S&P 500 Update

In mid-January, I asked: Is the ‘Bear Market’ Already Over?

The above article highlighted bearish (bullish for stocks) sentiment extremes, the average bear market trajectory (which projected a rally), and – most importantly – a bullish breadth thrust.

Therefore it’s no surprise that stocks continued higher. What is surprising (at least to me), is that they did so without any real pullback. Strong momentum overrode any pullback attempts.

This is highly unusual.

The January 30, 2019 Profit Radar Report stated that: “Based on the most likely Elliott Wave Theory count, upcoming gains should be choppy as waves 4 and 5 of various degrees unfold.”

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 market sure has been choppy, but continues to grind higher.

This comment in the February 12 Profit Radar Report highlights the conundrum of whether to chase price or not (back then and today):

The S&P 500 is on the cusp of breaking above resistance, and based on after-hours action is likely to do so tomorrow. Forward looking indicators (like Elliott Wave Theory) suggest this rally leg will relapse, but momentum and the technical breakout could over-power future expectations in real time.

I recommended an official buy limit order for the SPDR S&P 500 ETF (SPY), but later down graded it to a buy recommendation for aggressive investors only.

The S&P 500 has now arrived at another juncture.

The S&P 500 futures chart shows that 2,812 – 2,818 is important. Sometimes important price levels are subject to a brief seesaw.

In fact, there’s a pattern right now that – if in place – projects a pop and drop.

I’ve seen a couple of those patterns fail recently, so in order for the pop and drop pattern to gain teeth, the S&P will have to pop above resistance and thereafter drop below resistance.

If that happens, the down side risk could be quite significant.

Continued updates are available via the 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 evaluation 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 e-Newsletter to get actionable ETF trade ideas delivered for free.

Junk Bond ETF Approaches ‘Make it or Break it’ Point

We’ve all heard the ‘canary in the mine’ analogy. Bond investors are said to be smarter than stock investors and thus considered the canary in the mine. If that’s true, the SPDR Barclays Junk Bond ETF is about to chirp.

It’s said that bond (NYSEArca: AGG) investors are smarter than stock investors.

Stocks are not quite sure how to react to the budgetary/debt ceiling standoff, so we definitely can use a fair amount of ‘smarts’ right about now.

High yield bonds (or junk bonds) are the closest relative stocks have in the bond family. This is due to their elevated yield and risk levels.

So what kind of clues does the performance of high yield bonds provide for stocks?

The SPDR Barclays High Yield Bond ETF (NYSEArca: JNK) chart below shows some seemingly important support/resistance levels for JNK.

The green line has provided support since June. The descending red line has offered first resistance and now support. Both lines meet today at 39.70.

The situation for the iShares iBoxx $High Yield Corporate Bond ETF (NYSEArca: HYG) looks similar, although HYG has a bit more room before it hits support around 90.70.

The above chart also plots JNK against the S&P 500 (SNP: ^GSPC) to illustrate the correlation between junk bonds and stocks.

Quite frankly, based on this chart the correlation between stocks and junk bonds looks more like a myth.

JNK trades at the same level today as in November of last year. The S&P 500 (NYSEArca: SPY) on the other hand is up 25% since November 2012.

Now the question is if further weakness for junk bonds would spell trouble for stocks?

Not necessarily, purely based on the lack of direct correlation.

However, JNK is just above support, and a case could be made that the S&P 500 is about to break out of a bearish rising wedge.

What would that mean? The implications are discussed here: Will The S&P 500 be in Trouble if Support Fails?

Simon Maierhofer is the publisher of the Profit Radar Report.

Follow Simon on Twitter @ iSPYETF or sign up for the FREE Newsletter.

How Much Lower Can Apple Fall?

Apple shares have fallen as much as 17% since their September all-time high. Based on Apple’s humongous gains since 2003 the down side potential is quite large, but here’s one important support level to watch.

Did somebody upset the “Apple cart?” Apple’s earnings disappointed and the stock closed lower 6 out of 8 trading days. How much lower can Apple fall?

For readers of iSPYETF Apple’s 17% drop doesn’t come as a surprise. This September 18 article posted on iSPYETF (Technology Investing for Beginners – You Can’t Lose Money with Apple Math) warned that:

“Common sense and seasonality suggests that Apple is soon due for a reality check (a. k. a. lower prices). Since Apple is the MVP of the technology sector, it’s likely that the Nasdaq QQQ ETF and SPDR Technology ETF (XLK) will follow Apple’s direction.”

The September 12, Profit Radar Report (which identifies profit opportunities for subscribers) issued this trading recommendation: “Thus far Apple has been able to close above support at 660, but RSI is deteriorating. Aggressive investors may short Apple (or buy puts or sell calls) above 700 or with a close below 660. Obviously, there is no short Apple ETF and if you don’t have a margin account set up, you may consider using the ShortQQQ ProShares (PSQ), which aims to deliver the inverse performance of the Nasdaq-100 (Apple accounts for 20% of the Nasdaq-100).”

How Low Can Apple Go?

AAPL has rallied from $6 – $700 since 2003, so obviously there’s plenty of down side risk. The more appropriate question is: Where’s the next support for AAPL?

Below is an updated version of a chart that was first featured on this site on August 22 (Apple Bullies the Nasdaq and S&P 500 But May Soon Disappoint Investors).

We’re looking at a log scale chart of AAPL prices with two purple trend lines and a black parallel trend channel. The black trend channel contained prices since April 2010 and alerted us of the recent Apple top.

AAPL pulled away from trend channel resistance a few weeks ago and is now approaching the upper purple trend line. This trend line coincides with the 200-day SMA at 588 and will be important support. How AAPL reacts to this support may well set the stage for the Nasdaq and S&P 500.

The Profit Radar Report looks at all major markets (and some major players like Apple) to identify high probability, low-risk trading opportunities (or upset Apple carts).

Simon Maierhofer shares his market analysis and points out high probability, low risk buy/sell recommendations via the Profit Radar Report. Click here for a free trial to Simon’s Profit Radar Report.

VIDEO: S&P 500, Gold and China ETF – Trading Opportunity Update

Due to some sentiment extremes and technical break outs and a break down we saw some contrarian low-risk trading opportunities for the S&P 500, gold and China. The associated ETFs are the SPDR S&P 500 (SPY), SPDR Gold Shares (GLD) and iShares FTSE China 25 Index ETF (FXI).

This video highlights trading opportunities for the S&P 500 (SPY), SPDR Gold Shares (GLD) and iShares FTSE China 25 ETF (FXI).

Additionally it reveals a simple but unknown strategy on how to deal with fake out break outs (or seesaw moves).

Continuous updates are provided via the Profit Radar Report.

VIDEO: S&P 500, Gold and China ETF – Trading Opportunity Update

Simon Maierhofer shares his market analysis and points out high probability, low risk buy/sell recommendations via the Profit Radar Report. Click here for a free trial to Simon’s Profit Radar Report.