SPY Holds the Breakout and QQQ Tests Support

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The 20+ Year T-Bond ETF (TLT) extended its slide as the broader market held up rather well on Wednesday. TLT ended the day at the 61.80% retracement line. This area also marks support from broken resistance and the first big test is at hand. Continued strength in stocks would deepen the decline. There is also a large rising channel on the chart with parallel trendlines. The lower trendline extends to the next big support zone around 117.90.



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The US Dollar Fund (UUP), which is positively correlated with US Treasuries, is also at its moment-of-truth. Notice that the decline retraced 50-61.80% of the prior advance and support from the lower trendline is coming into play. Also note that RSI is in its support zone (40-50). Even though a picture perfect falling flag did not form, the decline over the last few days could certainly be corrective because the bigger trend is up. A move above 22.5 would break resistance and argue for a continuation higher.



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The US Oil Fund (USO) remains on a tear with a 6+ percent move the last few days. The short-term trend is up after Tuesday's breakout at 37 and the RSI breakout at 60, but the ETF is nearing the 61.80% retracement and getting overbought. USO is negatively correlated with Treasuries and the Dollar. Therefore, we can expect oil to move along with the stock market and counter to Treasuries and the Dollar.



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The Gold SPDR (GLD) surged to 157 early Tuesday and then traded flat the last two days. A tight consolidation formed with support at 156 and resistance at 157.50. Watch these levels for the first signal. It seems a bit too tight to set key support at 156 so I will leave it at 154 for now.



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Key Economic Reports:                                           

Thu - Dec 22 - 08:30 - Initial Claims        
Thu - Dec 22 - 08:30 - GDP        
Thu - Dec 22 - 09:55 - Michigan Sentiment    
Thu - Dec 22 - 10:00 - Leading Indicators    
Fri - Dec 23 - 08:30 - Durable Orders
Fri - Dec 23 - 08:30 - Personal Income/Personal Spending        
Fri - Dec 23 - 10:00 - New Home Sales                

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.