Last week was very important to U.S. equity charts, and I have selected from my ETF watch list a collection of 7 in particular whose patterns merit close watching this week.
The first is Emerging Markets—iShares MSCI Emerging Markets ETF (NYSE:EEM)—which have completed a small but well-defined reversal pattern. Take note how prices have broken the year-long channel and that a move below the horizontal line will complete the pattern.
Miners—VanEck Vectors Gold Miners ETF (NYSE:GDX)—completed an enormous right triangle pattern, and I think precious metals' awfulness is going to simply continue. Sure, it may bounce up to that triangle base once more, but whether it does or not, I think substantially lower prices are in store.
Gold—SPDR® Gold Shares (NYSE:GLD)—may also bounce, and perhaps even more robustly, since it is a fair distance from its own triangle base. As with miners, however, I think the lower pathway is the clearest.
Interest-sensitive instruments have been relatively tumultuous in recent weeks. The corporate bond ETF—iShares iBoxx $ Investment Grade Corporate Bond ETF (NYSE:LQD)—did a perfect touch of its trendline (twice, in fact) and is poised for a small recovery. The downtrend should continue, however.
The cleanest pattern, by far, has been NASDAQ (Invesco QQQ Trust), and the picture-perfect head & shoulders pattern completed this week with magnificent results. I suspect support will be available at the lower trendline shown.
Arm-in-arm with NASDAQ is the semiconductor index—VanEck Vectors Semiconductor ETF (NYSE:SMH)—which has broken beneath its ascending price channel and has completed its own clean topping pattern. This price failure is a core reason I believe the tide is finally turning, since this sector has been such a stalwart holdout.
Lastly is the Dow Jones Utilities—Utilities Select Sector SPDR® Fund (NYSE:XLU)—which has broken through three different uptrends. Utilities are, for most folks, so boring as to not even pay attention, but prior bear markets have all been preceded by a shift downward by the utility stocks, and this subtle breakdown is another clue for us.
