The magical first day of the month is upon us. Among others, bespokeinvest.com notes that the S&P 500 has gained 14 of the last 16 times on the first day of the month. The last two down days were the first days of June and July 2010. On average the S&P 500 has gained 1%. This trend may be going the way of the January affect, which occurs 1-2 months earlier now that everybody knows about it. The S&P 500 surged off its support zone late last week and held on for a modest gain on Monday. There is still a potential resistance zone around 132.5-133, but this zone is already under threat with yesterday's strong close and strength in the futures early Tuesday morning. SPY bottomed in the afternoon and rose the final two hours. Overall, the bulls still have the short-term edge, not to mention the medium-term edge. On the 60-minute chart, I am marking first support at 132. A move below this level would fill yesterday's gap and put the first day streak in jeopardy. Also keep an eye on RSI as it battles near 60.
It is a pretty big week on the economic front. Chicago PMI kicks off the week on Monday. The ISM is on Tuesday and Bernanke begins his two-day testimony before congress. ISM services its on Thursday and the employment report is on Friday.
Key Economic Reports/Events:
Tue - Mar 01 - 10:00 - Construction Spending
Tue - Mar 01 - 10:00 - ISM Index
Tue - Mar 01 - 10:00 – Bernanke Testimony
Tue - Mar 01 - 15:00 - Auto/Truck Sales
Wed - Mar 02 - 07:00 - MBA Mortgage Index
Wed - Mar 02 - 07:30 - Challenger Job Cuts
Wed - Mar 02 - 08:15 - ADP Employment
Wed - Mar 02 - 10:00 – Bernanke Testimony
Wed - Mar 02 - 10:30 - Crude Inventories
Wed - Mar 02 - 14:00 - Fed's Beige Book
Thu - Mar 03 - 08:30 - Initial Claims
Thu - Mar 03 - 08:30 - Continuing Claims
Thu - Mar 03 - 10:00 - ISM Services
Fri - Mar 04 - 08:30 - Nonfarm Payrolls
Fri - Mar 04 - 10:00 - Factory Orders
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.
