J.J.'s Risky Business

XLK Coppock Guide: Bullish as of May Day 2014

XLI Coppock Guide: Nonbullish as of May Day 2014

XLF Coppock Guide: Nonbullish as of May Day 2014

Sector SPDRs Behavior In January Indicates Change In Mood, 2013 Vs. 2014

Author’s Note: This is the ninth blog post in a May series centered on the Coppock guides of 13 important ETFs, among them all nine Select Sector SPDRs. The first was cross-posted at both J.J.’s Risky Business and J.J. McGrath’s Instablog on Seeking Alpha, but the rest of the series will be posted here. You can follow me (and the series) @JJMcGrath3000 on Twitter, at JJMcGrath on StockTwits and via myself on Google+.

Disclaimer: The opinions expressed herein by the author do not constitute an investment recommendation, and they are unsuitable for employment in the making of investment decisions. The opinions expressed herein address only certain aspects of potential investment in any securities and cannot substitute for comprehensive investment analysis. The opinions expressed herein are based on an incomplete set of information, illustrative in nature, and limited in scope. In addition, the opinions expressed herein reflect the author’s best judgment as of the date of publication, and they are subject to change without notice.

Thursday, May 15, 2014

XLF Coppock Guide: Nonbullish as of May Day 2014

The Financial Select Sector SPDR exchange-traded fund (XLF) ranked No. 8 by return among the ETFs that divide the S&P 500 into nine pieces during the first third of this year, as its adjusted closing share price inched higher to $21.96 from $21.78, an increase of 18 cents, or 0.83 percent.

Over this period, XLF’s gain was a small fraction of the return of the Utilities SPDR ETF (XLU) and about one-third that of the SPDR S&P 500 ETF (SPY), as described in “XLU Coppock Guide: Bullish as of May Day 2014.” (XLU returned 14.74 percent, and SPY returned 2.41 percent.)

XLF is the eighth of 13 ETFs featured in a J.J.’s Risky Business blog series this month. Basically, I have been looking at each ETF with both eyes fixed on its Coppock guide, as was the case in “SPY Coppock Guide: Away From Bullishness, Toward Nonbullishness as of March 31, 2014.” The Coppock guide, aka either the Coppock curve or the Coppock indicator, is a long-term indicator of price movements in major stock-market indexes calculated on the basis of monthly data.

Figure 1: XLF And Its Coppock Guide, The Complete History

Note: The XLF closing-value scale is on the left, and the Coppock guide scale is on the right.

Source: This J.J.’s Risky Business chart is based on proprietary analyses of Yahoo Finance adjusted monthly share-price data and those data themselves.

Edwin S. Coppock constructed his long-term guide not to flash both bullish and bearish signals but to generate only bullish signals. However, I employ it to produce either bullish or nonbullish signals. It is extremely important to keep in mind that a nonbullish signal is not equivalent to a bearish signal in the context of the guide.

I anticipate XLF may rise after a bullish signal and expect it might do anything following a nonbullish signal (i.e., trade higher, lower or sideways).

Figure 2: XLF’s Behavior Subsequent To Initial Bullish Signals

Source: This J.J.’s Risky Business chart is based on proprietary analyses of Yahoo Finance adjusted monthly share-price data.

The Coppock guide’s initial bullish signals for XLF have compiled a more anemic forecasting record than the guide’s initial bullish signals for any other Select Sector SPDR, as they have done neither better nor worse than a series of coin flips would have done in predicting the future upward movements of the ETF on monthly closing bases. In 10 cases since November 2000, these signals have been correct on five occasions, or 50.00 percent of the time, and incorrect on five occasions, or 50.00 percent of the time.

Figure 3: XLF’s Behavior Subsequent To Initial Nonbullish Signals

Source: This J.J.’s Risky Business chart is based on proprietary analyses of Yahoo Finance adjusted monthly share-price data.

In contrast, the XLF Coppock guide’s initial nonbullish signals have compiled an extremely interesting track record over the years. Keeping in mind a nonbullish signal is not equivalent to a bearish signal, the 10 initial nonbullish signals since November 2000 have been followed by the ETF’s share price on monthly closing bases declining on eight occasions, or 80.00 percent of the time, and advancing on two occasions, or 20.00 percent of the time.

The XLF Coppock guide’s latest initial nonbullish signal flashed in December, when the ETF’s closing share price was $21.78. Subsequently, the comparable figures were $20.98 in January, $21.62 in February, $22.34 in March and $21.96 in April. Therefore, the action in the market appears to have been pretty nonbullish to me, even though it is still an open question as to whether XLF will fall or rise on a monthly closing basis in the wake of this most recent signal.

Coppock Guide: The Blog Series

XLK Coppock Guide: Bullish as of May Day 2014

XLI Coppock Guide: Nonbullish as of May Day 2014

Sector SPDRs Behavior In January Indicates Change In Mood, 2013 Vs. 2014

Author’s Note: This is the eighth blog post in a May series centered on the Coppock guides of 13 important ETFs, among them all nine Select Sector SPDRs. The first was cross-posted at both J.J.’s Risky Business and J.J. McGrath’s Instablog on Seeking Alpha, but the rest of the series will be posted here. You can follow me (and the series) @JJMcGrath3000 on Twitter, at JJMcGrath on StockTwits and via myself on Google+.

Tuesday, May 13, 2014

XLI Coppock Guide: Nonbullish as of May Day 2014

The Industrial Select Sector SPDR exchange-traded fund (XLI) was No. 7 by return among the ETFs that divide the S&P 500 into nine pieces during the first third of this year, as its adjusted closing share price climbed to $53.03 from $52.03, a gain of $1.00, or 1.92 percent.

Over this period, XLI’s return was a little less than one-eighth that of the Utilities SPDR ETF (XLU) and about four-fifths that of the SPDR S&P 500 ETF (SPY), as described in “XLU Coppock Guide: Bullish as of May Day 2014.” (XLU returned 14.74 percent, and SPY returned 2.41 percent.)

XLI is the seventh of 13 ETFs featured in a J.J.’s Risky Business blog series this month. Basically, I have been looking at each ETF with both eyes fixed on its Coppock guide, as was the case in “SPY Coppock Guide: Away From Bullishness, Toward Nonbullishness as of March 31, 2014.” The Coppock guide, aka either the Coppock curve or the Coppock indicator, is a long-term indicator of price movements in major equity-market indexes calculated on the basis of monthly data.

Figure 1: XLI And Its Coppock Guide, The Complete History

Note: The XLI closing-value scale is on the left, and the Coppock guide scale is on the right.

Source: This J.J.’s Risky Business chart is based on proprietary analyses of Yahoo Finance adjusted monthly share-price data and those data themselves.

I anticipate XLI may rise after a bullish signal and expect it might do anything following a nonbullish signal (i.e., trade higher, lower or sideways).

Figure 2: XLI’s Behavior Subsequent To Initial Bullish Signals

Source: This J.J.’s Risky Business chart is based on proprietary analyses of Yahoo Finance adjusted monthly share-price data.

The XLI Coppock guide’s initial bullish signals collectively have done a fair job in forecasting the future upward movements of the ETF on monthly closing bases. In 11 cases since November 2000, these signals have been correct on seven occasions, or 63.64 percent of the time, and incorrect on four occasions, or 36.36 percent of the time.

The XLI Coppock guide’s latest initial bullish signal flashed in June 2012, when the ETF’s closing share price was $34.37. Factoring in the one-month lag in the confirmation of any signal, XLI’s closing share price soared to $51.83 in February 2014 from $34.50 in July 2012, which clearly constitutes bullish action by any standard.

Figure 3: XLI’s Behavior Subsequent To Initial Nonbullish Signals

Source: This J.J.’s Risky Business chart is based on proprietary analyses of Yahoo Finance adjusted monthly share-price data.

The XLI Coppock guide’s initial nonbullish signals collectively have built an interesting track record since November 2000. Again, it is important to keep in mind a nonbullish signal is not equivalent to a bearish signal in the context of the Coppock guide. After the generation of 11 initial nonbullish signals over the years, the ETF’s share price on monthly closing bases declined on six occasions, or 54.55 percent of the time, and advanced on five occasions, or 45.45 percent of the time.

The XLI Coppock guide’s most recent initial nonbullish signal was produced in March, when the ETF’s closing share price was $52.33. Because of the one-month lag in the confirmation of any signal, it is too early to tell whether the ETF’s share price will rise or fall on a monthly closing basis, but the historical tendency is the historical tendency.

Coppock Guide: The Blog Series

XLK Coppock Guide: Bullish as of May Day 2014

Sector SPDRs Behavior In January Indicates Change In Mood, 2013 Vs. 2014

Author’s Note: This is the seventh blog post in a May series centered on the Coppock guides of 13 important ETFs, among them all nine Select Sector SPDRs. The first was cross-posted at both J.J.’s Risky Business and J.J. McGrath’s Instablog on Seeking Alpha, but the rest of the series will be posted here. You can follow me (and the series) @JJMcGrath3000 on Twitter, at JJMcGrath on StockTwits and via myself on Google+.

Sunday, May 11, 2014

XLK Coppock Guide: Bullish as of May Day 2014

The Technology Select Sector SPDR exchange-traded fund (XLK) ranked No. 6 by return among the ETFs that divide the S&P 500 into nine pieces during the first third of this year, as its adjusted closing share price ascended to $36.45 from $35.59, a climb of 86 cents, or 2.42 percent.

Over this period, XLK’s return was about one-sixth that of the Utilities SPDR ETF (XLU) and about the same as that of the SPDR S&P 500 ETF (SPY), as described in “XLU Coppock Guide: Bullish as of May Day 2014.” (XLU returned 14.74 percent, and SPY returned 2.41 percent.)

XLK is the sixth of 13 ETFs to be featured in a J.J.’s Risky Business blog series this month. Basically, I will be looking at each ETF with both eyes fixed on its Coppock guide, as was the case in “SPY Coppock Guide: Away From Bullishness, Toward Nonbullishness as of March 31, 2014.” The Coppock guide, aka either the Coppock curve or the Coppock indicator, is a long-term indicator of price movements in major stock-market indexes calculated on the basis of monthly data.

Figure 1: XLK And Its Coppock Guide, The Complete History

Note: The XLK closing-value scale is on the left, and the Coppock guide scale is on the right.

Source: This J.J.’s Risky Business chart is based on proprietary analyses of Yahoo Finance adjusted monthly share-price data and those data themselves.

Edwin S. Coppock developed his long-term guide not to flash both bullish and bearish signals but to generate only bullish signals. However, I employ it to produce either bullish or nonbullish signals. It is extremely important to keep in mind that a nonbullish signal is not equivalent to a bearish signal in the context of the guide.

I anticipate XLK may rise after a bullish signal and expect it might do anything following a nonbullish signal (i.e., trade higher, lower or sideways).

Figure 2: XLK’s Behavior Subsequent To Initial Bullish Signals

Source: This J.J.’s Risky Business chart is based on proprietary analyses of Yahoo Finance adjusted monthly share-price data.

The XLK Coppock guide’s initial bullish signals collectively have done a good job in forecasting the future upward movements of the ETF on monthly closing bases. In 11 cases since November 2000, these signals have been correct on eight occasions, or 72.73 percent of the time, and incorrect on three occasions, or 27.27 percent of the time. All the errant signals flashed in proximity to SPY’s 2011 bear market, when that ETF dipped intraday to $107.43 on Oct. 4 from $137.18 on May 2, a drop of $29.75, or 21.69 percent.

The XLK Coppock guide’s latest initial bullish signal was generated last August, when the ETF’s closing share price was $30.96. Accounting for the one-month lag in the confirmation of any signal, I note XLK’s closing share price grew to $36.45 in April from $31.75 in September, which clearly constitutes bullish action by any standard.

However, I also point out the XLK Coppock guide’s rate of increase has significantly slowed during the past three months: It was 0.92 percent in April, 1.50 percent in March and 2.08 percent in February. Therefore, I would be completely unsurprised should we see an initial nonbullish signal produced by the middle of this year (i.e., July 1).

Figure 3: XLK’s Behavior Subsequent To Initial Nonbullish Signals

Source: This J.J.’s Risky Business chart is based on proprietary analyses of Yahoo Finance adjusted monthly share-price data.

The XLK Coppock guide’s initial nonbullish signals collectively have compiled an interesting track record when evaluated on monthly closing bases. Keeping in mind that a nonbullish signal is not equivalent to a bearish signal in the context of the Coppock guide, the flashing of 11 initial nonbullish signals since November 2000 has been followed by the ETF’s share price falling on seven occasions, or 63.64 percent of the time, and rising on four occasions, or 36.36 percent of the time.

The analyses associated with “NYSE Margin Debt Falls In March For First Time In 9 Months: Risk Rank At No. 55” and “S&P 500 And U.S. Economic Index Show Early Signs Of A Return To Normalcy” both indicate fundamental reasons why the equity market and XLK may be either at or close to long-term peaks.

And the analyses associated with “Coppock Guide: The Blog Series” all suggest a technical reason for the same outlook vis-à-vis the stock market and XLK.

Coppock Guide: The Blog Series

Sector SPDRs Behavior In January Indicates Change In Mood, 2013 Vs. 2014

Author’s Note: This is the sixth blog post in a May series centered on the Coppock guides of 13 important ETFs, among them all nine Select Sector SPDRs. The first was cross-posted at both J.J.’s Risky Business and J.J. McGrath’s Instablog on Seeking Alpha, but the rest of the series will be posted here. You can follow me (and the series) @JJMcGrath3000 on Twitter, at JJMcGrath on StockTwits and via myself on Google+.

Friday, May 9, 2014

XLP Coppock Guide: Nonbullish as of May Day 2014

The Consumer Staples Select Sector SPDR exchange-traded fund (XLP) was No. 5 by return among the ETFs that divide the S&P 500 into nine pieces during the first third of this year, as its adjusted closing share price advanced to $44.24 from $42.76, a boost of $1.48, or 3.46 percent.

Over this period, XLP’s return was less than one-quarter that of the Utilities SPDR ETF (XLU) and less than 1-1/2 times that of the SPDR S&P 500 ETF (SPY), as described in “XLU Coppock Guide: Bullish as of May Day 2014.” (XLU returned 14.74 percent, and SPY returned 2.41 percent.)

XLP is the fifth of 13 ETFs to be featured in a J.J.’s Risky Business blog series this month. Basically, I will be looking at each ETF with both eyes fixed on its Coppock guide, as was the case in “SPY Coppock Guide: Away From Bullishness, Toward Nonbullishness as of March 31, 2014.” The Coppock guide, aka either the Coppock curve or the Coppock indicator, is a long-term indicator of price movements in major stock-market indexes calculated on the basis of monthly data.

Figure 1: XLP And Its Coppock Guide, The Complete History

Note: The XLP closing-value scale is on the left, and the Coppock guide scale is on the right.

Source: This J.J.’s Risky Business chart is based on proprietary analyses of Yahoo Finance adjusted monthly share-price data and those data themselves.

I anticipate XLP may rise after a bullish signal and expect it might do anything following a nonbullish signal (i.e., trade higher, lower or sideways).

Figure 2: XLP’s Behavior Subsequent To Initial Bullish Signals

Source: This J.J.’s Risky Business chart is based on proprietary analyses of Yahoo Finance adjusted monthly share-price data.

The epitome of mediocrity, the XLP Coppock guide’s initial bullish signals collectively may have done better than coin flips would have done in forecasting the future upward movements of the ETF on monthly closing bases since inception. However, they may have done so not by a lot but by a little. In 15 cases since November 2000, these signals have been correct on nine occasions, or 60.00 percent of the time, and incorrect on six occasions, or 40.00 percent of the time.

To put this aberrant behavior in its proper perspective, I note the Coppock guide’s initial bullish signals for each of the four ETFs already covered in my “Coppock Guide: The Blog Series” compiled better success-failure rates than did XLP. They ranged from the best, those for the Utilities Select Sector SPDR (XLU), with 100.00 percent right and 0.00 percent wrong, to the worst, those for the Health Care Select Sector SPDR (XLV), with 83.33 percent right and 16.67 percent wrong.

Figure 3: XLP’s Behavior Subsequent To Initial Nonbullish Signals

Source: This J.J.’s Risky Business chart is based on proprietary analyses of Yahoo Finance adjusted monthly share-price data.

XLP’s performance after the Coppock guide’s initial nonbullish signals has been similar to the ETF’s performance following the Coppock guide’s initial bullish signals. However, the former’s track record is at least comprehensible because a nonbullish signal is not equivalent to a bearish signal in the context of the Coppock guide.

In the wake of the 14 XLP Coppock guide’s initial nonbullish signals since November 2000, the ETF’s adjusted share price on a monthly closing basis has fallen on six occasions, or 42.86 percent of the time, and risen on eight occasions, or 57.14 percent of the time.

The latest XLP Coppock guide’s initial nonbullish signal flashed in December, when the ETF’s closing share price was $42.76. The comparable figure was $44.24 in April.

I believe the Coppock guide’s signals in general are helpful long-term indicators of price movements in major market indexes, but I think the XLP Coppock guide’s signals in particular are about as useful as the New York-to-California flight plan filed by Douglas “Wrong Way” Corrigan in July 1938: The aviator’s Curtiss Robin Sunshine rose in New York on July 17, all right, but it set down in Ireland on July 18. Longtime observers of the XLP Coppock guide know the feeling.

Coppock Guide: The Blog Series

Sector SPDRs Behavior In January Indicates Change In Mood, 2013 Vs. 2014

Author’s Note: This is the fifth blog post in a May series centered on the Coppock guides of 13 important ETFs, among them all nine Select Sector SPDRs. The first was cross-posted at both J.J.’s Risky Business and J.J. McGrath’s Instablog on Seeking Alpha, but the rest of the series will be posted here. You can follow me (and the series) @JJMcGrath3000 on Twitter, at JJMcGrath on StockTwits and via myself on Google+.

Wednesday, May 7, 2014

XLB Coppock Guide: Bullish as of May Day 2014

The Materials Select Sector SPDR exchange-traded fund (XLB) ranked No. 4 by return among the ETFs that divide the S&P 500 into nine pieces during the first third of this year, as its adjusted closing share price progressed to $47.67 from $46.04, a yield of $1.63, or 3.54 percent.

Over this period, XLB’s return was a bit less than one-quarter that of the Utilities SPDR ETF (XLU) and a bit less than 1-1/2 times that of the SPDR S&P 500 ETF (SPY), as described in “XLU Coppock Guide: Bullish as of May Day 2014.” (XLU returned 14.74 percent, and SPY returned 2.41 percent.)

XLB is the fourth of 13 ETFs to be featured in a J.J.’s Risky Business blog series this month. Basically, I will be looking at each ETF with both eyes fixed on its Coppock guide, as was the case in “SPY Coppock Guide: Away From Bullishness, Toward Nonbullishness as of March 31, 2014.” The Coppock guide, aka either the Coppock curve or the Coppock indicator, is a long-term indicator of price movements in major stock-market indexes.

Figure 1: XLB And Its Coppock Guide, The Complete History

Note: The XLB closing-value scale is on the left, and the Coppock guide scale is on the right.

Source: This J.J.’s Risky Business chart is based on proprietary analyses of Yahoo Finance adjusted monthly share-price data and those data themselves.

I anticipate XLB may rise after a bullish signal and expect it might do anything following a nonbullish signal (i.e., trade higher, lower or sideways).

Figure 2: XLB’s Behavior Subsequent To Initial Bullish Signals

Source: This J.J.’s Risky Business chart is based on proprietary analyses of Yahoo Finance adjusted monthly share-price data.

The XLB Coppock guide’s initial bullish signals collectively have done an almost-perfect job in forecasting the future upward movements of the ETF on monthly closing bases. In 12 cases since November 2000, these signals have been correct on 11 occasions, or 91.67 percent of the time, and incorrect on one occasion, or 8.33 percent of the time.

The Coppock guide’s latest initial bullish signal flashed last June, when XLB’s closing share price was $37.77. Factoring in the one-month lag in the confirmation of any signal, I note the ETF’s closing share price advanced to the aforementioned $47.67 in April from $39.87 in July, which clearly constitutes bullish action by any standard.

Figure 3: XLB’s Behavior Subsequent To Initial Nonbullish Signals

Source: This J.J.’s Risky Business chart is based on proprietary analyses of Yahoo Finance adjusted monthly share-price data.

The XLB Coppock guide’s initial nonbullish signals collectively have compiled a pretty mixed track record when evaluated on monthly closing bases. Again, it is extremely important to keep in mind that a nonbullish signal is not equivalent to a bearish signal in the context of the Coppock guide. Following the generation of 11 initial nonbullish signals since November 2000, the ETF’s share price has fallen on six occasions, or 54.55 percent of the time, and risen on five occasions, or 45.45 percent of the time.

Factoid o’ the Day: Five of the 11 XLB Coppock guide’s initial nonbullish signals have been produced in the merry month of May (in 2002, 2004, 2009, 2010 and 2013).

Coppock Guide: The Blog Series