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Negative Divergences Continue Among The Five ETFs Representing The Five Major Equity Averages

The five major U.S. equity averages can be traded using five markets ETFs. The Dow Jones Industrial Average is represented by Diamonds. The S&P 500 is represented by Spiders. The Nasdaq 100 is represented by the QQQ’s. Transports is traded by iShares IYT. The Russell 2000 is represented iShares IWM.

SPDR Dow Jones Industrial Average ETF (DIA)

Courtesy of MetaStock Xenith

The weekly chart for Diamonds ($216.53 on Aug. 18) will shift to negative this week if DIA ends the week below its five-week modified moving average of $216.29 and above its 200-week simple moving average or “reversion to the mean” at $179.49, last tested during the week of Feb. 12, 2016 when the average was $157.98. The 12x3x3 weekly slow stochastic reading is projected to end this week below the overbought threshold of 80.00.

Investment Strategy: Buy weakness to my quarterly value level of $203.15. My semiannual pivot is $214.93. My annual pivot of $220.14 remains a magnet. This week’s pivot is $219.45. Sell strength to my monthly risky of $226.26. My annual value level is $150.83.

SPDR S&P 500 ETF Trust (SPY)

Courtesy of MetaStock Xenith

The weekly chart for Spiders ($242.71 on Aug. 18) is negative with the ETF below its five-week modified moving average of $243.83. The 200-week simple moving average or “reversion to the mean” is $207.88. The 12x3x3 weekly slow stochastic reading fell to 77.57 last week, falling below the overbought threshold of 80.00.

Investment Strategies: Buy weakness to my quarterly value level of $231.82. Sell strength to my weekly, semiannual, annual and monthly risky levels of $245.81, $252.96, $253.37 and $254.76, respectively. My annual value level lags $167.75.

PowerShares QQQ Trust ETF (QQQ)

Courtesy of MetaStock Xenith

The weekly chart for QQQ’s ($141.23 on Aug. 18) is negative with the ETF below its five-week modified moving average of $141.48. The 200-week simple moving average or “reversion to the mean” is $108.49. The 12x3x3 weekly stochastic reading slipped to 72.71 last week down from 76.94 on Aug. 11.

Investment Strategy: Buy weakness to my quarterly value level of $131.86. My annual pivot is $139.42. My weekly pivot is $141.80. Sell strength to my semiannual and monthly risky levels of $146.49 and $150.67, respectively.

iShares Transportation Average ETF (IYT)

Courtesy of MetaStock Xenith

The weekly chart for transports ($163.78 on Aug. 18) is negative with the ETF below its five-week modified moving average of $167.45. The 200-week simple moving average or “reversion to the mean” is $148.46, last tested during the week of July 8, 2016 when the average was $132.90. The 12x3x3 weekly slow stochastic reading declined to 52.17 last week down from 63.95 on Aug. 11.

Investment Strategy: Buy weakness to my quarterly value level of $158.89. Sell strength to my monthly, semiannual and annual risky levels of $170.08, $181.18 and $182.54, respectively.

iShares Russell 2000 ETF (IWM)

Courtesy of MetaStock Xenith

The weekly chart for the small caps ETF ($134.92 on Aug. 18) is negative with the ETF below its five-week modified moving average of $138.08. The 200-week simple moving average or “reversion to the mean” is $120.32, last tested during the week of July 1, 2016 when the average was $108.66. The 12x3x3 weekly slow stochastic reading declined to 56.22 last week down from 69.90 on Aug. 11.

Investment Strategy: Buy weakness to my quarterly value level of $125.32. Sell strength to my semiannual, monthly and annual risky levels of $144.61, $144.99 and $154.33, respectively.

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