Capitalization Funds

The Dow Jones Industrial Average (DIA) ETF visited its June high this week and with yesterday's nasty action, it looks to be failing at that level. That failure could lead to more sideways trading between 106 and 97 in the weeks ahead. 

Breadth for the index, measured by the percentage of Dow stocks in P&F bull trends, has failed to recover or support the recent bounce.

The fund is a sell as long as it remains beneath 106.

The MidCap (MDY) fund also looks to have failed at the top of its near three month range.

Interestingly, breadth here has recovered, conflicting with the indicator for the Dow. Regardless, price action is the most important technical and the fund is also a sell providing this week's high is not violated (142.23).

Sectors

The Nuclear Energy (NLR) sector ETF stop is raised to 20.70. That level marks the top of the two month range and a sustained break above there would confirm a double-bottom formation.

Up until May, the Retail (RTH) ETF was leading the market higher. Since then the sector has underperformed and the P&F relative chart against the S&P 500 is at its lowest level since November last year.

The price chart has struggled to even test its 200-day exponential moving average and with the 14-day RSI back to neutral, the downtrend is ripe to reassert.

We will open a short position in RTH but would exit following an end-of-day close above 95. The target is down to 82.

The Financial (XLF) ETF has struggled yet again to overcome horizontal resistance at 15. This is the fourth rally attempt in the last three months to clear this level.

Momentum, 14-day RSI, is no longer oversold and is in the same position as it stood ahead of the decline off the mid June high.

Consider shorts around 15, using a break above it as a cue to exit.

The Healthcare (XLV) ETF has performed poorly against the general market since the start of the month. Consequently, this underperformance has reasserted the medium-term relative downtrend.

The price chart remains penned beneath the 50-day EMA. With the reassertion underway, we will open a short position in XLV for the Trading Portfolio. The stop level will be at 29.40 and we would exit following three consecutive end-of-day closes above it. Initial target is down to 26.

Another poor performing health ETF is the Health Care Providers (IHF). The price is trading at its worse level since November last year and the relative chart against the S&P 500 is doing likewise.

Yesterday the fund printed a dead-cross with the 50-day EMA slicing down through the 200-day EMA, adding further to the chart's bearish picture.

Consider shorts in IHF on the next piece of strength.

International Funds

The Taiwan (EWT) stop is raised to 12.20 and is now intraday. A move to there would likely imply an end of the rally off the July-1 low.

Overall the EWT chart remains favorable. The 50-day EMA has just risen up though the 200-day EMA, providing a bullish golden-cross and the relative chart against the S&P 500 remains in an uptrend.

The Europe 350 (IEV) stop is moved higher to 35.10 and is now intraday. Similar to the reason for raising the stop on EWT. We want out if there is a breakdown of the recent uptrend. 

Like many of the equity ETFs, IEV is testing key moving average resistance and that action causes us to be on our guard. However, relative performance is excellent, with a new three month relative high against the US yesterday.

The Spain (EWP) ETF slammed into horizontal resistance across 40 this week. The encounter also coincided with the 200-day EMA.

The fund has its work cut out from here and we are going to open a short for the Trading Portfolio.

Trade would be covered following an end-of-day close above 42. The target is down to 35.

Bonds

The High Yield Corporate Bond (HYG) fund is trading up towards resistance from the January and April highs. Momentum, 14-day RSI, is also overbought, so the upside is really limited from here.

We will open a short in HYG for the Trading Portfolio. We will use 90 as a stop level and would exit following three consecutive end-of-day closes above there. The target is down to 86.

Currencies

We tried to short the British Pound (FXB) in June but were forced out with a small loss (1.97%). The stock has since climbed higher but is now at another potential selling area.

The currency fund is at a resistance band drawn across from the April high. Also, although broken, the 200-day EMA is still influential. In January there was a brief break above this average before the price rolled back over.

We will open a short in FXB but would close out following an end-of-day close above 158.60. The target is down to 147.

Commodities

The Gold short (DGZ) ETN is now outperforming the general market. In July the P&F relative chart against the S&P 500 printed a new buy signal.

The price chart is pulling away from the 50-day EMA and looks set to test the 200-day EMA at 19.45.

We shall open a long in this inverse ETF today for the Trading Portfolio. The stop level will be 17.85 and an end-of-day close is needed beneath that to initiate our exit.