This morning there is one less overbought ETF bringing the total number of major index ETFs at neutral to three while the eleven others are overbought. Those that are overbought have fallen off of near extreme levels that we have seen over the past week as well.  The ETF that has moved from overbought to neutral is the Russell 2000 (IWM) on a loss of 0.77% over the past week.  Despite this loss, it now has a good timing score; the only one of the group that can boast this.  IWM is not alone in sitting in the red on the week.  The Russel Mid Cap (IWR), Core S&P Small Cap (IJR), and to a greater extent, the Micro-Cap (IWC) are all also down.  IWC’s losses blow the others out of the water, shedding 1.93% over the past five days, bringing the year to date gain down to 13.61%, the second worst of the group behind the Dow (DIA).  Large caps, in general, are a little all over the place.  Ironically, while the large-cap Dow is up the least this year, over the past week it and the other large caps have outperformed.
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Turning to the individual sectors, like the large caps, things are a bit all over the place. Currently, there are four extremely overbought sector ETFs, four that are overbought, two neutral, and one that is extremely oversold. Financials (XLF) have surged over the past week rising 3.51% on the back of a string of strong earnings reports out of the big banks. While their gains have been more middling, Communication Services (XLC), Consumer Staples (XLP), and Consumer Discretionary (XLY) are the others that are sitting at extreme overbought levels. Over the past week, the Utilities sector (XLU) and Real Estate (XLRE) have seen losses, bringing both below their 50-DMAs. XLRE has been hit particularly hard and is now down 3.56% over the past five days. Believe it or not, this is still far from the worst performer. As we have repeatedly highlighted in the past week, Health Care (XLV) has been absolutely abysmal. Falling 6.53% since last Thursday, it is now negative on the year; the only ETF to be able to claim this by a wide margin. These declines have brought the sector to extremely oversold levels. So much so that it is basically off the chart of our Trend Analyzer.

The Consumer Staples sector, while far from the best, has been on a solid run this year gaining 11.34% YTD.  On a 1.42% gain over the past week, the sector, as seen through the XLP ETF, is now sitting in extremely overbought territory.  Below we show several notable charts of stocks in the sector taken from our Chart Scanner tool.

Consumer product conglomerate Colgate-Palmolive (CL) was hit hard in the last quarter of 2018.  After falling over 16% off of its highs all the way down to around $56 in the final days of October, the stock briefly rebounded back to summer lows before falling down again around $56-57 when the broader market bottomed.  The stock rallied off of this double bottom and in January, it came back into this range and has broken out to the upside in late March.  CL is now at its highest levels since this time last year.  Estee Lauder (EL) similarly made a double bottom in late 2018 and has been in a decent uptrend, especially following a large gap up in response to its Q4 earnings.  This uptrend has brought the stock up near 52-week highs.

There are a few other stocks within Consumer Staples that are also in solid uptrends: General Mills (GIS), Hershey (HSY), and Procter & Gamble (PG).  While GIS has only really been rallying since the start of the year (after a range-bound 2018), HSY and PG have had their uptrends relatively uninterrupted for just about an entire year now.  All three have been making 52-week highs recently, and while they are overbought at current levels, the general trend is still on their side.

On the other hand, Kellogg (K) has not been as fortunate to see these kinds of uptrends. The stock has been in a downtrend since the fall with a big dent coming in response to its November earnings report. Unlike most other companies, the start of 2019 was not a turning point.  Fortunately, late last month the stock managed to break out above the downtrend line as well as the 50-DMA.  It has made a higher low recently by bouncing off of the 50-DMA and has been working its way higher since.

Some other food-related stocks in the sector have seen some interesting movements in relation to resistance.  Sysco (SYY) and Tyson Foods (TSN) have both broken out above resistance to new highs.  SYY fell hard on its earnings report from last November, below prior support. In February, the stock failed to break out higher around these levels but on its next test of this resistance in the past couple of weeks the stock has surged; currently, it is pretty overextended as the most overbought stock in the sector.  On the other hand, TSN was in a downtrend from December 2017 to December of 2018.  This year it finally broke out of this downtrend and the stock has now come up to prior highs from late summer 2018.  In the past few days, TSN has smashed through these levels and is at new 52-week highs.

Spice giant McCormick (MKC) is almost the opposite of TSN.  After a solid rally through 2018, MKC held up in Q4 but eventually fell in December through late January.  The stock rallied off of a bottom near $120 and has now run upon its prior highs at $155. On this test the stock is failing to break out, currently trading around $152 today. This is not necessarily a detrimental sign as the uptrend is still holding as of now. Like SYY, it could take another test of these levels for a breakout.  Start a two-week free trial to Bespoke Premium to access our interactive economic indicators monitor and much more.

This morning the Mortgage Bankers’ Association (MBA) reported mortgage application volumes for the week ending April 12th this morning. Refinancing volumes dropped over 8% after an 11.4% WoW drop last week. Refinancing is still running at a strong pace (roughly twice the pace where they finished last year), but the more economically relevant result was the strong purchase application data. Applications for purchase are a leading indicator of home sales, so the new cycle high in purchase application volumes posted this week is a good sign that the housing market remains in a much better position than where it stood last year.

Weekly data can be tricky to seasonally adjust, so it’s also worth taking a peek at weekly data without seasonal adjustments. As shown, we’re right near the typical seasonal peak for application volumes, and as-of this week, only two weeks since 2009 have recorded stronger purchase application volumes. That confirms the basic message of the seasonally adjusted index, which is that mortgage applications are running at a very strong pace.

On a YoY basis, purchase application volumes are not extremely strong, but it’s pretty clear there’s a healthier trend than the period in the second half of last year. Since week-to-week applications can be pretty volatile, it helps to smooth things out with a rolling 4-week average. Using this approach, the 4-week average of purchase applications is up 8.2% YoY, the best pace since the week ended February 9th of last year.  Start a two-week free trial to Bespoke Institutional to unlock the full Bespoke interactive research portal.

It’s happening again.  After a 40%+ gain in less than 90 minutes of total trading (last hour on Tuesday and first half hour on Wednesday), shares of Qualcomm (QCOM) are once again back above $80, which is a level that it hasn’t had a whole lot of success holding in the past.  In the 25+ years that QCOM has been public, it has only closed above $80 (on a split-adjusted basis) 30 prior times.  The first date with $80 came back in late 1999/early 2000 at the height of the tech bubble as the stock closed above $80 on just five days.  From there, 14 years passed before the stock ever got back to that level again when there were 25 days in 2014 where the stock managed to close above $80.  Fast forwarding another five years and here we are again as QCOM traded back above $80 earlier this morning but has since traded back down below that level.  Will the third time be the charm, and can QCOM finally trade and hold above $80?  It’s certainly been quite a trip! Start a two-week free trial to Bespoke Institutional to unlock the full Bespoke interactive research portal.