Commentary

A Little Weakness

All the major index ETFs turned blue today but, on the plus side, they all succeeded in making their daily candles ambiguous.

VTI

The 18 day moving average was tested today. That has been a reliable, if conservative, trend line of the current advance. Note the 2 previous instances of blue candles during March. In an uptrend, it is OK to buy blue candles, but they should finish with a higher close than open. This candle had a lower close but the probe lower and nice recovery makes it somewhat ambiguous.

I’m inclined to look at the overall situation negatively but it is close. I mentioned the top of the March 21 candle, which was the reaction off the dip in early March. The long bottoming tail on today’s candle came within 1 point of that.

All of VTI and associates lost money on the latest rate of change algorithm long except for QQQ. The white candle on April 22 with the higher close than open was the correct entry, based on the 3 day bottoming action.

QQQ

This has been the best performing major index ETF. The algorithm has been long QQQ since March 28 and there was no reason to sell until the white candle appeared on April 30.

IWM

IWM came within a dime of touching the 54 day moving average today, before winning the best comeback award. That was probably enough to shake a lot of the swing traders out. Like most pretty triangles, it morphed into a rectangle. One could pretend it is now on the rising 54 day moving average trend line, however, the negative action of the last few days has changed the slope of both the 18 and 54 day moving averages. Glad I didn’t have to make a sell decision at the 54 day moving average today, that was a much easier place to buy.

Conclusion

There probably is a consensus opinion that this minor down move is a good buying opportunity, and bulls can’t have too many complaints about Friday action lately. In addition, there is the relatively positive technical action despite the negative momentum shift. My outlook is still slightly negative.

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