Stocks opened weak, but quickly firmed and consolidated at lower levels the rest of the day. The overall losses were small with the Russell 2000 ETF (IWM) loosing .71% and the Nasdaq 100 ETF (QQQ) falling just .18%. QQQ continues to lead the major index ETFs and show the most relative strength. It looks like investors are betting on a big product launch from Apple this autumn. We shall see. There were some concerning pockets of weakness. The Home Construction iShares (ITB) fell over 2% and is testing support from the 2013 lows. The Retail SPDR (XRT) and Semiconductor SPDR (XSD) were down over 1% and showed relative weakness. Weakness in homebuilders and retail weighed on the Equal-weight Consumer Discretionary ETF (RCD) as it fell over 1%. Despite these pockets of weakness, the bigger trends remain up and it possible that the ascent simply slows over the coming weeks. In other words, we could see a choppy zigzag higher as buying pressure wanes, but selling pressure remains muted.
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Key Reports and Events (all times Eastern):
Wed - Aug 07 - 07:00 - MBA Mortgage Index
Wed - Aug 07 - 10:30 - Crude Inventories
Thu - Aug 08 - 08:30 - Initial Claims
Thu - Aug 08 - 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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