It was a rather strange day in the stock market. The Russell 2000 ETF (IWM) fell by 1.34%, but the Dow SPDR (DIA) edged higher with a .02% gain. Defensive stocks led the Dow higher with nice gains in JNJ, MRK and UNH from healthcare, T from Telecom and PG from consumer staples. The Healthcare SPDR (XLV) was the only sector SPDR to gain on the day as money kept chasing this defensive group. On the non-defensive side, the Home Construction iShares (ITB) and the Retail SPDR (XRT) were hit with selling pressure. The Semiconductor SPDR (XSD) and Networking iShares (IGN) weighed on the technology sector. Elsewhere, the Metals and Mining ETF (XME) and the Gold Miners ETF (GDX) lost over 2%. These materials-related industry groups have been relative weak the whole year and remain out of favor. Overall, the same concerns remain for the market. Stocks are medium-term overbought and ripe for a correction or a pullback. The 20+ Year T-Bond ETF (TLT) held its breakout and remains in a short-term uptrend, which is negative for stocks. Also note that the six month cycle turns bearish in a few weeks. At best, we could see choppy trading ahead as the uptrend confronts these issues. Don't forget that the employment report is on Friday.
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Key Reports and Events (all times Eastern):
Tue - Apr 02 - 10:00 - Factory Orders
Tue - Apr 02 - 14:00 - Auto/Truck Sales
Wed - Apr 03 - 07:00 - MBA Mortgage Index
Wed - Apr 03 - 08:15 - ADP Employment Change
Wed - Apr 03 - 10:00 - ISM Services
Wed - Apr 03 - 10:30 - Oil Inventories
Thu - Apr 04 - 07:30 - Challenger Job Cuts
Thu - Apr 04 - 08:30 - Jobless Claims
Thu - Apr 04 - 10:30 - Natural Gas Inventories
Fri - Apr 05 - 08:30 - Employment Report
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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