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
| 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|| |
[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.