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The pandemic has no doubt changed everyday life for people across the globe, which certainly applies to the way we travel.  As many continue to stay at home and restrict their travels to only essential needs, we have seen the airline industry taking a significant hit during this difficult time.  While many airline stocks continue to struggle having hit multi-year lows and trade in a negative trend, one stock that caught our attention is Southwest Airlines Co. LUV.  The stock hit an intraday high on 8/11 at $37.44 putting the chart on a buy signal.  That was also enough to push the stock into positive trend territory for the first time since February of this year, and as a result of that movement, its technical attribute moved from a 0 to a 1.  Additionally, its weekly momentum is positive for the first week after having been negative for the last five weeks.  While it is too early to make any judgement on the stock or the industry, it is worth keeping an eye on this particular chart for any future improvement that could potentially cause this to become a technically sound candidate.

Each week the analysts at DWA review and comment on all major asset classes in the global markets. Shown below is the summary or snapshot of the primary technical indicators we follow for multiple areas. Should there be changes mid-week we will certainly bring these to your attention via the report.

Observations:

• Three of the four major bullish percent (BP) indicators moved higher over the past week. BPALL and BPOTC reversed up into a column of Xs and now read 58% and 54%, respectively. BPNYSE continued higher in a column of Xs to 68% while BPWORLD remained at 48%.
• Similarly, three of the four major positive trend (PT) indicators moved higher over the past week. PTNYSE reversed up into a column of Xs to read 56% while PTALL and PTOTC advanced higher in a column of Xs to 50% and 46%, respectively.
• ALLHILO and NYSEHILO remain unchanged from last week; however, OTCHILO reversed up into a column of Xs to read 90%, joining the ALLHILO and NYSEHILO in high field position.
• All major ten-week (TW) indicators reversed up into a column of Xs. TWALL, TWNYSE, TWOTC, and TWWORLD now read 68%, 74%, 64%, and 60%, respectively. 
• Rounding out the bullish action, we find that all thirty-week indicators also advanced higher. 30ALL, 30NYSE, 30OTC, and 30WORLD read 58%, 60%, 58%, and 54%, respectively.    

As the S&P 500 SPX continues to push close to new highs, we are seeing a number of the underlying constituents of the index return to positive trends. The Percent Positive Trend for the S&P 500 ^PTSPX has reversed back into a column of X’s at 78% this week. After falling to a low of 8% on the chart back in March, PTSPX reversed up in April and was off to the races, rising all the way to 82% by mid-June. The current reading of 78% simply means that 78% of all S&P 500 stocks are in positive trends today, which is generally a positive sign for the market. This also comes as the Percent Positive Trend for the NYSE ^PTNYSE has reversed back to X’s at 56%, indicating a majority of NYSE stocks are in positive trends.

Going back to mid-2000, there have been 20 reversals back to X’s above 50% for the PTSPX chart and more often then not it has been a positive sign for the market. Of the previous 20 times the PTSPX reversed up while above 50%, the average 1-week, 2-week, 1-month, and 6-month returns have been positive. The average 6-month return was 3.17% for the S&P 500 with 13 out of the 20 occurrences showing positive returns. While there have not been all that many occasions to examine, as the PT charts are typically viewed as a long-term indicator, the reversal back to X’s for trend indicators like ^PTSPX or ^PTNYSE are signs that more stocks are returning to positive trends, which has historically been a good sign for the market.

Portfolio View - Major Market ETFs

Additional Comments:

Over the last week of market action, two major market ETFs finished in the red while eight finished in positive territory. The best performing fund for the week was the iShares S&P SmallCap 600 Index Fund IJR with a gain of 4.50% while the Invesco QQQ Trust QQQ was the worst performing with a loss of -1.92%. Year-to-date, there are now three funds in positive territory for the year: QQQ (+24.73%) the Invesco S&P 500 Top 50 ETF XLG (+10%), and the SPDR S&P 500 ETF Trust SPY (+3.40%). Today, we will highlight some of the notable developments across the universe of major market ETFs covered in this report. Additionally, we will provide updated near-term support levels for all ten major market funds. 

Spread Triple Top Buy Signal for EFA

With today’s market action, the chart of the iShares MSCI EAFE ETF EFA broke a spread triple top at $65, moving above resistance dating back to March of this year. Today’s breakout marks the third consecutive buy signal on the chart, confirming that demand is in control. Also, monthly momentum just flipped positive after having spent the prior six months on the negative side. Currently, EFA has a less than ideal fund score of 1.56 as it is showing weakness versus both the market and its peers. Be sure to set a fund score alert so that you will be emailed if EFA is able to move above the 3.00 threshold, making the fund more actionable. From here, initial support sits at $60 while the next level of resistance sits at $70, EFA’s January high.

DIA Moves Higher

With yesterday’s market action, the SPDR Dow Jones Industrial Average ETF Trust DIA printed an X at $280, breaking through resistance dating back to June and now sits about 5% away from its all-time high from February at $295. In March, DIA fell as low as $184 when it gave four consecutive sell signals and moved into a negative trend. The fund has steadily recovered and has now given four consecutive buy signals. DIA has a solid fund score of 4.12 with a positive score direction of 1.64. Monthly momentum has been positive for two months, suggesting the potential for higher prices. From current levels, initial support sits at $250 while the bullish support line would be tested with a move to $200. Note DIA provides investors with a yield of 2.16%.

IJH Breaks Through Resistance

Yesterday, the iShares S&P MidCap 400 Index Fund IJH printed an X at $196, breaking through overhead resistance established in June. As a result, IJH has one final level of resistance to move through before it is back at all-time highs, which would come with a move to $215 or higher. IJH has given two consecutive buy signals since June, confirming that demand is in control. Monthly momentum has been positive for two months while weekly momentum has been positive for three weeks. Additionally, IJH has a fund score of 2.99 with a positive score direction of 2.56, speaking to the fund’s improvement over the trailing six months. The technical picture for IJH is strengthening, making new long positions welcome at current levels if looking for mid-cap exposure. As mentioned above, the last level of resistance lies at $210, IJH’s all-time high from January of this year, while initial support sits at $174.

Updated Support Levels

SECTOR BULLISH PERCENT CHANGES

Average Level

61.88

TELE

inet

prec

HEAL

FORE

WAST

REST

HOUS

BANK

RETA

ELEC

GAME

soft

COMP

EUTI

WALL

BUSI

SAVI

FOOD

MEDI

AERO

CHEM

PROT

drug

biom

meta

FINA

STEE

TEXT

INSU

SEMI

OILS

OIL

GUTI

LEIS

TRAN

REAL

AUTO

BUIL

MACH

0-14

16-20

22-26

28-32

34-36

38-42

44-46

48-52

54-56

58-62

64-66

68-72

74-78

80-86

88-100

SECTOR INDICATOR CHART CHANGES

PT is the percentage of stocks within a sector that are trading above their bullish support lines. RSX is the percentage of stocks within a sector whose relative strength charts are in a column of Xs. RSP is the percentage of stocks within a sector whose relative strength charts are on a buy signal. The strongest sectors, i.e. market leaders, will have most of these indicators positive and moving higher in a column of Xs.

FAVORED SECTOR STATUS CHANGES
A sector is considered to be Favored if it has 3 or 4 of the sector indicators (Relative Strength, RSX, RSP, & PT) positive, Average if it has 2 of the 4 indicators positive, & Unfavored if it has 0 or 1 of the indicators positive. The table below contains those sectors that have experienced a Favored Sector Status change over the past week. It is best to focus on sectors that are about 50% or lower on their Bullish Percent charts & are in Xs. Note: If a sector moves from Favored to Average, it doesn't necessarily mean that the sector in question has to be sold - it just means you need to evaluate your individual positions with exposure to that sector. 

Favored		Average	Unfavored
4	3	2	1	0
COMP  STEE  AERO  MACH	LEIS  GAME	TEXT	BANK  PROT
4	3	2	1	0

International equities have continued to gain strength over the past week, as has been exemplified through some of the relative comparisons on the NDW research platform. One such example can be found in the broad asset class comparison of the Dynamic Asset Level Investing (DALI) tool, which stacks each of the six broad asset classes against one another in order to determine which area possesses the most relative strength. This ranking saw domestic equities overtake cash following market action on August 5^th, during which the domestic equities asset class picked up 5 relative strength buy signals. Interestingly enough, we saw international equities also gain 5 buy signals on the same day, followed by an additional signal gained in the subsequent trading day. While international equities still sits in last place, it has moved substantially off its COVID-19 induced tally count low of 65 signals to its current tally of 123.

One way to view movement underneath the hood of the foreign equity space is through the Asset Class Group Scores (ACGS) page, which looks at a more in-depth breakdown of strength among various country and regional representatives, all sorted by the average score of the ETFs and mutual funds included in each classification. Out of 135 groups examined on this page, there are currently 102 groups with average scores above the 3.00 score threshold, which is often used as the line of demarcation for acceptable areas of the market. With over three-fourths of the tracked groups being in the top end of the 0 to 6 score range, we see most international equity groups in this territory, with the exception of the country/regional groups outside of Asia. This is not for lack of trying, as we can see through the score direction rank of the non-US view that only frontier markets and Middle East Africa Equity have seen a negative directional move.

One area that just moved above the 3 score line is India, with its recent score of 3.01 marking its highest level in over a year. Earlier this year, this group fell to its second-lowest fund score dating back to November of 2010, at a reading of only 0.53 on March 24^th. Since that time, the score has moved largely higher to its current position. This improvement is also depicted through the 2.48 average direction of the India group, which is the fifth-highest directional reading of any group on the ACGS system.

The near-term strength of India is also shown through the iShares MSCI India ETF INDA, which fell to a multi-year low of $20.50 in March before climbing higher over the past few months. INDA moved back to a positive trend and gave a second consecutive buy signal in late-June at $29.50 having continued higher since that time to its current default chart position of $33. The 3.38 fund score bests the average non-Us equity fund of 3.30 as well as the aforementioned average India fund (3.01) and is paired with a strongly positive 3.23 score direction. Monthly momentum recently flipped positive, suggesting the potential for further upside from here. While the technical picture continues to improve, the recent price movement has left the fund in overbought territory, so those looking to add exposure would be best served to wait for a pullback or normalization of the trading band. Initial support can be found on the default chart at $27, while the more sensitive, ¼ point chart shows the potential for additional support at $31.75, $30.25, and $29.

The US Treasury 10YR Yield Index TNX completed a bearish signal reversal in Wednesday’s trading. Prior to Wednesday’s buy signal, TNX had given three consecutive sell signals, and hit its lowest point since March when it fell to 0.525% on its default chart earlier this month. The rise in yields was cited as one factor leading to the sell-off of gold GC/ and silver SI/ which had both been on strong upward trajectories in recent weeks.

There was similar action further out on the yield curve as the US Treasury 30YR Yield Index TYX also returned to a buy signal in Wednesday’s trading when it hit 1.375%. TYX had also given three consecutive sell signals prior to Wednesday.

The buy signals given by TNX and TYX are first sign of potentially rising interest rates that we have seen since June, when both yield indexes rallied to the highest points since February before reversing course and finding a series of lower tops and lower bottoms.

Despite the upward action movement in rates, which contributed to funds like the iShares Barclays 20+ Year Treasury Bond ETF TLT and iShares US Core Bond Fund AGG reversing down into Os on their default charts, the iShares Barclays US Treasury Inflation Protected Securities ETF TIP remains at an all-time high on its default chart as Producer Price Index and Consumer Price Index showed higher than expected inflation this week. Within the Asset Class Group Scores (ACGS) System, the inflation protection group now has an average group score of 4.87 placing it second amongst fixed income groups after convertible bonds.

Remember, these are technical comments only. Just as you must be aware of fundamental data for the stocks we recommend based on technical criteria in the report, so too must you be aware of important data regarding delivery, market moving government releases, and other factors that may influence commodity pricing. We try to limit our technical comments to the most actively traded contracts in advance of delivery, but some contracts trade actively right up to delivery while others taper off well in advance. Be sure you check your dates before trading these contracts. For questions regarding this section or additional coverage of commodities email james.west@dorseywright.com.

Data represented in the table below is through 8/11/2020:

Broad Market Commodities Report

Portfolio View - Commodity Indices

The recent week of market action ushered in more headlines surrounding the commodities space, specifically the sharp pullback in precious metals and rebound in softs. Recent darlings like Gold GC/ and Silver SI/ experienced rather dramatic moves lower over the past week, posting losses of -5.76% and -6.54%, respectively (returns from 8/4/20 - 8/11/20). Consequently, GC/ returned to a sell signal on its default Point and Figure chart after a series of four consecutive buy signals and SI/ reversed down into a column of Os, yet remained above near-term support offered at $23.50 to maintain its two consecutive buy signals. Tracking ETFs like the SPDR Gold Trust GLD and iShares Silver Trust SLV also downshifted yet remain on Point and Figure buy signals on their default chart. However, perhaps noteworthy is the divergence in score direction between GLD and SLV, as the latter maintains a strongly positive score direction while GLD shows negative recent movement. Both funds remain above the optimal 4.00 score threshold and in overall positive trends, but ensure alerts are set if any further deterioration manifests.

On the contrary, we note near-term improvement from soft commodities like Cocoa CC/ and Coffee KC/. In fact, according to data from the Commodity Futures Trading Commission, “short positions in sugar were down by nearly 10,000 contracts, cocoa shorts were cut by more than 7,000 contracts and coffee shorts fell by more than 19,000 contracts” (Source: wsj.com). From a technical perspective, we find CC/ and KC/ both reentering positive trends in the last three weeks, demonstrating absolute strength after posting bottoms in June and July. Furthermore, products like the iPath Bloomberg Cocoa Subindex Total Return ETN NIB and iPath Bloomberg Coffee Subindex Total Return ETN JO reentered positive trends in the past two weeks, and also sport strongly positive score directions north of 2.0. Note the current fund scores for NIB and JO are also hovering around the acceptable 3.0 score line, yet still below the optimal fund scores put out by the precious metals camp.
In aggregate, the near-term pullback in precious metals and rebound in soft commodities has narrowed the leadership gap within the alternative assets space; however, the weight of the evidence does not yet suggest a change in the leaders themselves.

Relative strength is a measure of how a stock is performing when compared to something else, in this case the S&P 500 Equal Weighted Index (SPXEWI). Each day the stock's closing price is divided by that of the SPXEWI, the resulting numbers decimal is moved two places and then plotted on a Point & Figure chart. Whenever the relative strength chart shows a double top buy signal (e.g. RS Buy or Positive Relative Strength), it suggests the stock is likely to outperform the market for the foreseeable future. Conversely, whenever the relative strength chart gives a double bottom sell signal (e.g. RS Sell or Negative Relative Strength) it suggests the stock will under-perform the market. Relative strength signals tend to last roughly 18 to 24 months on average. Consequently, changes from buy signals to sell signals (and vice versa) are important to be aware of as they are longer-term implications of a stock's likely performance versus the indices. Using the Point & Figure chart along with the relative strength chart will allow you to better ascertain risk-reward and other trade management tools, but we always want to over-weight our portfolios toward those stocks that are on RS buy signals, giving us the best chance of outperforming the broader market.

In the Optionable Universe, this week we saw 23 relative strength buy signals compared to 27 last week. On the sell side, there were 29 relative strength sell signals compared to 26 last week.

Symbol	Company	Sector	Price	RS vs Market Signal	RS vs Market Column	RS vs Peer Signal	RS vs Peer Column	Tech Attrib
AGYS	Agilysys, Inc.	Industrial Goods & Svcs	24.020	Buy	X	Sell	X	4
CMC	Commercial Metals Corporation	Basic Resources	22.490	Buy	X	Buy	X	5
DE	Deere & Company	Industrial Goods & Svcs	193.220	Buy	X	Buy	X	4
FDX	FedEx Corporation	Industrial Goods & Svcs	196.450	Buy	X	Buy	X	5
FIX	Comfort Systems U.S.A.	Industrial Goods & Svcs	54.300	Buy	X	Buy	X	4
FSLR	First Solar, Inc.	Semiconductors	70.190	Buy	X	Sell	X	4
MTOR	Meritor Inc	Automobiles	25.500	Buy	X	Buy	X	5
MOS	Mosaic Company	Chemicals	17.640	Buy	X	Buy	X	5
MTSC	MTS Systems Corp	Industrial Goods & Svcs	24.130	Buy	X	Sell	X	3
PCAR	PACCAR Inc.	Industrial Goods & Svcs	90.390	Buy	X	Buy	X	4
PWR	Quanta Services, Inc.	Industrial Goods & Svcs	49.860	Buy	X	Sell	X	4
OMER	Omeros Corporation	Biotechnology	15.890	Buy	O	Buy	O	3
TRMB	Trimble Inc.	Communications Technology	47.960	Buy	X	Sell	X	4
TTEC	TTEC Holdings Inc	Industrial Goods & Svcs	56.130	Buy	X	Buy	X	5
TWIN	Twin Disc, Incorporated	Automobiles	7.230	Buy	X	Sell	X	2
VLRS	Controladora Vuela Compania (Mexico) ADR	Cyclical Goods and Services	6.900	Buy	X	Sell	X	3
PFNX	Pfenex Inc.	Biotechnology	12.830	Buy	X	Buy	X	5
CNXM	CNX Midstream Partners LP		9.560	Buy	X	Buy	X	4
SPNE	SeaSpine Holdings Corp	Medical Products	13.980	Buy	X	Buy	X	5
MCRB	Seres Therapeutics Inc.	Biotechnology	20.040	Buy	X	Buy	X	5
MOS.TR	Mosaic Company TR	Chemicals	17.860	Buy	X	Buy	X	5
PWR.TR	Quanta Services, Inc. TR	Industrial Goods & Svcs	50.172	Buy	X	Sell	X	4
TRMB.TR	Trimble Inc. TR	Communications Technology	47.960	Buy	X	Sell	X	4

Symbol	Company	Sector	Price	RS vs Market Signal	RS vs Market Column	RS vs Peer Signal	RS vs Peer Column	Tech Attrib
CORT	Corcept Therapeutics Inc.	Biotechnology	13.510	Sell	O	Buy	O	2
ED	Consolidated Edison, Inc.	Electric Utilities	73.260	Sell	O	Sell	O	0
HFC	HollyFrontier Corporation	Oil Companies Secondary	26.490	Sell	O	Sell	O	0
DK	Delek US Holdings, Inc.	Oil Companies Major	15.250	Sell	O	Buy	O	1
GLUU	Glu Mobile Inc.	Software	7.410	Sell	O	Sell	O	1
ASPS	Altisource Portfolio Solutions SA (Luxembourg) ADR	Financial Services	9.000	Sell	O	Sell	O	0
GRFS	Grifols S.A. (Spain) ADR	Biotechnology	17.990	Sell	O	Sell	O	1
MYL	Mylan NV	Pharmaceuticals	16.640	Sell	O	Sell	O	1
NWN	Northwest Natural Gas Corp	Gas Utilities	54.050	Sell	O	Buy	O	1
ODP	Office Depot, Inc.	Retail	19.290	Sell	O	Sell	O	0
SKT	Tanger Factory Outlet Centers	Equity REITs	6.670	Sell	O	Sell	O	0
UFI	Unifi Inc	Cyclical Goods and Services	12.690	Sell	O	Sell	O	0
ZIXI	ZixIt Corporation	Software	5.880	Sell	O	Sell	O	1
AGIO	Agios Pharmaceuticals Inc.	Biotechnology	40.400	Sell	O	Sell	O	0
DRNA	Dicerna Pharmaceuticals Inc	Biotechnology	19.750	Sell	O	Buy	O	2
AKBA	Akebia Therapeutics, Inc	Biotechnology	10.280	Sell	O	Buy	O	2
ATNM	Actinium Pharmaceuticals Inc	Pharmaceuticals	9.660	Sell	O	Buy	O	1
XENE	Xenon Pharmaceuticals Inc	Biotechnology	11.030	Sell	O	Sell	O	0
RETA	Reata Pharmaceuticals Inc	Biotechnology	103.600	Sell	O	Sell	O	0
EVBG	Everbridge Inc	Software	120.870	Sell	O	Sell	O	0
AYX	Alteryx Inc	Software	110.740	Sell	O	Sell	O	0
APRN	Blue Apron Holdings, Inc. Class A	Noncyclical Goods and Svcs	8.340	Sell	O	Sell	O	1
FENC	Fennec Pharmaceuticals Inc.	Biotechnology	6.660	Sell	O	Sell	O	0
CRON	Cronos Group Inc	Pharmaceuticals	5.550	Sell	O	Sell	O	0
FSLY	Fastly, Inc. Class A	Technology Services	74.960	Sell	O	Sell	O	1
WORK	Slack Technologies, Inc. Class A	Technology Services	27.610	Sell	O	Sell	O	1
NEU.TR	NewMarket Corporation TR	Chemicals	379.029	Sell	O	Sell	O	0
UFI.TR	Unifi Inc TR	Cyclical Goods and Services	12.690	Sell	O	Sell	O	0
SKT.TR	Tanger Factory Outlet Centers TR	Equity REITs	7.010	Sell	O	Buy	O	1