Stocks limped higher as the Euro, gold and oil rebounded on Tuesday. A pullback in the Dollar also lifted silver and copper, both of which have been in the doldrums of late. The Basic Materials SPDR (XLB) stole the show as the only sector to gain more than 1%. XLB was helped with strong gains in the Gold Miners ETF (GDX), Steel ETF (SLX), Copper Miners ETF (COPX) and Metals & Mining SPDR (XME). Despite strong moves, these industry groups ETFs are in downtrends overall and the moves are considered oversold bounces for now. All four ETFs were down over 20% from their January highs and ripe for a counter trend move. Also note that the Euro was oversold and ripe for a bounce. The chart below shows XME forming a spinning top on Thursday, firming on Friday and then surging on Tuesday with a gap. There is clearly a short-term reversal in play and the yellow area marks the target or resistance zone.
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Key Reports and Events (all times Eastern):
Wed - Apr 10 - 07:00 - MBA Mortgage Index
Wed - Apr 10 - 10:30 - Oil Inventories
Wed - Apr 10 - 14:00 - FOMC Minutes
Thu - Apr 11 - 08:30 - Jobless Claims
Thu - Apr 11 - 10:30 - Natural Gas Inventories
Fri - Apr 12 - 08:30 - Retail Sales
Fri - Apr 12 - 08:30 - Producer Price Index (PPI)
Fri - Apr 12 - 09:55 - Michigan Sentiment
Fri - Apr 12 - 10:00 - Business Inventories
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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