As we mentioned in a series of tweets earlier this morning, our Trend Analyzer one week ago looked a bit different than it does now. Last week, before the FOMC rate decision and the escalation of tariff tensions sent markets into a tailspin, almost all of the major US indices were overbought and had distanced themselves above their 50-DMAs. Now, in the Trend Analyzer, the reverse is true as every major index ETF has crashed through their respective 50-days, leaving ten of the fourteen oversold. Leading the way to the downside, the Micro-Cap (IWC) ETF is about as oversold as it gets as it has fallen over 3 standard deviations below the 50-DMA. With the most recent move lower, IWC is now showing a downtrend as well; the only one to show this. The four that are not oversold are just barely neutral and it would take only a little more downside for them to join the others. Ironically, one of these is the Nasdaq 100 (QQQ). While not by any significant degree, QQQ is just above oversold levels even after a 7.14% decline over the past week; the most of any major index ETF. The Nasdaq 100 has fallen more sharply than its peers as all of the others have seen declines of somewhere between 4.75% and just over 6% in that same time frame.
The past week’s steep declines have done some damage to the chart setups of these same ETFs. Across all of these ETFs, recent shorter-term uptrends have all been broken in addition to the 50-DMAs providing little to no support after yesterday’s steep gap lower at the open. For small caps like the Core S&P Small-Cap ETF (IJR) or the Micro-Cap (IWC), the 200-DMA did not provide any support either. But for mid-caps like the Core S&P Mid-Cap (IJH), buying during the day brought the ETFs off of the day’s lows and back near the 200-DMA. With equities seeing strong pre-market trading today, mid-caps could see a bounce off of this support at the open. Large caps, on the other hand, are more or less in no man’s land between the 50-DMA, 200-DMA, and prior highs and lows. While the past few days’ declines have been steep, we must also note that every major index ETF (except for IWC) is still above the lows from late May/early June. Start a two-week free trial to Bespoke Institutional to access our interactive economic indicators monitor and much more.