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ETF Trends – Week Of March 5, 2012

 March 05, 2012 01:40 PM


As expected in the report of last week, volatility increased after sizable corrections in precious metals. Index ETFs remain in overbought territory and it is quite possible they get a spillover of the increase in volatility from the commodity sector.

In my last ETF Trends report a week ago in wrote that index and metal ETFs have reached significant resistance levels and it is highly possible that volatility will increase. This past week we had a sizable drop in precious metal ETFs and some other commodity ETFs, like USO and DBC, have stalled. Under normal circumstances I would view this phenomenon as pertinent only to commodities but given that index ETFs are in overbought territory with QQQ and NASDAQ 100 up 9 weeks in a row, a spillover of commodity volatility into other markets is quite possible.

[Related -Bulls Rule As Volatility Recedes And Investors Position For Holiday Cheer]

ETF Trend State Table

ETFShort-termMedium-termLonger-termOB/OS
 SPY UPUP  UP *
QQQUPUP  UP OB
GLD   DN-  SW-  SW 
SLV   DN- UP  SW 
FXE   DN- SW  DN 
TLT SW SW   SW 
USO   SW- UP   SW 
DBC    SW-  UP   DN 

[Related -High Bond Market Returns Offset Commodity Losses of Diversified Portfolios]

"SW" indicates no trend, "+" indicates a new upward trend change,   "-" indicates a new downward trend change, "OB" means overbought and "OS" means oversold. "OB-" means close to becoming overbought and "OS+" means close to becoming oversold. The ‘*' means that the corresponding market is under watch for developing conditions.

Summary of trend changes

Short-term:  GLD, SLV and FXE on a downtrend. USO and DBC are moving sideways.
Medium-term:  GLD downgraded to sideways motion.
Longer-term:    No changes.

Number of changes on the trend table: 6

Overbought/Oversold Conditions: QQQ in overbought territory. SPY under watch for overbought condition development.

Disclosure: no relevant positions.

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