The State of ETFs – January 28, 2011

The ETF trend state as of the close of 01/27/2011 is as follows:   

SW” indicates no trend, ”+” indicates a new upward trend change,   “-” indicates a new downward trend change, “OB” means overbought and “OS” means oversold. “OB-” means close to becoming overbought and “OS+” means close to becoming oversold.     

There are still no critical overbought or oversold conditions although SPY is close to the former condition.  GLD is near oversold condition.  The p-indicator calculations indicate a higher probability for a short-term correction in SPY in the ranger of 1% – 2%. This is shown the the screenshot below where the P-delta value for a short term position based on the next opening price has a negative bias of -6.85 with high significance. The bias is calculated as the probability of prices hitting the profit target minus the probability of prices hitting the stop-loss, both 1% in this case.  The medium to longer-terms bias as calculated by the respective P-deltas is still positive.   

Click on image to enlarge

The ETF analysis was based on 3 different methodologies:         

• Technical Analysis – (mainly trend lines, moving averages and overbought/oversold indicators)
• P-indicator calculations - (short/medium/longer-term correspond to small/medium/large  target and stop values)
• MEI Indicator readings - This is a new technical analysis indicator for measuring trend/momentum/oversold/overbought conditions

Disclaimer: The author is not a financial advisor and does not recommend the purchase of any security or advise on the suitability of any trade or investment in any timeframe. ETF, stock, futures, forex and options trading and investing involves substantial financial risks and can result in total loss of capital. If investment or other professional advice is required, a licensed professional should be consulted.