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.ETF Trend State Table
| ETF | Short-term | Medium-term | Longer-term | OB/OS |
| SPY | UP | UP | UP | * |
| QQQ | UP | UP | 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 | |
"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.