Power ETF Setups
March 29, 2022
Markets continue to see follow through from the lows, but this last week saw a little more back and forth in many theme ETFs setting up some small bull flags to watch. Many of the names from last weeks Power ETF Setups post are still inplay, so click the link for more there. This week we will look at many that haven’t shifted into RSI bull ranges, but look setup to do so. If they get rejected at the 60 level on RSIs it would be a more negative sign for those themes and also on this bounce in the overall markets. Many important market themes are looking more constructive by the day as they take out small obstacles on the climb, but larger downtrends are still prominent as a whole for now. We covered mostly market weighted ETFs this week due to our desire to lean larger until the small caps prove themselves more.
Medical Devices ETF has built a wide base in 2022 and is now testing the upper rail. RSI is nearing a range test as price tries to breakout. Weekly RSI had 3 pierces of the 40 level with each making a higher low and a bullish divergence. Now the weekly is testing a polarity level on this breakout attempt.
First Trust Cloud Computing ETF is working on a reversal on the daily after breaking the long downtrend line. Now challenging the VPOC. If it can clear this on the daily it looks like it could build some momentum. The daily chart also looks set to shift to an RSI bull range on the break, but isn’t there yet. It will need that momentum to help it get through the direct overhead on the weekly chart. RSI is still deep there and price is under the MA bands and VPOC.
Ishares Software ETF is a more broad, cap weighted industry ETF whichs has a very similar setup, but I like better here as the weekly chart looks more like a failed breakdown in the works. This chart also needs to get a RSI range shift on the daily and move into the Kirby on the daily chart to really get some momentum, but it is right there. It also favors the larger names which we discussed in the weekly reviews.
ARK Autonomous Tech & Robotics is actually breaking out of its base and into a Kirby on the daily that could fill fast if growth extends. It forged a fresh RSI bull range last week after a long deficit. Weekly still needs a lot of work, but it’s hard to ignore vacuums like that on the daily as a trade.
Transportation ETF broke out of a small flag on Friday moving the RSI back over 60 potentially shifting this to a new RSI bull range. In the process it closed a couple of gaps without flinching showing some strength. The volume footprint at the bottom is also a good hint there is plenty of interest. Weekly chart has been in a long base since last spring and looks to be heading for another test of the upper rail. With the daily developing a new bull range and not overbought on either level, it sets up well for a potential breakout this spring with money to be made as it heads there.
Clean Edge Smart Grid looking to break into a vacuum if it can clear this basing action. If so, it should help shift the RSI to a fresh bull range. Price closed just under the upper rail. Weekly held value on the recent pullback and is now trying to move over the MA bands, but is still in an RSI bear range. On a break you could work against a close under the MA bands on the daily if you want to be tight, or 86.50ish if want to give it a bit more room.
Vanguard Health Care ETF is looking to break over the VPOC after getting rejected on the 1st attempt. This is a great example of large names running the show. We noted in our Sector review how rough the equal weighted healthcare sector index we build looked going into this week compared to all the other sectors, and then we have this ETF setup that looks to be working .It has a lot to do with the extremely top heavy weighting in this ETF to the largest players. Daily RSI shifted to a bull range and has recovered the entire drop day last week. Weekly chart shows the RSI never lost the bull range on the polarity test at the big volume node.
Health Care Providers has been a stealth area of strength within the space for most of the correction. It got hit with the markets in January, but that was it and it has been building since. The dail put in a solid backtest last week and is near challenging the highs already. RSI has moved into a bull range on the daily and the weekly has been in one since late 2020 while most didn’t notice.
Global Clean energy, like TAN last week is up against its breakdown level. It was rejected the first attempt up here, but managed for forge a fresh RSI bull range at that point and now is back flagging just under the level. Weekly chart shows how big this level is where we see the polarity as well as the MA bands. Clearing this level opens up the VPOCs next.
Vanguard Consumer Staples is moving over the VPOC after clearing the down trendline. Last week we covered PBJ leading as the sector looked for a floor which it looks like it found. Weekly shows that large down draft week, but it never lost the RSI bull rang and has reclaimed most of that drop. Now working above the volume node should send it to test the highs.
Vanguard Technology ETF is a broad market weighted play that is shaping up well if you want to cover a lot of the largest names. A theme that makes sense if things like AAPL and MSFT are seen as safe haven during today’s uncertainty which comes at us both foreign and domestic. It has come up fast and it at a downtrend, so putting together a plan depending on your timeframe is important in any of these plays.
The charts and tickers above are for educational purposes and are not recommendations to do anything. This is just to help show you what we see and then let you take it from there and do your own due diligence. Either build your own trade plan or get with your advisor or broker form one before considering any ideas above.