It was a good week for the stock market. The major index ETFs gained and hit fresh 52-week highs. The Nasdaq 100 ETF (QQQ) and S&P MidCap 400 SPDR (MDY) led the way with 2+ percent gains. All sectors were up with the Consumer Discretionary SPDR (XLY) and Industrials SPDR (XLI) gaining over 2%. Despite broad strength, some of the weekly gains were rather tepid. The Dow Industrials SPDR (DIA) gained just .67%, while the Finance SPDR (XLF) and Healthcare SPDR (XLV) gained less than 1%. Even though the trend is clearly up, parts of the stock market are getting tired and this could lead to a correction. Keep in mind that corrections can form as pullbacks or sideways consolidations. Elsewhere, we saw good strength in the Home Construction iShares (ITB) with a 4% gain and the Networking iShares (IGN) with a 2.5% gain. Industry groups within the materials sector remained under pressure as the Gold Miners ETF (GDX) fell over 7% and the Metals & Mining SPDR (XME) declined around 2.5% for the week.
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Key Reports and Events (all times Eastern):
Mon - Aug 05 - 10:00 - ISM Services
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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