There is no change to the short-term evidence, which remains bearish. However, the major index ETFs are oversold again and near support levels that could give way to a bounce. The first chart shows the Nasdaq 100 ETF (QQQQ) hitting the 62% retracement mark and support from broken resistance around 54. The Commodity Channel Index (CCI) moved below -200 for the first time since the early May flash-crash. With the bigger trend still up, this combination of oversold and support could give way to an oversold bounce back to broken support around 56.
The second chart shows the Russell 2000 ETF (IWM) forming a harami just above support from the January lows. Support is also at hand for RSI as this momentum oscillator moved to 39.22. Notice how the indicator bounced in the 40-50 zone in mid November and late January.
SPY is between the two most obvious support levels. The ETF broke below support at 128, but remains above support at 124, or even 122. The 126 area does, however, represent a 50% retracement of the December-February advance. The ETF is also oversold as CCI trades below -200. An oversold bounce could carry the ETF back to broken support around 130.
Obviously, the situation in Japan remains extremely fluid. A successful solution would likely trigger a relief rally. My best guess is that there will be a positive resolution at some point in the next few days. We do not even want to contemplate the alternative. I am not an expert in nuclear reactors and I am nowhere near the actual reactors. In order to have true insight into the problem, one must understand the reactor structure AND actually be there. The reactors may not be unique, but the extent of the damage is. As far as I am concerned, most, if not all, theories are just speculation. Nobody outside the Japanese nuclear industry really knows what is going on there. This is basically a known unknown. We know about the problem, but we do not know what will happen. It will just take time.
Key Economic Reports/Events:
Thu - Mar 17 - 08:30 - Jobless Claims
Thu - Mar 17 - 08:30 - CPI
Thu - Mar 17 - 09:15 - Industrial Production
Thu - Mar 17 - 10:00 - Leading Indicators
Thu - Mar 17 - 10:00 - Philadelphia Fed
Thu – Mar 17 – 18:00 – St Patrick's Day Evening!
Charts of Interest: Tuesday and Thursday in separate post.
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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.
SPY is between the two most obvious support levels. The ETF broke below support at 128, but remains above support at 124, or even 122. The 126 area does, however, represent a 50% retracement of the December-February advance. The ETF is also oversold as CCI trades below -200. An oversold bounce could carry the ETF back to broken support around 130.
Obviously, the situation in Japan remains extremely fluid. A successful solution would likely trigger a relief rally. My best guess is that there will be a positive resolution at some point in the next few days. We do not even want to contemplate the alternative. I am not an expert in nuclear reactors and I am nowhere near the actual reactors. In order to have true insight into the problem, one must understand the reactor structure AND actually be there. The reactors may not be unique, but the extent of the damage is. As far as I am concerned, most, if not all, theories are just speculation. Nobody outside the Japanese nuclear industry really knows what is going on there. This is basically a known unknown. We know about the problem, but we do not know what will happen. It will just take time.
Key Economic Reports/Events:
Thu - Mar 17 - 08:30 - Jobless Claims
Thu - Mar 17 - 08:30 - CPI
Thu - Mar 17 - 09:15 - Industrial Production
Thu - Mar 17 - 10:00 - Leading Indicators
Thu - Mar 17 - 10:00 - Philadelphia Fed
Thu – Mar 17 – 18:00 – St Patrick's Day Evening!
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.
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