US Treasury bonds and notes have been range bound for over six months.

There is reason to believe that Treasuries, especially 30-year Treasuries bonds, will soon break higher. Why?

Smart Money

Commercial hedgers – a group of traders considered the ‘smart money’ – are buying Treasuries across the bond curve in anticipation of higher prices.

The chart below shows commercial hedgers’ aggregate net exposure to 5, 10, 30-year Treasuries (blue graph).

As the green arrows show, hedgers’ bullish bets are generally vindicated by a period of rising prices.

Below is a list of ETFs likely to benefit from the bullish developments seen by commercial hedgers. Long-term maturities are more dynamic and subject to bigger price moves.

  • iShares Short Treasury Bond ETF (NYSEArca: SHV)
  • iShares 1-3 Year Treasury Bond ETF (NYSEArca: SHY)
  • iShares 3-7 Year Treasury Bond ETF (NYSEArca: IEI)
  • iShares 7-10 Year Treasury Bond ETF (NYSEArca: IEF)
  • iShares 20+ Year Treasury Bond ETF (NYSEArca: TLT)

Seasonality

The green chart insert shows that seasonality is generally bullish for the remainder of the year.

A move above the red resistance lines is necessary to unlock an up side target of 129 – 133. This up side target is based on Fibonacci retracement levels (50% and 61.8%) and an open chart gap.

Sustained trade below 120 would put any rally on hold.

Above analysis was initially published in the August 26 Profit Radar Report. Barron’s rates iSPYETF as “trader with a good track record” and Investor’s Business Daily says: “When Simon says, the market listens.” Find out why Barron’s and IBD endorse Simon Maierhofer’s Profit Radar Report.

Simon Maierhofer is the founder of iSPYETF and the publisher of the Profit Radar Report. Barron’s rated iSPYETF as a “trader with a good track record” (click here for Barron’s profile of the Profit Radar Report). The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013, 17.59% in 2014, 24.52% in 2015, 52.26% in 2016, and 23.39% in 2017.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

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Are Emerging Market Stocks Ready to Rally?

From January 26 – August 15, the iShares MSCI Emerging Markets ETF (EEM) lost 20.3%. A bear market is commonly defined as a decline of 20% or more. Based on this definition, EEM entered a bear on August 15.

Will the emerging markets bear market continue, or is it a false signal?

Emerging Markets Bear Market? The ‘Two Week Rule’

To assess emerging markets future prospects, we will look at other times EEM lost 20%.

As the chart below shows, since its inception in 2004, EEM fell 20% five other times. How it performed two weeks later, tended to be an indication of its longer-term prospects.

Two weeks after its initial 20% drop, EEM was higher 3 times, and lower 2 times. 4 out of 5 times, the subsequent gain or loss was significant (>7%).

The 3 times EEM was higher two weeks later, it was also higher three months later (on average 5.7%). The 2 times EEM was lower two weeks later, it was also lower three months later (average of 3%).

The chart below shows EEM since its January high. Since ‘entering bear market territory,’ EEM already rallied more than 5%, and it looks like it will be up two weeks after triggering a 20% decline.

Trade is just below its 50-day SMA and trend line resistance around 43.80. There was a bullish RSI divergence at the low.

It seems like EEM has a good shot at moving higher, but a move above 43.80 is need to start confirming a perhaps more lasting bounce.

Other popular emerging markets ETFs include:

  • Vanguard FTSE Emerging Markets ETF (VWO)
  • iShares Core MSCI Emerging Markets ETF (IEMG)
  • Schwab Fundamental Emerging Markets Large Company Index ETF (FNDE)

Above analysis was initially published in the August 26 Profit Radar Report. Barron’s rates iSPYETF as “trader with a good track record” and Investor’s Business Daily says: “When Simon says, the market listens.” Find out why Barron’s and IBD endorse Simon Maierhofer’s Profit Radar Report.

Simon Maierhofer is the founder of iSPYETF and the publisher of the Profit Radar Report. Barron’s rated iSPYETF as a “trader with a good track record” (click here for Barron’s profile of the Profit Radar Report). The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013, 17.59% in 2014, 24.52% in 2015, 52.26% in 2016, and 23.39% in 2017.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

Is FAANG Weakness Bearish for Stocks?

The spotlight has been on FAANG stocks (Facebook, Apple, Amazon, Netflix, Google) for much of this bull market, but lately it’s gotten kind of quiet around them. Perhaps that’s because they are actually under-performing the Nasdaq-100.

Is FAANG weakness bearish for stocks?

FAANG vs Nasdaq-100

The chart below plots an equal weighted FAANG index against the Nasdaq-100. The dashed lines highlight non-confirmations.

The black lines mark times where new Nasdaq-100 highs were unconfirmed by FAANG (as currently the case), the blue lines mark times where new FAANG highs were unconfirmed by the Nasdaq-100.

Since 2014, there have been 7 similar non-confirmations, where FAANG were lagging the Nasdaq-100. The last 4 very followed by micro pullbacks and renewed strength for both. The first 3 saw slightly larger pullbacks before renewed strength.

It was actually more of a warning sign when the Nasdaq-100 failed to confirm new FAANG highs (August and December, 2015 – blue lines).

Based on the short available history, FAANG under-performance is not bearish for stocks in general.

Nasdaq-100

The Nasdaq-100 QQQ ETF chart looks more bullish than bearish, as trade is above long-term Fibonacci resistance at 181.80, and on the verge of breaking out of a triangle formation.

Above analysis was initially published in the August 26 Profit Radar Report. Barron’s rates iSPYETF as “trader with a good track record” and Investor’s Business Daily says: “When Simon says, the market listens.” Find out why Barron’s and IBD endorse Simon Maierhofer’s Profit Radar Report.

Simon Maierhofer is the founder of iSPYETF and the publisher of the Profit Radar Report. Barron’s rated iSPYETF as a “trader with a good track record” (click here for Barron’s profile of the Profit Radar Report). The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013, 17.59% in 2014, 24.52% in 2015, 52.26% in 2016, and 23.39% in 2017.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

US Stocks: 5 Intriguing Charts, 1 Conclusion

Here is a look at the 5 (in my humble opinion) most intriguing and important charts right now. As you will notice, not all charts point in the same direction. Nevertheless, I will conclude with a weight of evidence-based conclusion.

1) S&P 500 Tug of War

The July 15 Profit Radar Report introduced subscribers to a massively bullish S&P 500 chart pattern with an up side target of 3,000+.

Barron’s rates iSPYETF as “trader with a good track record” and Investor’s Business Daily says: “When Simon says, the market listens.” Find out why Barron’s and IBD endorse Simon Maierhofer’s Profit Radar Report.

The chart insert shows price since July 15. Thus far, triangle support has held, the pattern has not been invalidated, but also not confirmed.

Short-term, as brought out by the August 8 Profit Radar Report, sellers have a window of opportunity due to triple resistance around 2,860.

2) Nasdaq Resistance

The Nasdaq-100 QQQ is up against double resistance comprised of the red trend line and a Fibonacci projection level going back to its 2002 low. As long as resistance holds, bears have a window of opportunity to take QQQ lower.

3) Bear’s Best Friend

All major indexes (S&P 500, Dow Jones, Nasdaq, Russell 2000) have been dancing to the beat of their own drum.

For a broader assessment of US stock’s health, some look at the NY Composite (NYC), which includes some 2000 stocks.

The NYC thus far only retraced 61.8% of the decline from the January high. 61.8 is a Fibonacci number, in fact, it is the ideal retracement of a counter trend rally, a dead cat bounce. That’s what makes the NYC “bear’s best friend” right now.

A look under the hood however, reveals two important facts:

  • More stocks have been advancing than declining (blue graph)
  • The ratio of advancing stocks has slowed significantly (gray graph)

Based on the NYC advance/decline line and ratio, the most likely outcome is short-term weakness followed by longer-term strength.

4) VIX

The August 1 Profit Radar Report published the chart below, which plots the VIX against hedgers’ (smart money) exposure and seasonality. Based on those factors, a spike to 17 (red trend line) seemed likely.

This week, the VIX spiked from 10.17 to 15.02, a 47% move. Higher readings are still possible.

5) Doom-and-Gloom Hurray

Investors loved doom-and-gloom stories a couple weeks ago. I took a screenshot of most popular MarketWatch articles on July 31. The top two were:

  • Prepare for the biggest stock-market selloff in months, Morgan Stanley warns
  • This ‘prophet of doom’ predicts stock market will plunge more than 50%

Admittedly that’s anecdotal evidence, but heavily bearish investors tend to get burnt first. The early August rally did just that.

Conclusion

If you want to be bullish, there’s plenty of data to support your view.

If you want to be bearish, there’s plenty of data to support your view, too.

Looking at the data objectively, my conclusion (based on the weight of evidence) is that short-term weakness will provide at least one more buying opportunity.

Weakness may not materialize if the S&P 500, Nasdaq, NY Composite move above their respective resistance levels.

Support levels, up side targets and continuous updates are available in the Profit Radar Report.

Barron’s rates iSPYETF as “trader with a good track record” and Investor’s Business Daily says: “When Simon says, the market listens.” Find out why Barron’s and IBD endorse Simon Maierhofer’s Profit Radar Report.

Simon Maierhofer is the founder of iSPYETF and the publisher of the Profit Radar Report. Barron’s rated iSPYETF as a “trader with a good track record” (click here for Barron’s profile of the Profit Radar Report). The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013, 17.59% in 2014, 24.52% in 2015, 52.26% in 2016, and 23.39% in 2017.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.

S&P 500: Now or Never?

The June 6 bigger picture S&P 500 update showed 3 projections, all of them were bullish.

2 month later, the S&P 500 filled the open chart gap at 2,851.48 (chart gaps act like price magnets) and is within spitting distance of a new all-time high.

As the chart below shows, the S&P 500 is also near a pretty significant resistance cluster.

The confluence of trend channels and the January all-time high almost make it seem like it’s ‘now or never’ for bears, but is it?

Now or Never?

The July 25 S&P 500 update discussed the tug of war between a massively bullish pattern and bearish divergences. Despite the bearish divergences, the update concluded that: “Further gains are possible while above 2,830 and 2,800, but bearish divergences (while they exist) suggest the risk is elevated.”

Thereafter the S&P fell 50 points, but support at 2,800 held.

The rally from the August 2 low has now erased many of the bearish divergences existent in late July (see chart below).

Resistance vs liquidity

The tug of war is now resistance (around 2,870) vs positive liquidity. How so?

Resistance may (and should) cause a pullback, but the new all-time highs of my favorite liquidity indicators (shown as secret sauce #1 and 2) suggest any pullback will be temporary.

Therefore it’s not ‘now or never’ for bears to step up, but they do have a window of opportunity.

The plan of action remains the same it’s been for years. Buy the dips.

Continued updates are available via the Profit Radar Report.

Barron’s rates iSPYETF as “trader with a good track record” and Investor’s Business Daily says: “When Simon says, the market listens.” Find out why Barron’s and IBD endorse Simon Maierhofer’s Profit Radar Report.

Simon Maierhofer is the founder of iSPYETF and the publisher of the Profit Radar Report. Barron’s rated iSPYETF as a “trader with a good track record” (click here for Barron’s profile of the Profit Radar Report). The Profit Radar Report presents complex market analysis (S&P 500, Dow Jones, gold, silver, euro and bonds) in an easy format. Technical analysis, sentiment indicators, seasonal patterns and common sense are all wrapped up into two or more easy-to-read weekly updates. All Profit Radar Report recommendations resulted in a 59.51% net gain in 2013, 17.59% in 2014, 24.52% in 2015, 52.26% in 2016, and 23.39% in 2017.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE iSPYETF Newsletter to get actionable ETF trade ideas delivered for free.