Let the volatility begin. The situation in Cyprus remains fluid and the news flow is providing a great excuse for volatility. Again, I do not think the situation in Cyprus will affect consumer spending and housing in the US. The Fed finishes its two day meeting today with a policy statement scheduled for 2PM today. This means we can expect a little extra volatility just before and after the announcement. While I have no idea how the Cyprus situation will be resolved, I do think it will be resolved and this could provide a convenient excuse for a rally in stocks, the Euro and oil. Conversely, we could see money move out of Treasuries and the Dollar because they are the safe-havens. Gold has a mind of its own these days. As the PerfChart below shows, the markets did move to risk-off this week. Notice that Treasuries, gold and the Dollar are up, while stocks, oil and the Euro are down. Strength in these three creates a negative backdrop for stocks. In particular, the 20+ Year T-Bond ETF (TLT) needs to reverse its surge and negate its breakout to put stocks back on a firm footing.
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Key Reports and Events (all times Eastern):
Wed - Mar 20 - 10:30 - Oil Inventories
Wed - Mar 20 - 14:00 - FOMC Rate Decision
Thu - Mar 21 - 08:30 - Jobless Claims
Thu - Mar 21 - 10:00 - Existing Home Sales
Thu - Mar 21 - 10:00 - Philadelphia Fed
Thu - Mar 21 - 10:00 - Leading Indicators
Thu - Mar 21 - 10:30 - Natural Gas Inventories
Wed – Mar 27 - 23:59 – US Government Shut Down Deadline
Wed – May 15 - 23:59 – US 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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