Recent Articles in US Markets

For clients that trade the QQQ ETF, we are highlighting the next target level on the QQQ based on our proprietary Money Flow Unit (MFU) analysis.

The Nasdaq Composite has gained upside momentum as it advanced above its 50% retracement level. The ratio of QQQ relative to the SPY indicates that the Q's are going to outperform the SPY from here.

The market indices held up well given the news flow last week. Going through the market internals and the number of stocks that continue to screen well on our work, we believe the probabilities for a strong rally from here are at hand.

The NDX has started to take out the recent high range, which is bullish for a move higher.

We will be out tomorrow for the funeral services of a dear family friend and will not be able to send out our Technical Tuesday research piece. Here is an update of the S&P 500 which complements the Nasdaq Composite chart we sent out this morning.

The index tested the MOB target band for a second time adn has turned up from it.

The S&P 500 formed a negative Money Flow Unit (MFU) this week, which has the index in a weak position. The only way this gets negated is for a close above the recent high at 3440.

As we noted in our September 20 report, “if we see weakness that breaks below the MOB band and 50-day average, the pullback could be deeper towards the 200-day average.” We have that weakness today to break these zones, and we have a bearish Money Flow Unit (MFU) that has developed, which is what we have been on alert for.

We sent out a note on September 9, highlighting the pullback in the S&P, which held at the support zone, and we were looking for a push higher. The index is forming a long trade at this zone, and we will have a buy alert this morning as noted on the second chart, which will trigger once we get the September futures moving above 3390. The target zone generated by two targeting systems lines up for a move to the 3630 level and higher.

The S&P Emini 500 futures have come down to the MOB target band and the 50-day average we highlighted in yesterday's Technical Tuesday report, and now reversing higher.  We don't know the magnitude of the advance, but we do want to put on longs to take advantage of this deep oversold condition. The fact that we have a turn from the MOB and 50-day is what we are leaning on. In the back of our minds is if we see a rally that eventually fails as it did in February of this year.

A number of the indices reviewed had a sharp downside reversal last week, which we consider a cautious flag to the advance. We remain cautious the Russell 2000 and Mid-Cap (MDY) and continue to suggest reducing exposure. We are on alert for both the S&P 500 and Nasdaq Composite as these indices approach their near-term support zones. The ratio chart of MTUM vs. SPLV reversed hard from our MOB target level, and we expect more weakness for MTUM. We remain short the TLT.

We now need to see how the index holds the lower end of the regression trend channel at 11180, which, if broken, could extend the decline to the 50-day at 10832.

As noted in this week's Technical Tuesday, the S&P is approaching our MFU-4 target zone which was generated off the March low and a zone where "we can expect at a minimum a pause in the advance, and most often, the start of a pullback". Given the momentum off this high, we believe this is the start of a pullback where we can see the index pullback to the lower end of the regression trend channel around 3390. Below is the updated chart of the S&P which we sent out.

The uptrends for both the S&P 500 and Nasdaq Composite remain intact but approaching target zones where we will be looking for a pause or pullback. We are concerned with the loss of upside momentum for the Russell 2000 and Mid-Cap (MDY) after coming into an area of resistance and target levels. We would be reducing exposure to both those segments of the market. The ration chart of the Momentum Factor (MTUM) ETF vs. The S&P 500 Low Volatility ETF has achieved the MOB target highlighted on August 18. We are taking partial profit right here. Lastly, we remain short the TLT and would be adding on short-term strength.

Both the S&P and Nasdaq Composite have found resistance at their MFU target zones, and it appears that we are starting a pullback, the degree of which we don't know yet.