Stocks were hit hard on Monday with small-caps and mid-caps leading the way lower. The Russell 2000 ETF (IWM) fell 3.77% and the S&P MidCap 400 SPDR (MDY) declined 3.13%. All sectors were down with the Energy SPDR (XLE) loosing 4.08% and the Basic Materials SPDR (XLB) falling 3.69%. Selling also extended to the consumer discretionary sector as the Home Construction iShares (ITB) fell over 5% and the Retail SPDR (XRT) declined over 3%. All but one of the Dow Jones US industry groups were down. The DJ US Mobile Telecom Index ($DJUSWC) managed a gain because Spring (S) surged on a buyout offer. Selling pressure was intense, but only one medium-term sell signal triggered for the major index ETFs. The chart below shows IWM closing right at support from the Raff Regression Channel and the early April low. Even though support is at hand, notice that –DI moved above 30 in early April and the Aroon Oscillator moved below -50 for the first time since mid November. With these moves, IWM is the first of the major index ETFs to trigger a bearish signal based on the directional movement indicators and the Aroon Oscillator. DIA, MDY, QQQ and SPY have yet to follow suit.
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Key Reports and Events (all times Eastern):
Mon - Apr 15 - 08:30 - Empire Manufacturing
Mon - Apr 15 - 10:00 - NAHB Housing Market Index
Tue - Apr 16 - 08:30 – Consumer Price Index (CPI)
Tue - Apr 16 - 08:30 - Housing Starts/Building Permits
Tue - Apr 16 - 09:15 - Industrial Production
Wed - Apr 17 - 07:00 - MBA Mortgage Index
Wed - Apr 17 - 10:30 - Oil Inventories
Wed - Apr 17 - 14:00 - Fed Beige Book
Thu - Apr 18 - 08:30 - Jobless Claims
Thu - Apr 18 - 10:00 - Philadelphia Fed Report
Thu - Apr 18 - 10:00 - Leading Indicators
Thu - Apr 18 - 10:30 - Natural Gas 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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