5 Major ETFs Reveal the Stock Market's Unstoppable Rally Isn't Yet Ready to Die

The bulls regained control of the U.S. stock market last week, with the PowerShares QQQ in control of the upward momentum. The QQQ's is by far the leader up 21.1% year to date and up 25.8% since its post-election low set on Nov. 14. The other four exchange-traded funds representing the major U.S. equity averages lag the Nasdaq 100, but all five have positive weekly charts.

The PowerShares QQQ Trust ETF (QQQ) , known as QQQ's, has over-run its semiannual and annual pivots of $139.27 and $139.42, which are magnets until the end of June and the end of 2017, respectively. There's an 85% chance that $139.42 will be tested again by the end of 2017. The all-time intraday high of $143.49 was set on June 2.

The SPDR Dow Jones Industrial Average ETF (DIA) , known as Diamonds, has monthly, annual and semiannual risky levels at $219.82, $220.14 and $221.34, respectively, and set its all-time intraday high of $212.21 on June 2.

The SPDR S&P 500 ETF Trust (SPY) , known as Spiders, has monthly, annual and semiannual risky levels of $245.24, $253.37 and $260.40, respectively, and set its all-time intraday high of $244.35 on June 2.

The iShares Transportation Average ETF (IYT) , known as transports, has monthly and annual risky levels of $180.00 and $182.54, respectively, and is below its March 1 all-time intraday high of $173.88.

The iShares Russell 2000 ETF (IWM) , known as small caps, has monthly, semiannual and annual risky levels of $144.06, $154,12 and $154.33, respectively, and is below its April 26 all-time intraday high of $141.81.

Here's the Scorecard for Five Equity ETFs
Here's the Scorecard for Five Equity ETFs

The PowerShares QQQ remain the leader so far in 2017 with a gain of 21.1% year to date, and is in bull market territory 26.8% above its Nov. 14 post-election low of $114.03. The laggard is transportation up 3.4% year to date, and 3.1% below its post-election high of $173.88 set on March 1.

When looking the weekly charts below, keep an eye on the 200-week simple moving averages shown in green is considered the "reversion to the mean" for each ETF. The "reversion to the mean" is an investment theory that the price of an index, will eventually return to a longer-term simple moving average. A logical choice that's easy to track is the 200-week simple moving average. A ticker trading above its 200-week simple moving average will eventually decline back to it on weakness. Similarly, a ticker trading below its 200-week simple moving average will eventually rebound to it on strength.

SPDR Dow Jones Industrial Average ETF (DIA)
SPDR Dow Jones Industrial Average ETF (DIA)

Courtesy of MetaStock Xenith

The Dow Jones Industrial Average (INDU) (21,206.29 on June 2) set its all-time intraday high of 21,225.04 on June 2. My quarterly value level is 19,189 with semiannual and weekly pivots at 20,893 and 21,153, respectively. My annual value level is 15,111. Sell strength to my monthly, annual and semiannual risky levels of 21,987, 22,042 and 22,148, respectively.

The weekly chart for Diamonds (DIA) ($211.91 on June 2) is positive with the ETF above its key weekly moving average of $208.81. The 200-week simple moving average is the "reversion to the mean" at $175.66. Note how the "reversion to the mean" was tested during the week of Aug. 28, 2015, the week of China's "Black Monday" and the flash crash of Aug. 24. It was also tested as the double-bottom of early 2016 during the weeks of Jan. 22, 2016, and Feb. 12, 2016. Weekly momentum ended last week rising to 73.11 up from 69.13 on May 26. Buy weakness to my quarterly value level of $191.55. My semiannual and weekly pivots are $208.59 and $211.31, respectively. Sell strength to my monthly, annual and semiannual risky levels of $219.82, $220.14 and $221.34, respectively. My annual value level is $150.83.

SPDR S&P 500 ETF Trust (SPY)
SPDR S&P 500 ETF Trust (SPY)

Courtesy of MetaStock Xenith

The S&P 500 (2,439.07 on June 2) set its all-time intraday high of 2,440.23 on June 2. My quarterly value level is 2,225.5, with my weekly pivot of 2,428.4. My annual value level lags at 1,676.1. Sell strength to my monthly and semiannual risky levels of 2,448.8 and 2,492.4, respectively. My annual and semiannual risky levels are 2,537.9 and 2,608.9, respectively.

The weekly chart for Spiders (SPY) ($244.17 on June 2) is positive but overbought with the ETF above its key weekly moving average of $239.11. The 200-week simple moving average is the "reversion to the mean" at $203.38, last tested during the week of Oct. 7, 2011, when the average was $114.40. Weekly momentum rose to 83.45 last week, up from 80.14 on May 26, and moving above the overbought threshold of 80.00. Buy weakness to my quarterly value level of $221.96. I show a weekly pivot at $243.07. Sell strength to my monthly and semiannual risky levels of $245.24 and $248.68, respectively. My annual value level is $167.75 with annual and semiannual risky levels of $253.37 and $260.40, respectively.

PowerShares QQQ Trust ETF (QQQ)
PowerShares QQQ Trust ETF (QQQ)

Courtesy of MetaStock Xenith

The Nasdaq Composite (NDAQ) (6,305.80 on June 2) set its all-time intraday high of 6,308.76 on June 2. My quarterly value level is 5,512, with semiannual and monthly pivots of 5,946 and 6,164, respectively. My annual value level is 4,331 with an annual pivot of 6,253, and weekly and semiannual risky levels at 6,320 and 6,387, respectively.

The weekly chart for the Nasdaq 100 ETF (QQQ) ($143.46 on June 2) remains positive but overbought with the ETF above its key weekly moving average of $137.55, and set its all-time intraday high of $143.49 on June 2. The 200-week simple moving average is the "reversion to the mean" at $105.00, not tested since the week of July 9, 2010, when the average was $42.51. Weekly momentum ended last week at 93.58, up from 93.49 on May 26, moving further above the overbought threshold of 80.00. Buy weakness to my semiannual and quarterly value levels of $128.39 and $125.37, respectively. I show monthly, semiannual and annual pivots of $138.75, $139.27 and $139.42, respectively. Sell strength to my weekly risky level of $143.82. My annual value level lags at $98.20.

iShares Transportation Average ETF (IYT)
iShares Transportation Average ETF (IYT)

Courtesy of MetaStock Xenith

Dow Transports (9,331.72 on June 2) set its all-time intraday high of 9,639.33 on March 1. My weekly value level is 9,121, My annual and quarterly value levels are 7,910 and 7,741, respectively. Sell strength to my monthly and semiannual risky levels of 9,974 and 9,980, respectively. Annual and semiannual risky levels are 10,167 and 10,713, respectively.

The weekly chart for the Transports ETF (IYT) ($168.45 on June 2) is positive with the ETF above its key weekly moving average of $164.66. The 200-week simple moving average is the "reversion to the mean" at $145.57, last crossed during the week of July 8, 2016, when the average was $132.92. Weekly momentum ended last week, rising to 40.93 up from 33.75 on May 26. Buy weakness to my quarterly value level of $139.43. Sell strength to monthly, annual and semiannual risky levels of $180.00, $182.54, $192.85, respectively.

iShares Russell 2000 ETF (IWM)
iShares Russell 2000 ETF (IWM)

Courtesy of MetaStock Xenith

The Russell 2000 (1,405.39 on June 2) set its all-time intraday high of 1,425.70 on April 26. My quarterly and annual value levels are 1,222.14 and 1,091.77, respectively. My weekly pivot is 1,405.58. Sell strength to my monthly and semiannual risky levels of 1,447.49 and 1,487.52, respectively. Annual and semiannual risky levels are 1,548.95 and 1,549.50, respectively.

The weekly chart for the small caps ETF (IWM) ($139.85 on June 2) is positive with the ETF above its key weekly moving average of $137.68. The 200-week simple moving average is the "reversion to the mean" at $118.26, last tested during the week of July 1, 2016, when the average was $108.66. Weekly momentum rose to 54.76 last week, up from 53.43 on May 26. Buy weakness to my quarterly value level at $121.48. Sell strength to monthly, semiannual and annual risky levels of $144.06, $154.12 and $154.33, respectively.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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