Risk On - May 27th to May 30th

Trend Change:

Bond vs Equities: TLT/SPY:

On April 16, I wrote the following on the long term treasury and US equity ratio.
"This ratio gives us a proxy of when US broad market is going into correction phase. Since the inception of TLT in July 2002, there has been 8 times where this ratio changed trend to higher low & higher high. 7 out of 8 times, stocks pulled back immediately. This occurrence signaled the bear market in 2008 for the first time during the week of Dec 10, 2007. Then again, during the week of May 5, 2008. The last warming was around August 11, 2008. "

It has been coiling up. Every time it reached the top or bottom of the wedge, it gave us signals on short term tops and bottoms. The perfect example is the small cap ETF IWM. The ratio reached the upper wedge on May 15th, and it reversed and formed a short term bottom.

Direction:

IWM:

The ETF closed above 200 day moving average, and broke above the green trend line. Things look even better on the weekly chart. It finished the week with a decisive green candle above 50 week moving average.

However, one cannot ignore the damage that's been done after breaking the steep red trend line going back to late November 2012. And the fact that every rally has been sold since March this year.

Individual names:

ARWR:

This biotech has seen better days. It plummeted from $27.63 on March 6th, to $9.12 on May 7th.  It's currently forming a nice wedge. I like it above 12. First target $14.

JVA:

This coffee manufacturer has been resilient. It broke out on Friday with good volume. First target $8.50. It could go much higher if it takes out 52w high at $8.58.

RAD:

It's simply a beauty. Big 52 week high breakout with huge volume. First target: $10

Other names that I am watching are QTWW, SOHU, GMCR, BIOF, ATSG and ISIS.

Thanks for reading, and have a good week!