The EuroZone crisis continues apace — although for the moment it seems to have abated by the barest of margins — but shall rematerialize sooner rather than later. European/Latin American/Asia-Pacific market ETFs remain archly lower off their October highs and further remain in larger bearish continuation patterns. The US ETFs have thus far remained immune to the contagion; but view the current price action as a topping process .
Further, “risk-on” vehicles — commodity and basic material ETFs — remain in bearish patterns; but seen positive gains have been seen in several given the annual Goldman Sachs Commodity Index (GSCI) reallocation. Regardless, we see the “risk-off” trade as coming to the fore during 1H-2012.
POTENTIAL LONG TRADES —
√ S&P Energy (XLE) — a bullish pennant is evident, but recent weakness has pushed prices into moving average support. If this holds, then it projects higher prices.
√ Oil Service (OIH) — a higher low has formed, and we should note that OIH/SPY ratio is at historically low levels.
√ Coal (KOL) — the previous lows have held; but resistance has not yet been taken out to warrant long positions.
√ S&P Materials (XLB) — a bullish pennant is confirmed; but prices are into major overhead resistance at the 270-dma.
POTENTIAL SHORT TRADES —
√ S&P Consumer Discretionary (XLP) — the highs are being approached; and we’ll expect them to prove their merit given the overbought models.
To read the entire report please click on the pdf file below.
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ETF Playbook: Current Activity Looks Like a Topping Process
Published 01/19/2012, 07:00 AM
Updated 07/09/2023, 06:31 AM
ETF Playbook: Current Activity Looks Like a Topping Process
OUTLOOK — “DEFENSIVE to BEARISH”
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