Rotation Report 9/8//2014

The Euro is the headline mover of the week after Thursday's ECB meeting.  Further QE measures were expected by the market, so we're already near a major support zone.

The market traded sideways all week, but many stocks broke higher.  We're still near overbought levels, could we see more of the same this week?

After a monster 2013, the defense group has held it's gains well in a sideways trend.  There are plenty of potential catalysts.  It looks set up on a tee.

XLP relative strength may have had a false breakdown at the Feb-Mar lows.  Now breadth is much improved and the sector is trading at new highs.  All the ingredients for out-performance are evident

Utilities have broken a short term down trend and cleared meaningful resistance Friday.

GRID broke out of a half year falling wedge.

After breaking out via price and relative strength specialty retail is very healthy.  Maybe this is related to the drop in gas prices, who knows.  It is a positive sign for consumers.

TLT reversed sharply at the 2013 highs.  Let's see how deep this pullback becomes.

The stock / bond ratio has consolidated for a year.  It looks drastically higher.  How long before T.I.N.A. is a thing again?

Last week I shared a chart of EEM at this long term resistance.  Emerging markets traded very well last week as EEM made new highs.  Check out the alternative VWO just below.  As you can see, it's already broken all forms of resistance.

I find this interesting because the two differ in construction methodology.  EEM tries to mimic the MSCI emerging markets index and VWO simply replicates it.  The bigger factor may be EEM has a much higher expense ratio, nearly 3x that of VWO.

We can draw a few conclusions here, but the main point is ETF construction and expenses ARE important.  My twitter pal @fabiancapital does a great job breaking down ETF's and explaining what you need to know.  I recommend you check out his work.

India keeps hitting new highs.  See you at the 2010 highs.

GAF doesn't care about Ebola, ISIS etc.  It still looks fantastic.  Lets see how it reacts when the RS line hits long term resistance.

Semi's are still trading well and Hong Kong is now joining it in a move higher.  There is a LOT of room higher in the Hang Seng.

Crude's bounce at key support fizzed out quickly.  Price is still in the support zone. 

Gold lost the pivot line and had failed to regain it thus far.  This week's action should be interesting.

XME tested the barely rising 50D MA Friday.  Can it bounce here after shaking out stops?

Materials are holding the RS support zone for now.  I can't help but think the market is done rotating into this group with retail perking up.

Have a great week and trade 'em well!