The Days Ahead Will Determine If the Bear Is Here to Stay

Index ETFs continue to decline alongside equity markets

Index ETFs declined further today, as the SPDR S&P 500 ETF (NYSEARCA:SPY) dropped an additional .28%, the SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) lost .18%, the PowerShares QQQ Trust Series 1 ETF (NASDAQ:QQQ) lost .35%, and the iShares Russell 2000 Index ETF (NYSEARCA:IWM) lost .27%.

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Today’s declines seemed to be just ancilary declines after the past few days, but nonetheless, major markets and index ETFs, especially the NASDAQ, are creeping ever close to their 200 Day Moving Average which should offer a huge floor of support.  But considering that every major market and index ETF has broken their 50 Day Moving Average which is another large floor of support, it is tough to say where markets will go from here.  Perhaps some sideways action is in store, or perhaps more declines, but any inclines are not likely as the daily MACD indicators on all index ETFs are still deeply negative so far.

Today’s positive earnings reports from Facebook (NASDAQ:FB), Dow Chemical (NYSE:DOW), and Boeing (NYSE:BA) certainly did not spur markets higher, and another positive housing sales report released today did not stop markets from falling either.

European stocks advanced today after yesterday’s declines, and gold ETFs and oil ETFs continue to decline alongside our declining index ETFs.  With VIX ETFs correcting today as well, I would say that all in all it was a pretty slow day.

Bottom line: Index ETFs continue to decline today and appear to be leveling off.  A few more days will indicate whether the bear has definitely returned.

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John Nyaradi is the author of The ETF Investing Premium Newsletter.