The SPDR S&P 500 ETF (SPY) has a Bullish Chaikin Power Gauge ETF Rating and rallied for a second consecutive day after holding support in the zone between $320 and $325 which we have been highlighting for the past few weeks. The OB / OS Indicator remains in an oversold position and Chaikin Money Flow is bullish. SPY is above the rising long-term trend line and is now testing resistance near $330. The Power Bar Ratio is bullish at 125 to 81.
The iShares Russell 2000 ETF (IWM) has a Neutral Chaikin Power Gauge ETF Rating and continues to lag the SPY. The fund is also oversold based on our indicator and Chaikin Money Flow is bullish. IWM is above the rising long-term trend line which acted as support (along with the $160 breakout level) during the recent pullback. The Power Bar Ratio is bullish at 469 to 264.
Based on the breakout, there is upside potential to the $176 level should the $160 level hold as support.
The Invesco QQQ ETF (QQQ) has a Bullish Chaikin Power Gauge ETF Rating and continues to lead the SPY. The OB / OS Indicator is also in an oversold position despite the fund trading to a new high yesterday. Chaikin Money Flow is bullish and QQQ is above the rising long-term trend line. The Power Bar Ratio is bullish at 32 to 4.
Take-Away: The major market ETFs in the US remain in well defined uptrends, trading near record levels. All three are now oversold following the coronavirus-induced pullback while remaining above their respective long-term trend lines. It seems that the fears surrounding the virus served to reset the overly bullish sentiment readings that we had seen to start the year.
Continue to focus on the Very Bullish / Bullish stocks in leading areas of the market that are outperforming when those stocks become oversold. The Neutral rating for IWM tilts our preference toward large cap names.