Damage Report: Stock ETF Sell-Off by the Numbers

October 23rd at 11:34am by John Spence

The downdraft in equity and commodity ETFs Tuesday has pulled several asset classes down to important levels that technical analysts will be watching as potential support.

Here’s an overview of where various ETFs stand by the numbers:

  • U.S. blue-chip stocks: SPDR Dow Jones Industrial Average (NYSE: DIA) and SPDR S&P 500 (NYSEArca: SPY) have dropped below the 50-day simple moving average for the first time since July. Next stop could be the 200-day average.
  • Tech: PowerShares QQQ (NasdaqGM: QQQ) is testing the 200-day average, a key technical indicator. The tech-heavy ETF has been underperforming lately. [Google Earnings Snafu Adds to Tech ETFs’ Woes]
  • Oil: U.S. Oil Fund (NYSEArca: USO) is on a three-day losing streak to its lowest level since July. Crude futures fell below $86 a barrel Tuesday after topping out at $110 in the first quarter. The good news for consumers is that U.S. Gasoline Fund (NYSEArca: UGA) has also pulled back, providing some relief at the pump.
  • Precious metals: The dollar has perked up a bit lately, which is putting pressure on SPDR Gold Shares (NYSEArca: GLD) and iShares Silver Trust (NYSEArca: SLV). Both funds have dropped below the 50-day moving average.
  • High-yield bonds: This has been a bright side for the market. High-yield corporate bond ETFs could be the proverbial canary in the coal mine. If they break down, it could be a red flag for stocks. So far that hasn’t happened – high-yield ETFs are hanging in there. SPDR Barclays High Yield (NYSEArca: JNK) and iShares iBoxx High Yield Corporate Bond (NYSEArca: HYG) are comfortably above the 50-day moving average and they haven’t breached the indicator since June.
  • Small-caps: The recent underperformance of riskier small-cap ETFs is a cause for concern for the bulls. The iShares Russell 2000 (NYSEArca: IWM) is testing the 200-day average.
  • Treasuries: The iShares Barclays 20+ Year Treasury Bond (NYSEArca: TLT) climbed over 1% Tuesday. The bond ETF has been trapped between the 50-day and 200-day averages.

SPDR Barclays High Yield

Full disclosure: Tom Lydon’s clients own SPY, QQQ, GLD, SLV, HYG, JNK, IWM and TLT.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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