and appear to be within the context of a longer term bull market.  If key support levels such as SMH $32, IWM 100 Day SMA and IYT $90 are lost then I will have been wrong and the market will probably fall apart in short order.  But while support remains, new highs remain likely at some point this year.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

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Cheers

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

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Quote Of The Week:

“The only mistake you can ever make is the one you make twice.” – Unknown

ETF HQ Report – The Good the Bad and the Radioactive

March 14, 2011 – 09:17 am EST

Friday afternoon I was looking at my computer screen in total disbelief.  A Twitter message saying “#JAPAN Earthquake” lead me to Aljazeera’s streaming news channel.  Suddenly from the comfort of my office I had real-time footage of a Tsunami carrying burning houses across the landscape of Japan and snuffing out all life in its wake.  It was hard to mentally digest such images.  They made the epic destruction from Christchurch’s recent earthquake look like the handy work of an angry child.

Now as I write this I hear that there have been two explosions at one of Japan’s nuclear plants the second of which could be felt 30 miles away!  Also the cooling on a third reactor has been lost… I know we have about a dozen subscribers from Japan and hope you and your families are all safe!

Now think, if you were one of the people who’s lives had been turned upside down.  I am sure you would rather the rest of the world send their donations rather than their sympathy – Red Cross.

As fate would have it, for the last two weeks my biggest position has been short EWJ (Japan).  With the Nikkei 225 down over 6% on Monday I feel sick at the thought I am profiting from death a nuclear fallout.  So I will be donating some of the profits.

———————-

It was a fascinating week in the US market.  Our last newsletter warned of “a high risk of declines“…  On Tuesday I posted to our Facebook followers:  “Buying interest found around support again today but with QQQQ and SMH being hit comparatively hard I’m not buying this dip!”  Then Wednesday on Facebook:  “Looks like SMH is going to close below its 50 Day SMA = DANGER DANGER, will Robinson!”

** Are you following us on Facebook yet?

By the end of Thursday the broad market had pulled back significantly and most if the ETFs that we track had closed below support.  While this is concerning behavior there are reasons to believe that there is still life left in this market.  Lets lake a closer look…

**** Do you find this newsletter of value?  If so then please post a testimonial and help our readership grow by telling your friends.  Thanks heaps!

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ETF % Change Comparison

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ETF % Change Comparison

Interesting stuff!  SMH suddenly is championing the pull back which demands that this be viewed as more that just a quick dip.  The big surprise for the week was that IYT (Transports) advanced 1.64%.  This is one indication that over the longer term there is probably more upside left because otherwise IYT would be getting pulled down harshly with the broad market.  Also, did you notice that SMH was the last to peak?  Generally the Semis are the first to peak at the end of a bull market.

Learn moreETF % Change Comparison

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A Look at the Charts

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SPY

Volume flows have deteriorated and the 50 Day SMA support is meaningless without QQQQ.

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QQQQ

The loss of support confirms the short term bearish trend change in volume.

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SMH

Save this chart it is full of warning signs.  Volume has been heavy on the declines.

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IWM

The continued bullish volume trend of IWM offers further hope for the longer term prospects for higher prices.

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IYT

There is no way that a trend change on the broad market can occur while IYT remains above $90.

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OM3 Weekly Indicator

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OM3 Indicator

SMH has just recieved the first sell signal from the OM3 indicator in over 6 months.  Bear alerts across the board warn of a continued decline in the weekly cycle.

Learn moreThe OM3 Indicator

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TransDow & NasDow

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TransDow & NasDow

NasDow – The Dow remains dominant over the NASDAQ after 91 days during which time the Dow and NASDAQ have advanced 5.56% and 2.96% respectively.

TransDow – The Dow remains dominant over the Transports after 48 days during which time the Dow and the Transports have advanced 1.45% and 1.61% respectively.

Historically when the Dow has been the dominant index the market has been very unproductive and most of its major declines have occurred.

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What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

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LTMF 80 & Liquid Q

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LTMF 80 & Liquid Q

LTMF 80 continues to hold a position in QQQQ that is showing a profit of 17.93% after 175 days.  Liquid Q also continues to hold a position in QQQQ that is showing a loss of 3.81% after 21 days.

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Historical Stats:

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LTMF 80 & Liquid Q Stats

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How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

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Summary

The Bad – Important support has been lost from many areas and this has been confirmed by a trend change in volume.

The Good – IWM still has a bullish volume trend, SMH was the last to peak before the recent declines and IYT is showing exceptional relative strength.

While the good factors continue to exist it is likely that these declines are simply a healthy pull back within a longer term bull market.  This situation is constantly evolving however so please stay alert and don’t go to sleep at the switch in case we start to see a melt down; be it figurative or literal.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

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Cheers

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

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Angry Degenerate Of The Week:

“listen u *%$@ STOP writin about the stock falling. it criminals like you with your letters that cause the market to go down!!!!!!” – Anonymous Reader

ETF HQ Report – High Risk of Declines

March 07, 2011 – 07:07 am EST

It was a volatile week but in the end we finished not far from where we started.  Support was tested again and held in most areas plus SMH had a fantastic week – all positive signs.  On a negative note volume flows have turned bearish in some areas which raises the risk levels dramatically, lets take a closer look…

Latest Research:

Standard Deviation Ratio Variable Moving Ave (SDR-VMA) – Test Results

Efficiency Ratio Variable Moving Average (ER-VMA) – Test Results

**** Welcome to all our new readers this week. We grow by word of mouth so thanks for spreading the word!

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ETF % Change Comparison

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ETF % Change Comparison

SMH was the shining leader for the week and even closed at a new high on Thursday.  It would be very unusual to reach a major market top when SMH is leading like this.  IYT continues to drag its feet however and any rally without the transports will ultimately be hollow..

Learn moreETF % Change Comparison

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A Look at the Charts

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SPY

The new bearish volume trend from SPY is a concern however price is king and support still holds strong.

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QQQQ

The 50 Day SMA is unusually important at the moment and QQQQ needs to maintain this support.

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SMH

A price volume divergence after such a big run up is not a good look and suggests short term weakness.

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IWM

IWM has strong volume flows and good support.  A close below $80 would be dangerous however.

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IYT

IYT is likely to foretell profit taking on the broad market with another close below $90.

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OM3 Weekly Indicator

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OM3 Indicator

Buy signals remain active for all but IYT while bear alerts warn that the weekly cycle is slowing down.

Learn moreThe OM3 Indicator

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TransDow & NasDow

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TransDow & NasDow

NasDow – The Dow remains dominant over the NASDAQ after 77 days during which time they have advanced 6.66% & 5.58% respectively.

TransDow – The Dow remains dominant over the Transports after 34 days during which time they have advanced 2.51% & 0.30% respectively.

Historically when the Dow has been the dominant index the market has been very unproductive.

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What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

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LTMF 80 & Liquid Q

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LTMF 80 and Liquid Q

The LTMF 80 continues to hold a position in QQQQ that is currently showing a profit of 21.02% after 168 days.  Liquid Q also continues to hold a position in QQQQ that shows a loss of 1.30% after two weeks.

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Historical Stats:

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LTMF 80 & Liquid Q Stats

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How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

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Summary

Remember that price is king and this strongly trending market is very dangerous to bet against.  There are several signs of weakness and the risk of declines is currently very high but while support remains the bulls have the upper hand.  Keep an eye out for:

  • QQQQ below its 50 day SMA
  • IWM below $80
  • IYT below $90

If these occur then a test of the November highs it extremely likely.  While SMH continues to show such strong relative performance, any declines should be within the context of a longer term bull market.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

.

Cheers

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

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Quote of the Day:

(Someone should tell Charlie Sheen) ”There is one quality that one must possess to win, and that is definiteness of purpose, the knowledge of what one wants, and a burning desire to possess it.” – Napoleon Hill

ETF HQ – Little Cause For Concern So Far

February 28, 2011 – 08:35 am EST

Another week comes to an end and it was an exciting one for all the wrong reasons.  The stock market saw some sharp declines but even more alarmingly the New Zealand Town of Christchurch suffered a devastating earthquake.  Thanks to everyone who emailed to ask if we were OK – Luckily for us the quake was down the other end of the country.

The death toll currently sits at 148 but is expected to rise significantly as more bodies are found.  Even these amazing photos just don’t do justice to the scale of the devastation.  Please take the time to read this article to get a true understanding of what it was like – The Day The Earth Roared, and then go here to help us Kiwis out – http://www.redcross.org.nz/donate.  Thank you so much!

To the markets – On Tuesday we saw sharp declines that apparently come out of nowhere, however this is typical behavior from a mature rally.  Thankfully support was quickly found and Friday saw many buyers return.  The skill at times like this is in being able to separate the whipsaws from the reversals, lets take a closer look…

** New Post – The Variable Moving Average (VMA) aka Volatility Index Dynamic Ave (VIDYA)

**** Welcome to all our new readers this week.  We grow by word of mouth so thanks for spreading the word!

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ETF % Change Comparison

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ETF % Change Comparison

Closest to their highs and also the best performers over the last week were IWM and SMH.  These are two highly economically sensitive ETFs – If we had just seen a major market reversal then it is most unlikely that these two would be showing such strong relative strength.  However the under performance of the Transports (IYT) is not good and it will be important that they don’t get left behind.

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Learn moreETF % Change Comparison

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1

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A Look at the Charts

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SPY

A bit of selling is healthy and for now there are no warning signs from SPY.

.

QQQQ

QQQQs 50 Day SMA support held strong, keep an eye on this level.

.

SMH

Volume from the Semis is lacking but the price action still looks strong.

.

IWM

Great volume from the Small Caps (IWM) – we remain in a bull market while that trend is intact.

.

IYT

IYT must hold together if the rally on the broad market is to continue.  Look out below $90.

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1

.

OM3 Weekly Indicator

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OM3 Indicator

The transports have achieved the first sell signal in almost 6 months.  Bear alerts across the board warn that the weekly cycle is slowing.

Learn moreThe OM3 Indicator

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1

.

TransDow & NasDow

.

TransDow & NasDow

NasDow – The Dow has been dominant over the NASDAQ for 77 days now.  During this time the Dow has advanced 6.31% and the NASDAQ has advanced 5.44%.

TransDow – The Dow has been dominant over the Transports for 34 days.  During this time the Dow has advanced 2.18% and the Transports have advanced 0.29%.

Historically when the Dow has been the dominant index the market has been very unproductive.

.

What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

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1

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LTMF 80 & Liquid Q

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LTMF 80 & Liquid Q

LTMF 80 continues to hold a position in QQQQ after 161 days and currently shows a profit of 20.35%.

The Liquid Q trade has gotten off to a bad start and currently shows a loss of 1.84% after 7 days.

.

Historical Stats:

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LTMF 80 & Liquid Q Stats

.

How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

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1

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Summary

We have seen a little bit of light selling and a number of support levels have been tested but there is little cause for concern so far.  The strongest bearish arguments comes from the lack luster performance of IYT and the lack of volume behind SMH.  However IWM and SMH continue to show relative strength and their volume trends do remain bullish.

If IYT closes below $90 and its 100 Day SMA then expect more selling from the broad market.  Keep an eye on the 50 Day SMAs – they have generated buying interest so far and will hopefully continue to do so.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

.

Cheers

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

.

1

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Quote of the Day:

“Do not regret growing older.  It is a privilege denied to many.”  – Author Unknown

ETF HQ – Same Old Bull

February 21, 2011 – 04:03 am EST

It was more of the same from this relentless bull over the last week.  Volume flows into most areas confirmed the price action and the Transports have now spent a few days above resistance at $95; all positive signs.  There are a few areas that will need to be monitored for warnings of profit taking though, lets take a closer look…

** If you have a moment, please vote for Whitney in the Demon Bikini Model Search 2011.

**** The LTMF 80 system that comes free with this newsletter is showing a profit of 22.61% on its current trade.  The two previous trades produced a return of -1.26% and 12.55%.  We grow by word of mouth… please and thank you for continuing to tell your friends.

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ETF % Change Comparison

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ETF % Change Comparison

The Semis (SMH), Small Caps (IWM) and Transports (IYT) were the market leaders over the last week.  These are all highly economically sensitive so this shows confidence in the bull.

.

Learn moreETF % Change Comparison

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1

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A Look at the Charts

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SPY

SPY is at a new highs on strong volume, it is difficult to pick holes in that.

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QQQQ

All looking good from QQQQ, just keep an eye on the volume trend for signs of weakness.

.

SMH

If SMH sees a trend change in volume and QQQQ does the same then expect profit taking to follow.

.

IWM

Wow great volume into IWM, awesome to see.

.

IYT

It would be good to see IYT at least hold onto $95 and have OBV stay above its previous high.

.

1

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OM3 Weekly Indicator

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OM3 Indicator

The buy signals remain active across the board and the bull alerts offer no warnings at this time.

Learn moreThe OM3 Indicator

.

1

.

TransDow & NasDow

.

TransDow and NasDow

The Dow remains dominant over both the Transports and the NASDAQ.  Historically the market has been very unproductive under these conditions.

.

What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

.

1

.

LTMF 80 & Liquid Q

.

LTMF 80 & Liquid Q

The LTMF 80 continues to hold a position in QQQQ that is now showing a profit of 22.61%.

Liquid Q has just opened a new position in QQQQ.  This new trade has a 66% probability of being profitable with an average profit of 7.36%

.

Historical Stats:

.

LTMF 80 & Liquid Q Stats

.

How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

.

1

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Summary

While there are not currently any signs of weakness, keep a close eye on the volume flows of QQQQ and SMH.  It is positive that Liquid Q has just opened a new long position in QQQQ; this has a 2/3 chance of being profitable.  If IYT closes back below $95 then the market is unlikely to make much headway so lets hope the Transports keep trucking.  Make it a great week!

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

.

Cheers

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

.

1

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Quote of the Day:

“Hope is not a strategy.  Luck is not a factor.  Fear is not an option.” – James Cameron

ETF HQ Report – Momentum

February 14, 2011 – 08:26 am EST

Happy Valentines day to you!  We very much appreciate all those who read this newsletter.  Also valentines day has a significant impact on many areas so here is an in-depth report – Valentines Day by the Numbers.

On a more serious note; much respect to the courageous people of Egypt!  We have just witnessed true power of the people in action!  Lets hope that it brings lasting change, peace and prosperity to their nation.

Inside the bat cave at headquarters, we are currently chest deep drowning in numbers from tests as part of the Technical Indicator Fight for Supremacy.  The next round of results will be posted soon but in the mean time here is one of the indicators that we are currently putting through its paces – Fractal Dimension.

To the markets…

Last week we spoke of the importance of continued momentum, that we needed to see a new high from IWM and that ITY must hold onto support at $90.  Well this market certainly knows how to deliver and even produced some big gains from IYT.  Lets take a closer look…

****There is currently a 22% profit on the open trade from the LTMF 80 system that comes free with this newsletter.  We grow by word of mouth so thanks for continuing to spread the word.

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ETF % Change Comparison

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ETF % Change Comparison

It is not often that you see new highs across the board like this and it is a very positive sign.  IYT and IWM have been lagging behind recently but over the last week lead the market higher.  SMH on the other hand was at the back of the pack, but after several weeks of big gains this is not surprising.

.

Learn moreETF % Change Comparison

.

1

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A Look at the Charts

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SPY

Volume on SPY is the best part of this picture.

.

QQQQ

QQQQ will not behave like this forever and we are privileged to be part of this epic rally.

.

SMH

Volume flows on SMH are not super strong and will need close monitoring for warnings of weakness.

.

IWM

IWM has produced the new high we were looking for and it has been confirmed by OBV.

.

IYT

It would be great to see IYT close at a more convincing new high backed by volume.

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1

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OM3 Weekly Indicator

.

OM3 Indicator

The buy signals remain active across the board and have been active for almost 6 months now.  Bull alerts have returned to IWM and IYT.

Learn moreThe OM3 Indicator

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1

.

TransDow & NasDow

.

TransDow & NasDow

The NasDow has indicated that the Dow has been dominant over the NASDAQ and likely to outperform for the last 63 days.  During this time the Dow and NASDAQ have advanced 7.56% and 6.52% respectively.

The TransDow has indicated that the Dow has been dominant over the Transports and likely to outperform for the last 20 days.  During this time the Dow and the Transports have advanced 3.38% and 3.76% respectively.

Historically when the Dow has been dominant the market has been highly unproductive.

.

What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

.

1

.

LTMF 80 & Liquid Q

.

LTMF 80 & Liquid Q

The LTMF 80 continues to hold a position in QQQQ and is now showing a profit of 22% after 147 days.  Liquid Q remains in cash.

.

Historical Stats:

.

LTMF 80 & Liquid Q Stats

.

How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

.

1

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Summary

No markets don’t only go up and yes we are likely to get caught out by sudden and sharp profit taking at some point.  At the moment however there are very few signs of weakness and there are always warning signs before things turn really bad.  SMH has far weaker volume than is ideal so its behavior should be watched closely.  Hopefully we will soon see a more convincing close at a new high from IYT as this would be a further sign of bullishness.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

.

Cheers

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

.

1

.

Quote of the Day:

“I will not leave the square.  Over my dead body.  I trust the army, but I don’t trust those controlling the army behind the scenes.  Down with corruption and repression.  This is a new day of freedom.  I have tasted freedom and I will not turn back.” – Mohamed Salah 27, Agriculture Graduate

ETF HQ Report – Sterodic Rally Continues

February 07, 2011 – 04:20 am EST

I hope everyone enjoyed the Super Bowl and congratulations to the Packers.  I enjoyed everything but the Black Eyed Peas performance which was worse than a violin being played badly.

To the markets, the sterodic rally continued over the last week with most areas up over 2%.  Few support levels even had the chance to be tested apart from IWM’s 50 day simple moving average and it held strong.  SPY quickly made its way above $130, a resistance level that I had expected to stand for a few weeks.  One of the bests parts however was that volume was strongly behind the bulls, lets take a closer look…

***We grow by word of mouth so thanks for continuing to spread the word.

.

ETF % Change Comparison

.

ETF % Change Comparison

New highs from all but IWM and IYT are great to see but most importantly SMH continues to lead.  Being so economically sensitive SMH acts like the canary in a coal mine and for the time being it says that everything is just fine.  The Transports (IYT) are also important however and it is important that they do not lag too behind far if the rally is to be sustained.

.

Learn moreETF % Change Comparison

.

1

.

A Look at the Charts

.

SPY

Resistance on SPY at $130 has been broken and volume is strongly with the bulls.

.

QQQQ

With OBV at a new high it is a great sign for QQQQ.

.

SMH

SMH has been fueling this rally and has had a recent surge of volume; all positive signs.

.

IWM

We really want to see IWM at a new high sooner rather than later.  Below the 50 day SMA would be dangerous.

.

IYT

IYT offers the strongest bearish argument at the moment; a close below $90 would be bad news.

.

1

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OM3 Weekly Indicator

.

OM3 Indicator

All buy signals remain active and bull alerts have returned for most of the ETFs.

Learn moreThe OM3 Indicator

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1

.

TransDow & NasDow

.

TransDow NasDow

The Dow remains dominant over the NASDAQ and the Transports.  Historically the market has made very little ground under these conditions.

.

What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

.

1

.

LTMF 80 & Liquid Q

.

LTMF 80 & Liquid Q

The LTMF 80 continues to hold a position in QQQQ that is now showing a profit of almost 20%.  Liquid Q remains in cash.

.

Historical Stats:

.

LTMF 80 & Liquid Q Stats

.

How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

.

1

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Summary

With strong volume backing the latest leg of this rally and SMH leading the way higher there are many reasons to be confident.  However it would have been nice to see a little more profit taking as such profit taking is necessary in a healthy market.

What we really need now is continued momentum.  That involves IWM moving to a new high and IYT at least holding onto support.  Be on high alert if IWM closes below its 50 day SMA and IYT closes below $90; with a loss of these levels sharp and broad based profit taking is likely.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

.

Cheers

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

.

1

.

Quote of the Day:

Challenge is the core and the mainspring of all human activity.  If there’s an ocean, we cross it; if there’s a disease, we cure it; if there’s a wrong, we right it; if there’s a record, we break it; and finally, if there’s a mountain, we climb it. – James Ramesy Ullman

ETF HQ Report – A change from the typical

January 31, 2011 – 04:17 am EST

The march higher continued for the first part of last week and it looked as though the concerns that were raised in our last newsletter were unfounded.  Then on Friday the market took a big hit that saw QQQQ down over 2.5% on the day and end flat for the week.  This is a change from the typical action over the last 5 months but not all was bad, let take a closer look…

***We grow by word of mouth, if you like this newsletter then please share it.

.

ETF % Change Comparison

.

ETF % Change Comparison

The main thing you will notice from the numbers above is that SMH managed to advance 2.05% and is 2.08% off its high while QQQQ advanced 0.09% and is 2.54% off its high.  It is very impressive when SMH can show relative strength like this and if it continues then any profit taking can be considered a buying opportunity.

.

Learn moreETF % Change Comparison

.

1

.

A Look at the Charts

.

SPY

SPY has strong resistance at $130, still expecting a test of the 50 day SMA.

.

QQQQ

It would be good to see a test of $54, keep an eye on SMH for relative performance.

.

SMH

A little more selling from SMH will cause a trend change in volume and a likely test of the 50 Day SMA.

.

IWM

Key support at test here on IWM, keep an eye on the 50 day SMA.

.

IYT

The Transports have weak volume and have broken through support, not a safe place to be.

.

1

.

OM3 Weekly Indicator

.

OM3 Indicator

The buy signals remain active after more than 5 months but the ‘bear alerts’ warn that the weekly cycle continues to slow.

Learn moreThe OM3 Indicator

.

1

.

TransDow & NasDow

.

TransDow & NasDow

The Dow remains dominant over both the NASDAQ and the Transports and both systems remain in cash.  Historically the market has been very unproductive while the Dow was been dominant.

.

What the TransDow Readings tell us:

The TransDow measures dominance between the DJ Transportation Index (DJTI) and the Dow Jones Industrial Average (DJIA). In a strong market the more economically sensitive Transportation Index should be dominant over the DJIA.

Historically the DJTI has been dominant over the Dow 45% of the time. The annualized rate of return from the DJTI during this period was 18.47% with the biggest loss for one trade sitting at -13.27%. The annualized return from the DJIA during the periods it was dominant over the DJTI was just 4.06% and the biggest loss for one trade was -16.13%. A 4% stop-loss is applied to all trades adjusting positions only at the end of the week.

What the NasDow Readings tell us:

The NasDow measures dominance between the NASDAQ and the DJIA. Using the same theory behind the Trans Dow; in a strong market the more economically sensitive NASDAQ should be dominant over the DJIA.

Historically the NASDAQ has been dominant over the DJIA 44% of the time. Taking only the trades when the NASDAQ is above its 40 week moving average the annualized rate of return was 25.47% with the biggest loss for one trade sitting at –8.59%. The annualized rate on the DJIA during the periods it was dominant over the NASDAQ is just 8.88% and the biggest loss for one trade was –12.28%. A 8% stop-loss is applied to all trades adjusting positions only at the end of the week.

.

1

.

LTMF 80 & Liquid Q

.

LTMF 80 & Liquid Q

LTMF 80 continues to hold an open position in QQQQ and is currently showing a profit of 16.35%.  Liquid Q remains in cash.

.

Historical Stats:

.

LTMF 80 & Liquid Q Stats

.

How The LTMF 80 Works

LTMF stands for Long Term Market Forecaster. It reads volume flows relative to price action and looks for out performance of volume measured on a percentage basis over the prior 12 months. During a sustained rally the readings will reach high levels (near 100%) making it imposable for the volume reading to always outperform price so any reading above 80% will maintain the buy signal. This system has outperformed the market over the last 10 years but performance has been damaged by some nasty losses. It only produces buy signals and only for QQQQ.

How Liquid Q Works

Liquid Q completely ignores price action and instead measures the relative flow of money between a selection of economically sensitive and comparatively stable ares of the market. It looks for times when the smart money is confident and and can be seen by through volume investing heavily is more risky areas due to an expectation of expansion. This system has outperformed the market over the last 10 years and remained in cash through most of the major declines. It only produces buy signals and only for QQQQ. We will provide more performance details on the web site for these systems soon.

.

1

.

Summary

Volume flows over the last week favored the bulls as nearly all the selling occurred on just one day (Friday).  SMH also displayed some great strength in the face of that selling which is another positive sign.  Plus, with the exception of IYT, there have not yet been any major support levels lost.  This would suggest that what we are seeing is a bit if healthy profit taking but I will be monitoring the situation closely for any more sinister signs.

Any disputes, questions, queries, comments or theories are most welcome in the comments section below.

.

Cheers

Derry

And the Team @ ETF HQ

“Equipping you to win on Wall St so that you can reach your financial goals.”

.

1

.

Quote of the Day:

“What are the differences between Mark Zuckerberg and me?  Let’s take a look.  I give you private information about corporations for free and I’m a villain.  Mark Zuckerberg gives your private information to corporations for money and he’s Man of the Year.” – Bill Hader’s Julian Assange