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Wednesday, June 28, 2017 9:27:20 AM
Is the Summer Slowdown Here?
By Tushar Chande | June 28, 2017
Yesterday's selling has shifted the short-term trends across many key indexes, equal weight ETFs and capital weighted ETFs. Is this the start of the summer slow down? The S&P 500 closed below its 20-day, half-width bands for the first time since mid-May and the path of least resistance for most of my key sectors has now turned negative on the short-term.
Chart 1: The SPX has closed below the short-term trend-following model bands, using a 25-day moving average. However, the trend is still up because the moving average is above the bands.
Path of Least Resistance Crumbles in the Short-term
The path of least resistance (POLR) measures the percentage of stocks moving up versus those that are flat or moving down. In general, weakness (or strength) begins at the short-end of my trend-following models, and then affects the longer time periods. Take a look at a few paths-of-least-resistance below.
The selling in the technology sector has push the QQQ path of least resistance downwards in the short and medium term, and it is generally the weakest of the lot. The stocks in the S&P 500 index have also turned lower in their short-term POLR. The Guggenheim Equal Weight S&P 500 sector ETFs have turned lower, showing the breadth of the weakness in the SPX universe. The picture is the same when we regroup the market in terms of capitalization or value/blend/growth, as the Vanguard capital weighted analysis shows below. I then checked the entire (and very broad) SPDR ETFs for an across the board look at the market. It too has turned negative in the short-term. Lastly, I checked the Russell 1000 universe stocks, for another broad look at the market. In short, all of these analyses of market trend strength show weakness in the short-term.
Chart 2: The QQQ has shifted towards lower prices on the short- and medium-term.
Chart 3: The SPX POLR has turned down in the short-term.
Chart 4: The Guggenheim Equal Weight ETFs as a group have turned lower in the short-term.
Chart 5: The Vanguard Capital Weighted ETFs as a group have turned negative in their POLR in the short-term. These ETFs cover the spectrum of value, blend and growth, as well as small, medium, large and mega-cap stocks.
Chart 6: The very-broad based SPDRs ETFs as a group have turned lower in their short-term POLR.
Chart 7: The Russell-1000 universe has turned negative on the short-term POLR.
Summary
The short-term weakness is now spreading across the market's key constituents, and may be a signal that the summer slowdown is on the way. As usual, I caution that these trends can change quickly, and note that the more important intermediate-term trend remains positive on all of the above charts.
Thank you for spending a few minutes here, and please sign up for the automated reminders of new posts below.
Enjoy!
Tushar
http://stockcharts.com/articles/chande/2017/06/is-the-summer-slowdown-here.html
• DiscoverGold
By Tushar Chande | June 28, 2017
Yesterday's selling has shifted the short-term trends across many key indexes, equal weight ETFs and capital weighted ETFs. Is this the start of the summer slow down? The S&P 500 closed below its 20-day, half-width bands for the first time since mid-May and the path of least resistance for most of my key sectors has now turned negative on the short-term.
Chart 1: The SPX has closed below the short-term trend-following model bands, using a 25-day moving average. However, the trend is still up because the moving average is above the bands.
Path of Least Resistance Crumbles in the Short-term
The path of least resistance (POLR) measures the percentage of stocks moving up versus those that are flat or moving down. In general, weakness (or strength) begins at the short-end of my trend-following models, and then affects the longer time periods. Take a look at a few paths-of-least-resistance below.
The selling in the technology sector has push the QQQ path of least resistance downwards in the short and medium term, and it is generally the weakest of the lot. The stocks in the S&P 500 index have also turned lower in their short-term POLR. The Guggenheim Equal Weight S&P 500 sector ETFs have turned lower, showing the breadth of the weakness in the SPX universe. The picture is the same when we regroup the market in terms of capitalization or value/blend/growth, as the Vanguard capital weighted analysis shows below. I then checked the entire (and very broad) SPDR ETFs for an across the board look at the market. It too has turned negative in the short-term. Lastly, I checked the Russell 1000 universe stocks, for another broad look at the market. In short, all of these analyses of market trend strength show weakness in the short-term.
Chart 2: The QQQ has shifted towards lower prices on the short- and medium-term.
Chart 3: The SPX POLR has turned down in the short-term.
Chart 4: The Guggenheim Equal Weight ETFs as a group have turned lower in the short-term.
Chart 5: The Vanguard Capital Weighted ETFs as a group have turned negative in their POLR in the short-term. These ETFs cover the spectrum of value, blend and growth, as well as small, medium, large and mega-cap stocks.
Chart 6: The very-broad based SPDRs ETFs as a group have turned lower in their short-term POLR.
Chart 7: The Russell-1000 universe has turned negative on the short-term POLR.
Summary
The short-term weakness is now spreading across the market's key constituents, and may be a signal that the summer slowdown is on the way. As usual, I caution that these trends can change quickly, and note that the more important intermediate-term trend remains positive on all of the above charts.
Thank you for spending a few minutes here, and please sign up for the automated reminders of new posts below.
Enjoy!
Tushar
http://stockcharts.com/articles/chande/2017/06/is-the-summer-slowdown-here.html
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