The Gold SPDR (GLD) remains in an uptrend, but this bullion ETF warrants a close watch as it trades near the 50% retracement with a rising wedge. I identified the inverse head-and-shoulders and breakout last week and GLD remains in an uptrend as long as the wedge rises. Typically, a rising wedge is associated with a counter-trend advance and resistance is expected in the 50-62% retracement zone. Broken resistance turns into support around 131 and the wedge trendline confirms support here. A break below 131 would reverse this wedge and the uptrend in GLD.
The Euro Currency Trust (FXE) is also at an interesting juncture. Moreover, this week's pattern and retracement resemble the movements in GLD. After breaking support from the late January lows, FXE retraced 62% of the early February decline with a rising wedge. If last week's support break signals the start of an extended decline, then this rising wedge-retracement should end soon. The trend is up as long as the wedge rises. Look for a move below 136 to break wedge support. This would be short-term Euro bearish and Dollar bullish.
On the daily chart, SPY is hitting some resistance near the upper trendline of a rising price channel. The ETF surged to this trendline with a ±4% advance the first seven days of the month. As noted earlier this week, this surge looks like some sort of buying climax, similar to early November. The bears are still faced with one of those Dirty Harry moments. Well, bear, do you feel lucky? The medium-term and short-term trends are up with no signs of price weakness. However, stocks are clearly overbought and ripe for at least a pullback or correction. The 60-minute chart shows a gap up on Monday and then a stall around 131.5-132.5. A move below 131 would fill the gap and provide the first signs that a pullback may be starting. In a related note, Cisco disappointed after the close for the third time in a row. Prior reports on 12-May, 11-Aug and 10-Nov coincided with stock market weakness for the next two weeks.
Key Economic Reports:
Thu - Feb 10 - 08:30 - Jobless Claims
Fri - Feb 11 - 09:55 - Michigan Sentiment
Charts of Interest: Tuesday and Thursday in separate post.
-----------------------------------------------------------------------------
This commentary and charts-of-interest are designed to stimulate thinking. This analysis is not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise). We all need to think for ourselves when it comes to trading our own accounts. First, it is the only way to really learn. Second, we are the only ones responsible for our decisions. Think of these charts as food for further analysis. Before making a trade, it is important to have a plan. Plan the trade and trade the plan. Among other things, this includes setting a trigger level, a target area and a stop-loss level. It is also important to plan for three possible price movements: advance, decline or sideways. Have a plan for all three scenarios BEFORE making the trade. Consider possible holding times. And finally, look at overall market conditions and sector/industry performance.
On the daily chart, SPY is hitting some resistance near the upper trendline of a rising price channel. The ETF surged to this trendline with a ±4% advance the first seven days of the month. As noted earlier this week, this surge looks like some sort of buying climax, similar to early November. The bears are still faced with one of those Dirty Harry moments. Well, bear, do you feel lucky? The medium-term and short-term trends are up with no signs of price weakness. However, stocks are clearly overbought and ripe for at least a pullback or correction. The 60-minute chart shows a gap up on Monday and then a stall around 131.5-132.5. A move below 131 would fill the gap and provide the first signs that a pullback may be starting. In a related note, Cisco disappointed after the close for the third time in a row. Prior reports on 12-May, 11-Aug and 10-Nov coincided with stock market weakness for the next two weeks.
Key Economic Reports:
Thu - Feb 10 - 08:30 - Jobless Claims
Fri - Feb 11 - 09:55 - Michigan Sentiment
Charts of Interest: Tuesday and Thursday in separate post.
-----------------------------------------------------------------------------
This commentary and charts-of-interest are designed to stimulate thinking. This analysis is not a recommendation to buy, sell, hold or sell short any security (stock ETF or otherwise). We all need to think for ourselves when it comes to trading our own accounts. First, it is the only way to really learn. Second, we are the only ones responsible for our decisions. Think of these charts as food for further analysis. Before making a trade, it is important to have a plan. Plan the trade and trade the plan. Among other things, this includes setting a trigger level, a target area and a stop-loss level. It is also important to plan for three possible price movements: advance, decline or sideways. Have a plan for all three scenarios BEFORE making the trade. Consider possible holding times. And finally, look at overall market conditions and sector/industry performance.
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.
Learn More
