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Better Sell Now While the Bear Is Taking a Breather

The weekly charts for five major equity averages are positive but their dynamics differ. With stocks riding high right now, this could be your best time to sell before the inevitable return of the bear market.

The Dow Jones Industrial Average (INDU) can be traded using the SPDR Dow Jones Industrial Average ETF (DIA) , aka Diamonds. This exchange-traded fund has a positive but overbought weekly chart and shows a series of lower highs going back to its all-time high of $183.35 set almost a year ago on May 20.

The S&P 500 (^GSPC) can be traded using the SPDR S&P 500 ETF Trust (SPY) , aka Spiders. This ETF has a positive but overbought weekly chart and also shows a series of lower highs going back to its all-time high of $213.78 set on May 20.

The Nasdaq Composite (NDAQ) is best traded using the ETF that represents the Nasdaq 100, the PowerShares QQQ Trust ETF (QQQ) , dubbed QQQ. While the Nasdaq peaked on July 20, this ETF did not set its all-time high of $115.75 until Dec. 2, thanks to the strength of Jim Cramer’s FANG stocks. The weekly chart for the QQQ is positive, not yet overbought.

Must Read: Bonds, Gold, Utilities Are Beating Stocks Overall — These Charts Show Why

The Dow Jones Transportation Average can be traded using the iShares Transportation Average ETF (IYT) . The transportation ETF has a positive but overbought weekly chart and shows a series of lower highs going back to its all-time high of $167.80 set on Nov. 28, 2014. A warning is that the transportation sector is in correction territory 16.9% below its November 2014 high.

The Russell 2000 can be traded using the iShares Russell 2000 ETF (IWN) . The small-cap ETF has a positive weekly chart that will likely become overbought this week. The Russell 2000 set its all-time of $129.10 on June 24 and shows a series of lower highs since then. The Russell 2000 provides a warning as the small cap index is in correction territory 15.3% below the all-time high.

Here are the daily charts and trading levels for the five stock market ETFs.

Diamonds


Courtesy of MetaStock Xenith

The daily chart for Diamonds shows the Fibonacci retracement from the May 20 all-time high of $183.35 and the Aug. 24 low of $150.57. The key levels to hold on weakness are the 200-day simple moving average (in green) at $171.04 and its 61.8% retracement of $170.79.

Investors looking to buy Diamonds should consider doing so on weakness to $165.07, which is a key level on technical charts until the end of April. Investors looking to reduce holdings should do so on strength to $182.24, which is a key levels on technical charts until the end of June. This potential upside is shy of the all-time high of $183.35 set on May 20.

Spiders


Courtesy of MetaStock Xenith

The daily chart for Spiders shows the Fibonacci retracement from the May 20 all-time high of $213.78 and the Jan. 20 low of $181.02. The key levels to hold on weakness are the 200-day simple moving average (in green) at $201.50 and its 61.8% retracement of $201.31.

Investors looking to buy Spiders should consider doing so on weakness to $191.26, which is a key level on technical charts until the end of April. Investors looking to reduce holdings should do so on strength to $216.41 and $216.80, which are key levels on technical charts until and end of this week and the end of June, respectively. This implies that a potential new all-time high is feasible, above the May 20 high of $213.78.

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Better Sell Now While the Bear Is Taking a Breather Reviewed by on . Reddit Email Print Reprint The weekly charts for five major equity averages are positive but their dynamics differ. With stocks riding high right now, this coul Reddit Email Print Reprint The weekly charts for five major equity averages are positive but their dynamics differ. With stocks riding high right now, this coul Rating:
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