You have to give the bulls credit for resilience. Stocks treaded water in the early going and then surged in the afternoon. The major index ETFs closed at or near their highs for the day. On the 60 minute charts, IWM broke falling channel resistance, SPY is challenging neckline resistance of an inverse head-and-shoulders pattern and QQQ is on the verge of another ibreakout. Check your iwatch for details on that one. Led by retail stocks, the Consumer Discretionary SPDR (XLY) was the star of the day as it closed at a new high. XLF was also strong as it extended its bounce off support near 17. XLI lagged with a decline, but remains above support at 40. Even though XLY performance was impressive, the defensive sectors were just as impressive. The Utilities SPDR (XLU), Healthcare SPDR (XLV) and Consumer Staples SPDR (XLP) closed at 52-week highs. There you have it. Defensive sectors are leading and the market remains strong overall. Forget about last week's breakout in the 20+ Year T-Bond ETF (TLT) or the February breakdowns in oil and copper. You can also forget about the breakout in the Dollar and breakdown in the Euro. Stocks are the place to be, the only place to be. All kidding aside, the external concerns remain. In addition to the aforementioned, the major index ETFs remain ripe for a corrective period. Market internals, however, remain clearly bullish as stocks recover from their late February declines to keep the medium-term uptrends alive and kicking.
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Key Reports and Events (all times Eastern):
Tue - Mar 05 - 10:00 - ISM Services
Wed - Mar 06 - 07:00 - MBA Mortgage Index
Wed - Mar 06 - 08:15 - ADP Employment Change
Wed - Mar 06 - 10:00 - Factory Orders
Wed - Mar 06 - 10:30 - Crude Inventories
Wed - Mar 06 - 14:00 - Fed's Beige Book
Thu - Mar 07 - 08:30 - Initial Claims
Thu - Mar 07 - 08:30 - Continuing Claims
Thu - Mar 07 - 10:30 - Natural Gas Inventories
Thu - Mar 07 - 15:00 - Consumer Credit
Fri - Mar 08 - 08:30 - Nonfarm Payrolls
Fri - Mar 08 - 08:30 - Unemployment Rate
Wed – Mar 27 - 23:59 – Government Shut Down Deadline
Wed – May 15 - 23:59 – Debt Ceiling Deadline
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.
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