For the first time since August 1st, not a single major index ETF in our Trend Analyzer is oversold. This comes as the Micro-Cap ETF (IWC) finally closed within one standard deviation of its 50-DMA yesterday. As with other small caps like the Russell 2000 (IWM) and Core S&P Small-Cap ETF (IJR), even though IWC has worked off of its oversold levels, it has still yet to move back above its 50-DMA. IWC is also the only index ETF currently in a downtrend. Granted, the trends of the other major indices still leave a lot to be desired considering only the S&P 500 is in an uptrend.
While stocks have worked off of the past month’s persistent oversold readings, fixed income has yet to do the reverse. Although there has been a some mean reversion with most fixed income ETFs lower than where they were a week ago, the vast majority are overbought. As investors have begun to put risk back on, preferred stocks (PFF), High Yield (JNK and HYG), Short Treasury Bonds (SHV), and Emerging Market Bonds (EMB) have actually become extremely overbought. Of these, EMB has rallied the most with a 1.24% gain. On the other hand, the long end of the curve has been met with more intense selling. The Long-Term Corporate Bond ETF (VCLT), 10-20 Year Treasury Bond ETF (TLH), 20+ Year Treasury Bond (TLT), Long-Term Bond ETF (BLV), and Extended Duration Treasury ETF (EDV) are all down well over 1% over the past week. EDV has been met with the worst of these declines as it has fallen 2.58%. This is after the ETF was the most extended above its 50-DMA and has risen the most so far in 2019. Start a two-week free trial to Bespoke Institutional to access our Trend Analyzer and much more.