There is no change in the overall assessment. The majority of short-term evidence remains bearish. Bearish evidence started building when RSI on the 30-minute chart plunged below 30 on February 22nd. Bearish evidence expanded as Nasdaq breadth indicators turned bearish on February 23rd and NYSE indicator followed suit on March 7th. SPY confirmed these indicators with a gap down and support break on March 10th. The duration and path of this short-term downtrend are really indeterminable. We can look for support levels based on prior reaction lows and key retracements for potential reversal or bounce points. A full short-term trend reversal would require bullish signals from the big three indicators: RSI, breadth and price action.
While I still see some similarities between late November and now, SPY has yet to produce a short-term bullish breakout or surge that would suggest an extended move higher, such as in early December. Thursday's gap remains unfilled and CCI remains in negative territory. As far as downside targets, the 38% retracement and broken-resistance-turned-support point to the 128 area.
Key Economic Reports/Events:
Tue - Mar 15 - 08:30 – Empire State Manufacturing
Tue - Mar 15 - 10:00 - NAHB Housing Market Index
Tue - Mar 15 - 14:15 - FOMC Policy Statement
Wed - Mar 16 - 07:00 - MBA Mortgage Index
Wed - Mar 16 - 08:30 - Housing Starts & Building Permits
Wed - Mar 16 - 08:30 - PPI
Wed - Mar 16 - 10:30 - Oil Inventories
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.
Key Economic Reports/Events:
Tue - Mar 15 - 08:30 – Empire State Manufacturing
Tue - Mar 15 - 10:00 - NAHB Housing Market Index
Tue - Mar 15 - 14:15 - FOMC Policy Statement
Wed - Mar 16 - 07:00 - MBA Mortgage Index
Wed - Mar 16 - 08:30 - Housing Starts & Building Permits
Wed - Mar 16 - 08:30 - PPI
Wed - Mar 16 - 10:30 - Oil Inventories
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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