No Capitulation In Sight
The tech-focused tradable funds
bounced to pare Friday’s losses, but the week-long picture reinforced the
bearish picture. A glance at activity on the Chicago Board Options Exchange
suggests that people are still trying to pick bottoms, which means we haven’t seen
the capitulation sell-off needed to form a durable bottom in the Nasdaq.
The CBOE put-call ratio stood at 0.71
as of Friday’s close, 0.78 as of Thursday’s, 0.72 as of Wednesday’s close. 0.70
as of Tuesday’s close. So throughout the week, we have complacent sentiment readings
even as techs deteriorated. This is the same situation that caused me to doubt
the putative Nasdaq bottom a few months ago in my lesson on psychological
indicators.
The Broadband HOLDR
(
BDH |
Quote |
Chart |
News |
PowerRating) lost
20.2%, the biggest loss for the week among the exchange-traded
funds. The B2B Internet HOLDR shed
(
BHH |
Quote |
Chart |
News |
PowerRating) 19.9%, the Internet
Infrastructure HOLDR
(
IIH |
Quote |
Chart |
News |
PowerRating) 19.8%, the Dow Jones Internet iShares
(
IYV |
Quote |
Chart |
News |
PowerRating)
16.2%, the Internet Architecture HOLDR
(
IAH |
Quote |
Chart |
News |
PowerRating) 14.0%, the Wireless HOLDR
(
WMH |
Quote |
Chart |
News |
PowerRating)
13.1%, the Dow Jones Technology iShares
(
IYW |
Quote |
Chart |
News |
PowerRating) 12.7%, the Nasdaq 100 Tracking
Stock
(
QQQ |
Quote |
Chart |
News |
PowerRating) 12.1%, the Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating) 12.0%, the Internet
HOLDR
(
HHH |
Quote |
Chart |
News |
PowerRating) 11.5%, the Technology SPDR
(
XLK |
Quote |
Chart |
News |
PowerRating) 10.8%.
To my eye, more troubling for the
bulls was the ground lost in the finance-focused ETFs. The Dow Jones Financial
Services iShares
(
IYG |
Quote |
Chart |
News |
PowerRating) 6.3%, the Financial SPDR
(
XLF |
Quote |
Chart |
News |
PowerRating) 6.1%, the Dow
Jones Financial SPDR
(
IYF |
Quote |
Chart |
News |
PowerRating) 5.9%, the Regional Banking HOLDR
(
RKH |
Quote |
Chart |
News |
PowerRating) 5.4%.
The top field of all charts in this
commentary uses a logarithmic price scale and displays a 50-day price average in
red. In the second field, a
blue relative strength line represents the displayed security’s price
performance relative to the S&P 500. The third field displays vertical daily
volume bars in black with a 50-day moving average in blue for volume.
If you’re new exchange-traded funds,
be sure to visit TradingMarkets’ Knowledge Center,
dedicated to explaining the basics of trading and active investing in ETFs and
mutual funds. Just click on the Funds tab
near the top of this page, then click on the Knowledge
Center tab.
You also will find lessons on trading
exchange-traded funds in the Stocks Education area of TradingMarkets.com. In
particular, check out my three-part series on trading ETFs, starting with
Average Crossovers. I also recommend newcomers read my tutorial,
HOLDRs: Unique Opportunity And Risk.