A significant relative strength event happened yesterday when the iShares S&P 100 Index ETF (OEF) climbed up into the Green Favored Zone of the SIA S&P 100 Index Report by moving up two spots to 26th place. This is the highest rank the Index ETF has achieved, topping previous peaks at 27, the top of the yellow zone.
The long-term relative strength ranking chart for OEF dating back to 2007 shows what a rare event this is. For most of the history of this report, the Index ETF has been in the yellow zone or the top half of the red zone which is what one would expect in a healthy, broad-based, advancing market where a large number of stocks are posting strong advances.
OEF reaching the Green Favored Zone means that 75% of the stocks in the SIA S&P 100 Index Report are losing in head to head battles with the Index. Considering that US indices are near or at all-time highs, this indicates that the index gains are being driven by strong performance in a small, concentrated group of stocks. The majority of US mega cap stocks struggling to keep up with the S&P 100 Index also suggests that under the hood, this bull market may be nearing exhaustion and technically potentially due for a pause or correction.
Last fall, two years of consolidation in the iShares S&P 100 ETF (OEF) ended with a major breakout over $210.00, which completed a bullish Ascending Triangle pattern. Since then, the ETF has steadily advanced in a Rising Channel of higher highs and higher lows. The underlying trend support line has steepened and there has only been one correction along the way, back in April.
This week, OEF has broken out to new all-time highs again above $265.00. It is approaching potential resistance near $275.00 which is based on a cluster of measured moves. Initial support appears in the $245.00 to $250.00 zone where a round number, uptrend support line and the 10-week moving average cluster, followed by the April low near $235.00.
The iShares S&P 100 Index ETF (OEF) has been under steady accumulation since a correction bottomed out last October, climbing 16 rows or about 32% without even so much as a 3-box correction. Last fall, OEF completed bullish Double Top and Spread Double Top breakouts a Bullish Catapult, and has blown through initial, conservative measured objectives.
OEF is currently approaching resistance near $274.40 which is based on a horizontal count, which is followed by the $300.00 round number, and then $315.20 based on a vertical count. Initial support appears near $243.65 based on a 3-box reversal, followed by a previous breakout point near $212.10.
With its perfect SMAX score (which is a near-term 1 to 90-day indicator comparing an asset against different equal-weight asset classes) of 10 out of 10, OEF is exhibiting short-term strength across the asset classes.
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