Stocks moved higher on Monday with broad participation. All of the major indices were up 1% or more. All sectors were up with the Consumer Discretionary SPDR (XLY) leading the way. The Financials SPDR (XLF), however, was clearly the weakest link with a fractional gain (+.27%). This could develop into a problem and I will be watching XLF support from last week's low. Semis were strong as the Semiconductors HOLDRS (SMH) gained over 3%. Despite relative weakness in finance, the S&P 500 ETF (SPY) opened strong and closed strong to build on Thursday's reversal day. Thursday's low now becomes medium-term support. Failure to hold the gains since Thursday morning would reverse the three week advance.
On the 60-minute chart SPY broke above flag resistance on Friday and continued higher on Monday. Short-term, it is important that this breakout holds. After all, strong breakouts hold, weak breakouts fold. Broken resistance around 111 turns into a support zone. For a little buffer, I am marking the support zone at 110.7-111. A move below 110.7 would negate this breakout. With SPY trading around 112 and RSI near 70, the ETF is already short-term overbought. That is not necessarily bearish. It just increases the chances of a pullback or consolidation.
All trading leads to Friday morning, which marks the employment report. Gaps and/or big moves are possible, but it is difficult to predict the employment report or the market's reaction to the report. Therefore, it is important to have a buffer heading into this report. We will get employment previews with the ADP report on Wednesday and Initial Claims on Thursday.
Tuesday-10:00 ISM Index
Wednesday-08:15 ADP Employment
Wednesday-10:00 ISM Services
Wednesday-10:30 Crude Inventories
Wednesday-14:00 Fed's Beige Book
Thursday-08:30 Initial Claims
Thursday-08:30 Continuing Claims
Thursday-10:00 Factory Orders
Thursday-10:00 Pending Home Sales
Friday-08:30 Employment Report
All trading leads to Friday morning, which marks the employment report. Gaps and/or big moves are possible, but it is difficult to predict the employment report or the market's reaction to the report. Therefore, it is important to have a buffer heading into this report. We will get employment previews with the ADP report on Wednesday and Initial Claims on Thursday.
Tuesday-10:00 ISM Index
Wednesday-08:15 ADP Employment
Wednesday-10:00 ISM Services
Wednesday-10:30 Crude Inventories
Wednesday-14:00 Fed's Beige Book
Thursday-08:30 Initial Claims
Thursday-08:30 Continuing Claims
Thursday-10:00 Factory Orders
Thursday-10:00 Pending Home Sales
Friday-08:30 Employment Report
About the author:
Arthur Hill, CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London.
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