Even though Thursday's losses were small, stocks just can't seem to shake that selling feeling. The major index ETFs edged lower the small-caps again leading the way. The sectors were mixed with three up and six down. Gains and losses were also small though. The Finance SPDR (XLF) edged up .23% and the Energy SPDR (XLE) eked out a .14% gain. The biggest losses came from homebuilders as the Home Construction iShares (ITB) fell around 1% and semis as the Semiconductor SPDR (XSD) declined 1.59%. There were also losses in the materials players (steel, gold miners, silver miners, coal). The Metals & Mining SPDR (XME) has clearly broken down with the gap and trend line break at 44. The ETF stalled for a few days after the break and then pushed lower the last three days. Ouch!
After plunging below 139 last week, the S&P 500 ETF (SPY) consolidated and formed a triangle. This week's triangle break signaled another continuation lower. SPY is down around 5% in less than two weeks and clearly oversold. Even though the ETF is ripe for an oversold bounce, buyers remain on the sidelines and prices have yet to entice even bottom pickers. Broken support turns first resistance in the 138 area. I am moving key resistance to 141 for now.
**************************************************************************
No change. The 20+ Year T-Bond ETF (TLT) opened lower, but quickly found its footing and surged above 126.5 by the close. The uptrend remains in place with first support now at 125.5. Even though TLT is overbought, a pullback is unlikely as long as stocks, the Euro and oil remain weak. The broken resistance zone turns into a big support zone in the 123-124.5 area.
**************************************************************************
No change. The US Dollar Fund (UUP) remains in an uptrend with first support marked in the 22.05 area. The advance slowed over the last few days, but the greenback did not buckle as the risk-off trade held sway. Strength in the Dollar favors the risk-off trade. While a break below 22.05 would be negative, I would not turn too bearish because the Dollar is entitled to a pullback. Broken resistance turns into the next support zone in the 21.95 area.
**************************************************************************
The US Oil Fund (USO) failed to hold its flag breakout and declined below 31.50 during the day. After plunging from resistance last week, USO consolidated between 31 and 32 the last five days. This could be a rest before a continuation lower. A break below 31 opens the door to the upper 20s. Even though the bigger trend is down, oil has shown some relative strength by firming the last 2-3 weeks. Look for a surge above 32 to get an oversold bounce working. Oil could use some help from stocks and the Dollar though.
**************************************************************************
The Gold Miners ETF (GDX) and the Silver Miners ETF (SIL) plunged again on Thursday and the Gold SPDR (GLD) broke support at 166.50. Gold is holding up ok, but weakness in the miners is a negative. Also note that the Dollar is holding its gains and has yet to correct. This breakdown in gold could foreshadow an upside breakout in the Dollar, which is in an uptrend. I am setting resistance at 168.20 for GLD.
**************************************************************************
Key Reports and Events:
Thu - Nov 15 - 08:30 – Jobless Claims
Thu - Nov 15 - 08:30 – Consumer Price Index (CPI)
Thu - Nov 15 - 08:30 - Empire Manufacturing
Thu - Nov 15 - 10:00 - Philadelphia Fed
Thu - Nov 15 - 11:00 - Crude Inventories
Fri - Nov 16 - 09:15 - Industrial Production
Charts of Interest: Tuesday and Thursday
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.
**************************************************************************
No change. The 20+ Year T-Bond ETF (TLT) opened lower, but quickly found its footing and surged above 126.5 by the close. The uptrend remains in place with first support now at 125.5. Even though TLT is overbought, a pullback is unlikely as long as stocks, the Euro and oil remain weak. The broken resistance zone turns into a big support zone in the 123-124.5 area.
**************************************************************************
No change. The US Dollar Fund (UUP) remains in an uptrend with first support marked in the 22.05 area. The advance slowed over the last few days, but the greenback did not buckle as the risk-off trade held sway. Strength in the Dollar favors the risk-off trade. While a break below 22.05 would be negative, I would not turn too bearish because the Dollar is entitled to a pullback. Broken resistance turns into the next support zone in the 21.95 area.
**************************************************************************
The US Oil Fund (USO) failed to hold its flag breakout and declined below 31.50 during the day. After plunging from resistance last week, USO consolidated between 31 and 32 the last five days. This could be a rest before a continuation lower. A break below 31 opens the door to the upper 20s. Even though the bigger trend is down, oil has shown some relative strength by firming the last 2-3 weeks. Look for a surge above 32 to get an oversold bounce working. Oil could use some help from stocks and the Dollar though.
**************************************************************************
The Gold Miners ETF (GDX) and the Silver Miners ETF (SIL) plunged again on Thursday and the Gold SPDR (GLD) broke support at 166.50. Gold is holding up ok, but weakness in the miners is a negative. Also note that the Dollar is holding its gains and has yet to correct. This breakdown in gold could foreshadow an upside breakout in the Dollar, which is in an uptrend. I am setting resistance at 168.20 for GLD.
**************************************************************************
Key Reports and Events:
Thu - Nov 15 - 08:30 – Jobless Claims
Thu - Nov 15 - 08:30 – Consumer Price Index (CPI)
Thu - Nov 15 - 08:30 - Empire Manufacturing
Thu - Nov 15 - 10:00 - Philadelphia Fed
Thu - Nov 15 - 11:00 - Crude Inventories
Fri - Nov 16 - 09:15 - Industrial Production
Charts of Interest: Tuesday and Thursday
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.
Learn More
