The largest bull, bear ratio we have seen to date.  more than 4.5 bullish to bearish SPY stocks. Bullish fundamental scores on 10 of the 11 SPY sectors.  In the context of a bullish market, we noticed a few cautionary technical data points.  Including wide-spread negative money flow. We may be seeing some early rotation in Mike's RSMK analysis.  Although, the shortest timeframes are less meaningful to us, we have yet to see much rotation via the RSMK creep into the timeframes that matter to us. 

It sure looked bleak for our tech holdings on Thursday, but our plan rules kept us from selling semis, software and services and innovative tech. Even though the Nasdaq had fallen below its 50 day moving average, the Power Gauge turned bearish and a number of key individual stocks had broken down, for time frame in which we trade, this was a normal, every day intermediate term pullback which happen during a multi month rally that had delivered over $100,000 in unrealized gains in a single quarter in 2021.  Watch us manage the portfolio using a combination of Chaikin factors and relative performance vs. SPY

This week's portfolio moves: we reduced our holdings by 1/2 in $COPX and $EWY. We added to our existing $IWM, $IWC and 4UGS positions. We initiated a new position in $ECH. 

The Weekly Relative Strength Chart's you have gotten to know are updated for the week below.  Once again to start the week, we didn't see any significant change in most of the metrics we track. However, we were starting to see technical evidence that led us to be a bit cautious.  Technical evidence, including what we have found to be a fairly reliable indicator, divergence in the Chaikin Oscillator.  We also noticed most of the SPY sectors with   money flow in the negative.   The last chart below is Mike's RSMK chart of the week. This week we highlight the commodity chart.  Several of the previously high flying commodities had a rough week, last week.  Of course, one week a trend does not make! However,  we feel the move in commodities has been an important part of the market as of late, and should be watched closely. 

Every week, we compare and rank ETF's using the RSMK indicator (named after it's creator Markos Katsanos).  We watch for patterns of increasing or decreasing relative strength. The relative strength trend across various timeframes is something we find particularly useful as trend following traders with a "weeks to months" time horizon favored by the Chaikin Analytics model.  We use relative strength when evaluating the soundness of the price trend of a stock. Look at the AAXJ, an exchange traded fund that tracks the performance of Asian markets outside Japan. This security had been showing persistent strength, ranking near the top of our global macro ETF comparison chart until it began losing steam a couple of months ago. It's relative strength trend slowed before its price trend slowed-- signaling to us at the time that a period of consolidation or, worse yet, price mean reversion was ahead. In fact, the moving average tracking we incorporate on the right side of our comparison charts confirms bearishness now in two of the three time frames we pay attention to (including the 20 day exponential moving average having crossed below the 50 period exponential moving average) .  Relative strength analysis gives us an idea of "where the puck is going."  We want to enter areas of the market that are not only outperforming but where price performance is accelerating on a relative basis.  As I write this, the AAXJ seems to have completed its intermediate pullback, and while price is still struggling below its 50 day moving average, it's relative strength rank improved week over week.  We'll watch for weekly relative  strength gains to take AAXJ above the SPY,  and we'll likely purchase a top Asian country ETF once  price retakes the 50 day moving average. 

RSMK calculates the strength of a security relative to another security or index and can be used to analyze intermarket relationships. We use SPY, the ETF that tracks the top 500 US stocks, as our comparative benchmark.  Our comparison charts don't show actual RSMK scores, but rather the RSMK-based rank of every security relative to SPY, trended over time. In baseball, a player under consideration for a big contract because of his impressive career statistical snapshot would be a perfect candidate for this type of relative strength trend analysis.  We'd be on the lookout relative performance that may have leveled off or even cooled.  Stack ranking players and trending their ability to deliver in key statistical areas would be vital before big checks to free agent athletes.  That's the mindset we should have as traders and why this type of analysis is so important. 

In addition to finding bullish rated stocks in uptrends, we increase our odds of success by selecting securities that are part of indexes, sectors or industry groups that are both outperforming and accelerating in relative strength.  Copper, for example, has been a huge high flyer in the commodity rally of recent months, and price action continues to show bullishness.  Commodities have grabbed the headlines and copper still trading above it's 50 day moving average. Plus, the short, intermediate and longer term moving average relationships are all bullish.  But in the last three weeks, we've seen the first early warning sign of a relative strength slow down.  The second early warning sign came just days ago when price put in a lower high.  Nothing in our analysis tells us sell, but it is telling us to be cautious.  As traders with a 3 to 6 month time horizon, relative strength changes that fall within our emphasis zone of 60 to 120 day lookbacks, would be key to our style of buying and selling. 

Meanwhile, gold miners (GDX) have traded right up to their 50 day moving average from below, but the move has accompanied by an impressive gain in relative strength rank.  Our analysis isn't telling to load the wagon until the mule goes blind, but improvements in both Chaikin Money flow and relative strength suggest the possibility that GDX will take back its 50 day moving average and resume an uptrend that's been on pause for the past six months. 

Methodical, consistent relative strength analysis helps correct erroneous assumptions.  The old expression "don't trade what you think, trade what you see" is especially important when the market is being flooded with $1.9 trillion in debt-fueled stimulus,  but interest rates are starting to become attractive to yield-seeking bond investors. My first reaction to Real Estate rotating steadily to the top of the World and US Sector ETF stack was "Huh?  But interest rates on Treasuries are spiking!"  But, a look further under the hood shows the market is betting on the return of the hotel and hospitality business and the Dow Hotel and Lodging Reit, a significant industry group component, had climbed up 9 points over a five day period.   The tech downturn, on the other hand, is one we've seen coming for months.  The XLK lagged for weeks before tech prices broke trend and the 50 day moving average.  Now the question is does the Nasdaq lead the rest of the market lower or do financial-heavy small caps lead the market higher?  There's no flight to safety in TLT yet, but utilities, staples and reits are occupying the top half of the relative strength chart for the first time in months and months.  We can't deny that the US market is a bit defensive.

We thought they'd be permanent top 10 subsectors, but the landlord gave the boot to  Innovative Tech, Semis, Info Tech, & Software and Service ahead of the recent tech technical breakdown. With Transports and Aerospace moving into the top 10, Industrials appear on solid ground.  As do Consumer Discretionary (Retail, Home Builders) and Financials (big and regional banks, insurance and capital markets (think brokers).   Reits as a subsector of Real Estate also in the top ten.  This stack rank would suggest that institutions (that are the market) are not hedging defensively, but rather simply selling what's run up to excess to make room for stuff that still has room to run.  No panic button in our market assumptions.

We're reminded that 45% of of the market-cap weight of the All Country World Index (ACWI) is occupied by companies listed outside the of the United States.  While the US market may be the biggest game in the world, we're certainly not the only game.  Chile, Canada, Mexico and Brazil are showing positive relative strength vs. SPY  in this hemisphere. They are joined by handful of Eurozone  economies and Japan.   

This week we liquated the remainder of our $TAN position, following weeks of gradual liquidation.  We managed to lock in profits on $TAN. At one point late last year, $TAN was our biggest winner, and we managed to lock in a large part of those gains. 

With the capital made available by selling $TAN, we put it to work in the strongest sub-sector, which continues to be $KRE ( Regional Banks).   On a RS basis, KRE continues to outperform the parent $XLF, we always prefer RS over all else. 

To wrap up the week, we managed our delta neutral portfolio.  A resting buy order and bought back one of our MAR strangles at half of credit received.  Today we laid out another $SPY strangle.  We went to the last weekly in APR 412.5C/365P 

Watch todays video to learn how we use Chaikin Analytics to manage a simulated ETF portfolio. We've been following this ETF plan since October 2018, through some pretty big peaks and troughs!  

Our Macro-Monday analysis once again shows a commodity and interest rate driven market. Over-all conditions remain bullish, in our opinion. 

Below are some of the charts used in todays analysis.  At the bottom of this post you will find our RSMK Macro chart of the week, which is all about the commodities. 

General Motors finally broke out a consolidation on Friday.  But what's an entry for breakout traders is a take-profits signal for those of us swing trading GM's move from overold to overbought while range bound in Chaikin Analytics.  GM had been rated Very Bullish since we entered oversold on 02/24 through the time we took profits into the close on Friday 3/12 (when GM was deep into overbought territory but before the OB/OS oscillator rolled over.  To be fair to my fellow Chaikin Power Users, this was a trade selected by the group during our trading meeting.  So, it could fall into all of our "W" columns.

​I updated our closed trade log below.  We took small loses on QQQ, TXN and CLOU  as the tech sector pulled back into an intermediate terms consolidation. On a percentage basis, the loss on the cloud computing and QQQ ETFs look huge, but, we sized both option trades for max allowable % trade oss, and set our exit as 50% trailing loss of the value of the underlying option contract.  The contracts actually grew before rolling over, so our traling 50% loss reduced the size of our net actual loss when we closed the trade. So, in reality, these losses were actually smaller that the Texas Instruments loss of .65%. 

I know, this sounds like a whole bunch of mumbo jumbo distracting from the fact that these trades were losers.  I got news for you, even with a powerful system like Chaikin putting the directional wind at your back, actually winning more times that losing on directional trades is hard to do.  And it's actually not necessary, as long as stocks like GM are part of the equation.  GM, at nearly $7.50 in appreciation in less than a month, more than paid for all of our losers, if everything in a corresponding properly position-sized portfolio were running.   At twelve percent net gain, GM pays losers of .5% to .7%. 

Moving forward, I'm only going to report trades as one lots.  So, we'll be focused on the win/loss percentage and the % gain or lost on each trade.  Once the sample size is big enough, I can break out stock and option trading performance separately.  The goal of this test isn't about how much money gets made or lost.  It's about the efficacy of swing trading using Chaikin Analytics core metrics.  

Finally, CA is a trend following quantitative-funamentals-driven investment decision aid at its core.  But, diversifying the types of trades taken can positively impact results.  Sometimes markets just aren't favorable to trend followers.  Sometimes, it's painfully obvious that GM has a lot more room to run after breaking out.  Why would we exit?  Because that's how we planned the trade. 

Each week we manage our simulated ETF portfolio, using Cannikin Analytics alongside our own set of relative strength rules. We started this portfolio in October of 2018 and have endured several big,violent swings in the market. Today we are more than $85,000 in the black ( paper money) This week, a few forced liquidations created space for us to add 2 tranches in our Macro holdings.  The pull-back in tech led to a half liquidation in $EWY.  We also continues to liquidate $ICLN and $TAN as the pull-back in clean energy continues.  Despite the fact that clean energy may be finding some support, our rules are about relative strength, not technical analysis. So, we continue to scale out, and capture some gains. 
This week we added to our macro holdings with one tranche each of $UGA ( gasoline) and $IWC ( micro caps)  

Below is Mike's "best of the best" RSMK chart. Relative strength based on various time frames.  We tend to focus on the 60-120 day time frame.