Momentum Returns To The 5 ETFs That Track The Five Major U.S. Equity Averages

Richard Suttmeier

Please join me in Trader Club - Traders Club

Sometimes I simply scratch my head because there are no concrete reasons for stock market strength at this time. It’s simply a case where technical momentum has returned to the five major U.S. equity averages making the associated exchange-traded funds trade higher. This gives investors the opportunity to reduce holdings on strength to my risky levels. My advice remains the same. Reduce holdings by 50% on strength to risky levels.

Let’s say you invested $100,000 into the stock market and it’s now worth $300,000. If you reduce holdings by 50% you still have $150,000 in the stock market, more than you started with. Your original invested is now fully-protected with an extra $50,000 in the bank. This is a prudent investment strategy.

SPDR Dow Jones Industrial Average ETF (DIA)

Courtesy of MetaStock Xenith

The weekly chart for Diamonds ($221.52 on Sept. 12) is positive with the average above its five-week modified moving average of $218.28. The ETF is above its 200-week simple moving average or “reversion to the mean” at $180.43, last tested during the week of Feb. 12, 2016 when the average was $157.98. The 12x3x3 weekly slow stochastic reading is projected to rise to 77.33 this week up from 74.95 on Sept. 8.

Investment Strategy: Buy weakness to my quarterly value level of $203.15. My semiannual and annual pivots are $214.93 and $220.14, respectively. Sell strength to my monthly risky level of $225.32. My annual value level lags at $150.83.

SPDR S&P 500 ETF Trust (SPY)

Courtesy of MetaStock Xenith

The weekly chart for Spiders ($250.16 on Sept. 12) is positive with the ETF above its five-week modified moving average of $246.25. The 200-week simple moving average or “reversion to the mean” is $208.94. The 12x3x3 weekly slow stochastic reading is projected to rise to 73.08 this week up from 65.97 on Sept. 8.

Investment Strategies: Buy weakness to my quarterly value level of $231.82. My weekly pivot is $246.51. Sell strength to my semiannual, annual and monthly risky levels of $252.96, $253.37 and $257.09, respectively. My annual value level lags at $167.75.

PowerShares QQQ Trust ETF (QQQ)

Courtesy of MetaStock Xenith

The weekly chart for QQQ’s ($146.22 on Sept. 12) is positive with the ETF above its five-week modified moving average of $143.49. The 200-week simple moving average or “reversion to the mean” is $109.73. The 12x3x3 weekly stochastic reading is projected to rise to 77.66 this week up from 71.63 on Sept. 8.

Investment Strategy: Buy weakness to my quarterly value level of $131.86. My annual pivot is $139.42 with my semiannual pivot of $146.49. Sell strength to my monthly risky level of $156.52.

iShares Transportation Average ETF (IYT)

Courtesy of MetaStock Xenith

The weekly chart for transports ($172.13 on Sept. 12) is positive with the ETF above its five-week modified moving average of $168.53. The 200-week simple moving average or “reversion to the mean” at $149.30 last tested during the week of July 8, 2016 when the average was $132.90. The 12x3x3 weekly slow stochastic reading is projected to rise to 42.67 this week up from 35.40 on Sept. 8.

Investment Strategy: Buy weakness to my quarterly value level of $158.89. My monthly pivot is $170.91. Sell strength to my semiannual and annual risky levels of $181.18 and $182.54, respectively.

iShares Russell 2000 ETF (IWM)

Courtesy of MetaStock Xenith

The weekly chart for the small caps ETF ($141.54 on Sept. 12) is positive with the ETF above its five-week modified moving average of $139.48. The 200-week simple moving average or “reversion to the mean” is $120.79, last tested during the week of July 1, 2016 when the average was $108.66. The 12x3x3 weekly slow stochastic reading is projected to rise to 48.93 this week up from 42.26 on Sept. 8.

Investment Strategy: Buy weakness to my quarterly value level of $125.32. Sell strength to my monthly, semiannual and annual risky levels of $142.44, $144.61 and $154.33, respectively.



Comments

Traders Club

FEATURED
COMMUNITY