Stocks were trading flat most of the day, but got hit with selling pressure in the final hour. As a result, the major index ETFs closed modestly lower. The S&P MidCap 400 SPDR (MDY) and S&P 500 ETF (SPY) fell around .50% on the day. Eight of the nine sectors were down with the Technology SPDR (XLK) sporting the only gain. A bullish reaction to Cisco earnings fueled a rally in the Networking iShares (IGN), which helped the technology sector. Within the consumer discretionary sector, the Home Construction iShares (ITB) and the Retail SPDR (XRT) were down over 1%. The chart below shows the Homebuilders SPDR (XHB) forming a bearish engulfing after a 10+ percent run the last four weeks. Also notice that the stock is overextended as it moved above the upper trend line of a rising channel. Broken resistance and the 50% retracement mark the first support zone in the 30-30.5 area.
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Key Reports and Events (all times Eastern):
Fri - May 17 - 09:55 - Michigan Sentiment
Fri - May 17 - 10:00 - Leading Indicators
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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