Green shoots 22.05.29
Hello everyone,
Two things happened this month:
We hit major support levels on several indices and ETFs
We subsequently got a bounce that’s now resulting in many failed breakdowns (and even breakouts in tickers that held up well during this year’s selloff).
We’ll look at both events in today’s post.
Major Supports
IWM, DAX, VEU, and XBI hit ~5yr support earlier this month and have been bouncing.
REMX Monthly. We looked at this chart in the previous 2 blog posts. REMX hit a 9yr base support and has been bouncing. Note: Both REMX and IWM bottomed on May 11 - a week before SPY’s May 19 bottom.
DJUSHB Monthly. Retested a support level going back to 2005.
I like the idea of taking a partial position on support and adding more on a breakout / failed breakdown. Let’s look at the latter next.
Breakouts / Failed Breakdowns
Global Stocks:
HEWU (Hedged UK) is at 52-week highs and working on a breakout.
FRDM Weekly. This emerging markets ETF negated its breakdown. So too did EWW, ENOR, and other global ETFs.
Dividend Stocks:
FDL made a breakout! In Canada, XDV made a failed breakdown on its weekly.
Health care:
We looked last week at breakouts in MRK, MCK.
Commodities:
I’ve been discussing this area for a while as it’s where the leadership is. Two weeks ago, the Canadian Dollar (which is highly tied with copper and oil) showed a false breakdown.
It’s a similar picture on AUD and REMX weekly charts (the latter was discussed in the previous post).
Of course, oil and coal charts continue to look just fantastic:
Closing Notes
It’s no longer just some areas within commodities looking good. The monthly and weekly charts for broad indices and several sectors are looking great.
The question on everyone’s mind: Is this a bear market rally for stocks or the start of a new bull market?
We could certainly rally for weeks from here as we hit major support levels on the monthly charts. But no one knows if we made a lasting bottom, nor does it really matter – we’ll follow price wherever it takes us.
To illustrate how quickly this market can change: it was just a month ago that I thought I could take a break for a while, but here we are now with new opportunities to go long. Let’s just take things one week at a time.
That’s all for this week! If you found this post useful, please give it a like and share. Thanks for reading.
Twitter: @alphacharts.
Important Disclaimer: This blog is for educational purposes only. I am not a financial advisor and nothing I post is investment advice. The securities I discuss are considered highly risky so do your own due diligence.