Equities Market Analysis

ETF Watch List

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Here’s a LIST of the 27 ETF’s I follow on a weekly basis. The ETF is listed at the top in bold followed below by the top 15 weighted holdings in each one. If green, then it’s bullish. This means the 8 EMA, 13 EMA, 21 EMA, and 34 EMA are positively stacked (i.e. 8 over 13 over 21 over 34). If red, then it’s bearish. This means the 8 EMA, 13 EMA, 21 EMA, and 34 EMA are negatively stacked (i.e. 8 under 13 under 21 under 34). If no color, then it’s neutral. The EMAs are not stacked either positively or negatively. If you are a long only trader, then it’s best to look for pullback buys when green. Avoid the neutral and bearish stocks. If you are a two way trader, then you can also look for pullback sells when red. The trend is you friend!

This upcoming week’s observations are:

  • 10 ETF’s are bullish, 5 are bearish, and 12 are neutral
  • The most bearish sectors are IYT (9), JETS (8), OIH (13), and XLE (8)
  • The most bullish sectors are CLOU (9), QQQ (10), SPY (10), XLK (9), XLV (9), and XRT (10)

Grayscale Bitcoin Trust (GBTC) To Test All-Time Highs?

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For anyone looking for some exposure to Bitcoin without buying Bitcoin itself can look to the Grayscale Bitcoin Trust (GBTC).  For more information, please check out this link.

This market, from it’s 2-19-21 all-time high to its 6-22-21 most recent low, corrected 59%.  During this period, GBTC was in a downtrend from a daily time frame perspective.  However, since that 6-22-21 low it is showing signs of an upwards turnaround.  First, it formed a bullish double bottom pattern that was triggered on 7-26-21.  Second, it broke the bearish pattern of lower highs and lower lows on the same day the double bottom pattern became active.  Third, it formed a bullish ABCD pattern today.  This pattern is bullish because it has a super shallow retracement (less than 38.20%) plus it has positive momentum because of the 6:1 skewing (6 bars down, 1 bar up).

Now that we have the signs of a potential trend change, where can we go from here, and where can we run into resistance?  Let’s look at the targets first.  The double bottom objective is ~ 38.52 and the ABCD pattern’s objective is a range from 41.78 to 43.16.  Now let’s look at the obstacles in the way of these upside targets. We have the 100 DMA ~ 37.49, the monthly R1 @ 38.82, and a change in polarity (old support becomes new resistance) between 37.88 and 40.67.  The double bottom target sits in the bottom of this potential resistance range.  But the ABCD target sits further above.  I think we could see the double bottom target reached, then see prices stall inside the resistance zone, and then fall back to retest the ABCD breakout level of 35.50 before moving back higher.  Once the change of polarity zone has been breached, then a move to the ABCD pattern’s objective seems likely. 

The final potential resistance to keep GBTC from all time highs will be two significant volume @ price clusters.  These clusters show the 2 heaviest traded volume profiles since the all-time high down to the recent lows.  The only larger one is the one that was just recently created below current price action.  These two upper resistance clusters are between 44.31-47.41 and 48.93-51.71.  If price action can clear these two zones, then new all-time highs should come soon afterwards.

GBTC

ARKK ETF Approaching Sell Zone

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This ETF peaked on February 16th and has since seen a steady move lower the past 3 months. This downwards move produced a bearish ABCD pattern with a smaller abcd pattern inside of it. This double dose of patterns is called a butterfly and typically extends out to its 127 and/or 161 fib extensions. The May 13th low dropped just in between the two and has rallied over 10% since. However, I believe this rally is setting up a potential short trade.

Why? The dominant ABCD pattern had a neutral retracement (less than 50%), which indicates a strong bearish trend. The skewing on this pattern was to the left (7 bars up to 38 bars down). This indicates a downwards move that lacked momentum. So it’s no surprise that we would get a move back inside the breakout level. However, I still believe the 100% projection target of the ABCD pattern is still in play. That would mean a move down to 77.35 before it rises above 130.80 is still possible. Therefore, I would still look to make bearish trades.

But where? That’s where we look to volume profile for answers. If we look at all the volume from the Feb 16th peak to the May 13th low, we will find a large volume cluster zone between 120.34 and 126.25. This clusters point of control (POC) is roughly 122.14. The POC is the price level with the heaviest volume. This resistance zone alone is enough to be bearish, but there’s more. There’s a tight cluster of 3 separate Fib retracements and/or projections inside this volume cluster between 121.09 and 123.61. Price action often finds resistance in these situations.

What’s the trade? Look to buy puts when price trades between 120.34 and 126.25. You could build a small position towards the bottom of this zone and increase the size towards the POC. Or you can just wait to see if price moves to the POC at 122.14 or the middle of this zone at 123.30 and build your position there. This set-up is no longer valid when price breaks above 130.80. Initial downside targets would be the recent low at 97.22 and the 100% Fib projection of the ABCD pattern at 77.35. Look for further posts for other targets that will be available if this pattern develops. Stay tuned!