Saturday, August 8, 2009

ETF Rewind - Week 32 (08/07/09)

(Click Image to Enlarge/ Glossary)

The S&P500 (SPY) continued its relentless advance by another +2.4% last week for a four-week increase of +15.1%. However, the big winners were really the underdog Financial (XLF) and Real Estate (IYR) sectors on heavy rotation back into those arenas. Even so, the best forward stability has been demonstrated by the Dow (DIA) and Consumer Discretionary (XLY) stocks, whose 'Risk Reward' (Omega) distributions have stood head and shoulders above the rest over the course of the last month.

Week Thirty-Three of 2009 features yet another very busy economic calendar, including the Federal Open Market Committee statement:

I find it remarkable below how the continuous strength of late vis-a-vis overbought RSI readings was corrected so easily after the very mild pause in the advance earlier this week.

Lastly, while we had a bullish response to the Friday jobs report, imagine what the reaction would have been a few weeks ago. Also, the leading NASDAQ's recent under-performance continues and there have been fewer new high participants during the last several days. While I'm all for trading what I observe -- and that has certainly been bullish -- the short-term bearish divergences continue to pile on.

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