ETF Rewind - Week 6 (2/12/10)

(Click Image to Enlarge/ ETF Rewind Glossary)

Markets made gradual, albeit volatile progress last week that left the S&P 500 (SPY) higher for the first time in a month by about +1.3%. In fact, due to muted closing ranges overall, by some short-term measures equities are actually beginning to look overbought (see the RSI charts below).

The Small-Cap Style ETFs look particularly extended, including IWM, PWT and PWY. However, as these readings maybe exaggerated by the aforementioned narrow range, perhaps markets can build on Friday's late comeback momentum. I'm somewhat skeptical of that, but we'll see. Meanwhile, with nearly 17 days spent under its 20 and 50-day moving averages (which are both pointing lower), I'd suggest that the S&P 500 needs to show stronger signs of recovery strength -- and soon -- if it isn't to be sold for a third leg lower.

Lastly, note how a handful of the tracking indices have recently broken their respective ten-month moving averages, including the: EAFE Internationals (EFA), Utilities (XLU) and Commodities (DBC). This type of damage has the potential to feed on itself and minimally takes weeks to repair. At this point the action may be easy to write-off with hope of a recovery/bounce ahead -- but as a potential early warning sign -- I'd suggest that it should likewise be given cicumspect consideration. (See "Trading the 200-Day" from the archives.)

Holiday-shortened Week Seven of 2010 featuring very busy reporting calendars, monthly options expiry, and rotation model selections, as follows:

• U.S. Economic Calendar
• U.S. Earnings Calendar
• ETF Rotation Models [Custom]

Have a terrific long weekend!

Never Investment Advice: Prior Weekly Summaries: ETF Rotation Models