Stocks opened weak on news of the Cyprus bail-in plan, but quickly found their footing and bounced. Nevertheless, the major index ETFs ended the day with small losses. The Nasdaq 100 ETF (QQQ) held up well because Apple and Microsoft advanced. Note that tomorrow marks the one year anniversary of Apple's dividend announcement. Yes, speculation is running rampant that Apple will make some sort of announcement today. The intermarket arena was quite active on Monday as the 20+ Year T-Bond ETF (TLT) broke short-term resistance at 116 and held this breakout. The bigger trend is still down, but this breakout is negative for stocks as long as it holds. We need to watch TLT closely because US treasuries are the ultimate risk-on/risk-off indicator. The Dollar, oil and gold all moved higher on Monday. The US Oil Fund (USO) opened sharply lower, but recovered and closed near its high for the day. This bounce affirmed short-term support to keep the short-term uptrend alive. Even though oil recovered, weakness in Schlumberger (SLB) hit the Oil Service HOLDRS (OIH) as it broke the flag trend line. Notice that the Aroon indicators are both declining in parallel fashion. The first Aroon to turn up and break above 50 will trigger the next directional signal for this dynamic duo. The Gold SPDR (GLD) broke triangle resistance and this breakout held. As with TLT, this is a breakout within a bigger downtrend so I am not sure how long it will hold.
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Key Reports and Events (all times Eastern):
Tue - Mar 19 - 08:30 - Housing Starts/Building Permits
Wed - Mar 20 - 07:00 - MBA Mortgage Index
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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