The ETF For The Nasdaq 100 Has Regained Momentum, The Other Four ETFs Have Declining Momentum

Richard Suttmeier

Washington politics, a stubborn Federal Reserve, a storm named Harvey and trigger-happy North Korea continue to weigh on U.S. stocks. Here’s how to trade them using exchange-traded funds as investors have been advised to reduce holdings by 50% on recent strength.

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 ($219.92 on Sept. 1) is neutral with the average above its five-week modified moving average of $217.28. The ETF is above its 200-week simple moving average or “reversion to the mean” at $179.81, last tested during the week of Feb. 12, 2016 when the average was $157.98. The 12x3x3 weekly slow stochastic reading slipped to 76.87 last week down from 80.94 on Aug. 25 falling below the overbought threshold of 80.00.

Investment Strategy: Buy weakness to my quarterly value level of $203.15. My semiannual pivot is $214.93. Strength has been failing between my semiannual of $214.93 and just above my annual pivot of $220.14. Sell strength to my weekly and monthly risky levels of $222.28 and 225.32, respectively. My annual value level lags at $150.83.

SPDR S&P 500 ETF Trust (SPY)

Courtesy of MetaStock Xenith

The weekly chart for Spiders ($247.84 on Sept. 1) is neutral with the ETF above its five-week modified moving average of $244.95. The 200-week simple moving average or “reversion to the mean” is $208.24. The 12x3x3 weekly slow stochastic reading declined to 63.37 last week down from 66.68 on Aug. 25.

Investment Strategies: Buy weakness to my quarterly value level of $231.82. Sell strength to my weekly, semiannual, annual and monthly risky levels of $249.85, $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 ($146.00 on Sept. 1) is positive with the ETF above its five-week modified moving average of $142.46. The 200-week simple moving average or “reversion to the mean” is $109.10. The 12x3x3 weekly stochastic reading moved up to 68.56 last week from 68.05 on Aug. 25.

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 weekly and monthly risky levels of $149.13 and $156.52, respectively.

iShares Transportation Average ETF (IYT)

Courtesy of MetaStock Xenith

The weekly chart for transports ($168.64 on Sept. 1) is neutral with the ETF above its five-week modified moving average of $167.21. The 200-week simple moving average or “reversion to the mean” at $148.87 last tested during the week of July 8, 2016 when the average was $132.90. The 12x3x3 weekly slow stochastic reading declined to 34.07 last week down from 40.29 on Aug. 25.

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

iShares Russell 2000 ETF (IWM)

Courtesy of MetaStock Xenith

The weekly chart for the small caps ETF ($140.52 on Sept. 1) is neutral with the ETF above its five-week modified moving average of $138.90. The 200-week simple moving average or “reversion to the mean” is $120.49, last tested during the week of July 1, 2016 when the average was $108.66. The 12x3x3 weekly slow stochastic reading declined to 39.93 last week down from 43.50 on Aug. 25.

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.

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