The short-term uptrend for the S&P 500 ETF (SPY) began with the breakout on December 20th and is now entering its 19th day, which is pretty long for a short-term uptrend. Also note that the ETF is up around 8% from its December 19th low. For now, the uptrend continues has the ETF continues to forge rising peaks and rising troughs. Tuesday's opening surge to 130 forged yet another higher high. Even though there was no follow through after the gap, the gap is largely holding and the cup remains half full for now. I raised key support to 127.5, which is based on Friday's low and the Raff Regression Channel. RSI support remains at 40. A move below both of these levels would be enough to reverse the short-term uptrend.
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Even though stocks and the Euro advanced on Tuesday, the 20+ Year T-Bond ETF (TLT) held up and closed near resistance. Something needs to give here. Perhaps money is moving into treasuries to safeguard against negative developments in Europe. TLT is challenging resistance from the late December high and the swing remains up as Friday's big surge holds. I am marking key support at 119 for now.
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Despite some fairly volatile swings the last several days, the US Dollar Fund (UUP) continues to hold its breakout. UUP broke falling flag resistance with a surge the first week of December and broken resistance turned into support. The ETF held this support level twice last week and is once again testing the 22.55-22.60 area. A break below 22.55 would be negative for UUP. The bulls have the edge as long as this level holds. RSI support is set at 40.
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The US Oil Fund (USO) is a tough call at the moment. Strength in stocks and the euro is positive for oil and USO bounced off support Tuesday. The bounce, however, could meet resistance from broken support and the 50-61.80% retracement zone. For now, the bounce is holding and more positive than negative. I would mark first support at 38.20.
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Even though gold bottomed a week after the stock market, gold remains tethered to the stock market in 2012. Also note that gold is up despite a strong Dollar this year. I expect gold to continue taking its cues from the stock market, whatever the reason might be. The ETF has been zigzagging higher this year with last week's low marking key support at 158.
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Key Economic Reports:
Wed - Jan 18 - 07:00 - MBA Mortgage Index
Wed - Jan 18 - 08:30 - Producer Price Index (PPI)
Wed - Jan 18 - 09:15 - Industrial Production
Thu - Jan 19 - 08:30 - Jobless Claims
Thu - Jan 19 - 08:30 - Consumer Price Index (CPI)
Thu - Jan 19 - 08:30 - Housing Starts/Building Permits
Thu - Jan 19 - 10:00 - Philadelphia Fed
Thu - Jan 19 - 11:00 - Oil Inventories
Fri - Jan 20 - 10:00 - Existing Home Sales
Mon - Jan 23 – 08:00 – EU Finance Ministers Meeting
Mon - Jan 30 – 08:00 – EU Heads of State Meeting
Mon - Jan 30 – 08:00 – Italian Medium and Long Term Bond Auction
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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