Slowing selling pressure
Slowing selling pressure
Here's the daily chart for the iShares MSCI USA Momentum Factor Fund (MTUM)...We don't trade this fund a lot, but it's an important tool... It tracks large-cap and small-cap stocks that exhibit higher price momentum.This MTUM chart is simple... You can see the 200-day moving average (200-DMA) above, in red, which helps clarify the long-term trend.Back in August 2024, the fund briefly fell below its 200-DMA and then rallied. As of March 14, MTUM is trading below this level.Now look at the Composite Index ("CI") at the very bottom of the MTUM chart... It's starting to move higher as price is trending lower. This is a warning sign.The relative strength index ("RSI"), right above the CI, reached extreme oversold levels while the CI is sloping up. This is warning of weakening selling pressure.And that's something I'll be buying soon.Now let's move on to the Vanguard Total Stock Market Index Fund (VTI), which tracks U.S. stocks...Similar to MTUM, VTI traded below its 200-DMA. And it's showing similar divergence between the CI and RSI as well.The CI is also starting to slope up as price moves lower. So, again, we're very close to a bottom. (Note: The Vanguard Total World Stock Index Fund (VT), which tracks global stocks, is making a higher low relative to VTI.)Now let's review some assets we'll actually trade, starting with the VanEck Semiconductor Fund (SMH)...SMH is also trading below its 200-DMA. And as we saw in MTUM and VTI, the CI in SMH is beginning to slope up while price is falling.We're always on the lookout for a stock to make a low, rally, and then drop again. If that happens it would present an ideal buying opportunity.