After finishing the session higher on Friday to cap off a strong June and first half of 2019, conditions have not necessarily become overly extended as the major indices work their way back all-time highs. Only half of the 14 the major index ETFs are overbought while the rest are neutral. These overbought ETFs are primarily comprised of large caps including the Dow (DIA), S&P 500 (SPY), and Russell 1000 (IWB). Meanwhile, distancing itself from some of its peers, the Nasdaq (QQQ) was the worst performer last week and has actually fallen out of overbought territory. Now sitting at neutral, QQQ is actually one of the least overbought ETFs of this group.
While large caps are mostly overbought, they are down versus one week ago, and as such, less extended than they were a week ago as well. The red dots and tails to the right in our Trend Analyzer tool show this slight pullback off of more overbought levels. On the other hand, small and mid-caps outperformed last week as each saw a gain of over 1%—save the Russell Mid Cap (IWR) which only rose 0.09% as it is also the most overbought index ETF. The Micro Cap (IWC) and Core S&P Small Cap (IJR) were the strongest performers rising over 1.7%, taking out the 50-DMA in the process. Despite the short term performance for these two, the long term trend is still sideways.
Following geopolitical progress made this past weekend at the G-20 summit, S&P 500 futures have gapped up to all-time highs leading to what will likely be a sizable gap up for other indices at the open as well. As shown in the charts from our Chart Scanner tool below, another gap up will lead some of these index ETFs back up towards their all-time or prior highs. A number of index ETFs reached new highs in the past couple of weeks in the form of both all-time highs for the Dow (DIA) and the S&P 500 (SPY) as well as lower highs like the S&P MidCap 400 (MDY). The major indices once again reaching these highs would be a positive sign for stocks. Similarly, late last week, the small cap IWC and IWM both managed to see some positive technical developments in taking out both the 200 and 50-DMA. Currently, none of the major index ETFs sit below either the 200 or 50-day. Start a two-week free trial to Bespoke Institutional to access our Trend Analyzer tool and much more.