Stocks took a little breather on Thursday as the major index ETFs edged lower. The losses were fractional, but the markets were clearly shaken by something in the afternoon. Rumors were swirling that the Fed may hint at changes to its quantitative easing program. This is believable because jobless claims fell below 325,000 and to their lowest level since January 2008. This is perhaps the best indicator for the employment picture and the Fed has tied quantitative easing to the unemployment rate. The S&P 500 fell around 10 points from 1PM to 2PM and then stabilized. Gold fell around $20 during this timeframe and the Euro Currency Trust (FXE) fell to support at 129. The Euro is down over 1% from Wednesday's high. The currency opened weak on Thursday and finished weak. Also note that Dollar/Yen is pushing the 100 level for the first time since April 2009. Yen bulls are few and far between. With the Yen remaining weak, a breakdown in the Euro would be very bullish for the Dollar and this could weigh on commodities.
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Key Reports and Events (all times Eastern):
Thu - May 09 - 08:30 - Jobless Claims
Thu - May 09 - 10:30 - Natural Gas Inventories
Fri – May 10 – 08:00 - TGIF
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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