Biotech ETF $XBI is in play over the two-day high following a strong move off the lows and lighter volume pause.
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$DRIP is a 2x inverse Oil & Gas Bear ETF. Wednesday’s strong reversal suggests another leg up after a brief pullback. Do not chase the price action, but an entry near Wednesday’s close is doable. It’s a volatile ETF, so one should probably reduce size to handle a wide stop or exit if the price retraces more than half of Wednesday’s reversal.
The S&P 500 did not generate a buy signal last week as it failed to close above the 20-day EMA by 1% or more. The 3,800 area is support.
The second setup is a breakout entry from a bullish double-bottom pattern in $AZN.
In a double bottom pattern, the second low should undercut the first low. The buy point is the swing high between the first and second low.
We are going with a standard 6% stop.
$PATH has formed a tight trading range the past few weeks after reversing at $67 on June 10. A move through week’s high and the 10-day EMA could put $PATH in play. No official entry yet.
The S&P 500 did not close more than 1% above the 21-day EMA, so technically not a buy signal. The 50-day MA is also resistance.
Just a reminder, the market timing model uses the 21-day EMA on the indices to generate buy/sell signals. The 20-day EMA is used for all stock/ETF analysis. You can use the 20 or 21 ema for both if you prefer.
Leading the current rally are biotechs ($XBI) and beaten-down growth stocks ($ARKK). Midcap Growth ETF $IWP is outperforming as well. The Nasdaq Composite and 100 are lagging just a bit. The S&P 500 is struggling, weighed down by the recent heavy selling in commodity-based stocks.
$IWP back through the 10-day EMA.
$AMZN, $TSLA, $CRWD, and $GOOG are a few large-cap leaders that did not make new lows with the Nasdaq/SP-500. Let’s see how these stocks react to Wednesday’s poor closing action. If these stocks begin to roll over then the market could be headed for another round of selling.
As of Tuesday’s close, the S&P 500 and Nasdaq are still below the 10-day EMA and in a downtrend with lower highs and lower lows in place.
For now, we are expecting higher prices as long as Tuesday’s lows hold.
Biotech ETF $XBI is one of only a few ETFs trading above the 20-day EMA after reclaiming the average on Tuesday (not counting inverse or bond related ETFs).
