Major stock indexes continued to slide this last week, despite a mid-week brief rally focused around the Federal Reserve announcement & Powell conference.
Energy prices continued to climb, the dollar remained relatively flat & earnings reports continued to come in, with more on deck next week.
SSO, the ProShares Ultra S&P 500 ETF traded on above average volume this past week, with their MACD signaling more pain to come as it looks to be in relative free-fall.
With an RSI at 38, there may be an opportunity to trade options around the ETF & profit while waiting for the dip to rebound.
TQQQ, the ProShares UltraPro QQQ ETF is in a more extreme, yet similar camp, as their holdings are more focused on names that such as technology & sciences, which tend to have higher levels of debt & be impacted more greatly by interest rate changes.
The technicals on TQQQ’s chart look similar to SSO’s; higher volume than average this week, RSI at 36 & a MACD that is showing more downward momentum to come.
Let’s take a look into some of the top & bottom performing sectors & geo-locations based on their technical ratings.
Energy (ERX), 7-10 Year Treasury Bear (TYO), Utilities (UTES) & Agriculture (DBA) Bullishly Leading The Markets
ERX, the Direxion Daily Energy Bull 2x Shares ETF has been steadily gaining since it’s 2021 low in mid-August.
I don’t think that this surprises anyone, but something interesting here is that after their gap up on Wednesday, their trading volumes have dropped below average for the past year, which is even lower than the average for the last 1-2 months.
Their RSI is still in the 60’s & their MACD looks healthy, but there may be some near-term pullback that can be used as an entry-point based on the closeness of the 10 & 50 day moving averages.
ERX pays a 1.36% dividend yield, which can be used as a cushion for those entering a long-only position.
The $62.79 level will be key to watch this week, as they try to stay above it.
TYO, the Direxion Daily 7-10 Year Treasury 3x Bear Shares ETF has also seen steady success since the beginning of August, gaining ~50% in that time period.
Their RSI is approaching overbought territory, although their MACD is beginning to cross over bullishly, signaling more gains in the near-term.
An entry into the ETF now should be accompanied with some options as a hedge.
UTES, the EFTIS Series Trust I Reaves Utilities ETF is beginning to rebound, after falling sharply ~10% since April 2022.
While they aren’t out of the woods just yet, their MACD is beginning to curl upwards, and their RSI is still in the low 40’s, which may signal the turning of momentum into a bullish near-term period.
UTES provides a 2% cushion for investors in the form of their dividend for stockholders who plan to build a position for the longer-term.
DBA, the Invesco DB Agriculture Fund has been steadily gaining since last May, despite having some more recent hiccups since mid-April.
While they do not have a dividend yield, they do have options that can be used to soften the landing on entering a new position via long-short.
DBA’s MACD is still trending downwards, but it is beginning to signal potential signs of a reversal in the near-term, which is supported by their RSI at 42.
I would be watching how they hold $21.77, as well as how their price reacts when the 10 & 50 day moving averages meet.
Blockchain (BKCH), Cannabis (YOLO), Semiconductors (USD) & Social Sentiment (BUZZ) Bearishly Lagging The Markets
BKCH, the Global X Blockchain ETF has struggled since its inception in July 2021,falling 72.7% over its first 2 quarters on the market.
BKCH does not have options to trade yet, but they do offer an 8.65% dividend yield, which interested investors can use as a cushion for building their position, should they hold it for over a year.
They look poised to reverse trend & gain some losses back as their RSI approaches the 30, or “oversold” mark & their MACD looks to try & crossover bullishly, but it is too speculative to tell for sure, given the interest rate concerns impacting tech names.
YOLO, the AdvisorShares Pure Cannabis ETF has been steadily declining since June of 2021, although there may be an end in sight, as Friday 5/6/2022 resulted in a hammer candlestick at their current low price for the year.
Those interested in entering a long position here or buying down their average price for existing positions may see this as a sign of confidence in a near-term reversal.
Their RSI is well-oversold & their MACD is beginning to flatten, which could lead to more bullish momentum, should their trading volumes continue to stay above average for the year in the near-term. (I have a long position in TOKE, another cannabis ETF)
With no options to use as a hedge & no dividend to offer a cushion from more losses, this will be an interesting one to watch.
USD, the ProShares Ultra Semiconductors ETF has dropped by 53.5% from its high in November 2021, with trading volumes increasing on average throughout 2022.
USD’s MACD is currently bullish, but they will need to break above their 10 day moving average in the near-term in order to keep it from crossing back bearishly.
Anyone thinking of entering USD should also consider buying some puts as well in order to protect themselves from potential near-term losses.
BUZZ, the VanEck Vectors Social Sentiment ETF has performed poorly since topping out in November 2021, posting 44.4% losses from their high.
Their trading volumes have been steadily going down since last August to October, with a few random flare ups, signaling that investors aren’t particularly keen on their concept.
Their MACD is trying to break out bullishly, but a reversal will be heavily reliant on yesterday’s hammer candlestick, making the $15/share mark a good place to be keeping an eye on as the begin trading again next week.
Tying It All Together
Next week will be interesting, particularly Wednesday’s CPI numbers, which will be one of the week’s focal points.
Thursday’s PPI data & jobless claims data will also be something to keep an eye on, to look for inconsistencies with other recently reported data points that markets have been trying to digest.
Another couple sets of numbers that will shed better light on inflation are coming on Tuesday, with the NFIB small business index & the real household savings rate (SAAR), as this will shed more light into how inflation is impacting people.
Earnings reports will also add in another dimension that markets will need to deal with, with 1,177 companies reporting (per Yahoo).
Results & guidance numbers reported will give more insight into the current state of the economy beyond the data prints that we have been reading each week.
*** I DO NOT OWN SHARES OF SSO, TQQQ, ERX, TYO, UTES, DBA, BKCH, YOLO, USD, or BUZZ AT THE TIME OF PUBLISHING THIS ARTICLE ***
*** I HAVE A LONG POSITION IN TOKE, WHICH IS MENTIONED ABOVE IN THE BODY OF THIS ARTICLE ***