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Stocks Hold Upward Sloping Trend

David Becker
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www.iforex.com
Stocks Hold Upward Sloping Trend

Stocks took a breather during the past week as the S&P 500 SPDR (SPY) and the Nasdaq 100 ETF (QQQ) moved sideways after a strong open. Considering the negative geopolitical news during the week, the returns for the large cap index were impressive with the stock market’s ability to hold its gains. Remember, the news is not what is important. Instead, it is the market’s reaction to the news. A market that stays strong in the face of negative news is bullish.

The SPY surged above its July high and exceeding 200 this week. The ETF actually opened above 200 on Monday and then traded flat. Overall, SPY remains in a clear uptrend that is defined by a rising channel. The upper trend line extends to the 207 area in late September for the next upside target. The lower trend line marks first support and the June-August lows mark key support in the 190-192 area. The indicator window shows the S&P 500 advanced decline Line hitting a new high this week and confirming the new high in the S&P 500.

The QQQ is heavily weighted towards its large-cap components because the top ten stocks account for around 45% of the ETF. While the other 90 stocks certainly influence performance, the top ten are clearly the main drivers. The charts show that the performance for these ten stocks since mid April, are very bullish. The gains in QQQ can be attributed to Apple (NASDAQ:AAPL) (+39.65%), Microsoft (NASDAQ:MSFT) (+14.41%), Google (NASDAQ:GOOG) (+5.76%), Intel (NASDAQ:INTC) (+31.42%), Gilead Sciences (NASDAQ:GILD) (+57.71%) and Facebook (NASDAQ:FB) (+24.99%). Google, however, is a bit of a laggard with the third smallest gain. Momentum on the QQQ is poised with the MACD (moving average convergence divergence) generating a buy signal as the spread crosses above the 9-day moving average of the spread.

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