**This chart analysis is for educational purposes only, and should not
be construed as a recommendation to buy, sell or sell-short said securities**
Techs took the lead on Wednesday with semiconductor and networking stocks scoring nice gains. The Nasdaq 100 ETF (QQQ) relative strength with a 1% gain, while the S&P MidCap 400 SPDR (MDY) rebounded with a 1.17% gain. Market breadth was pretty good with S&P 1500 AD Percent hitting 61% and AD Percent reaching 60%. Even so, the charts below show the AD Line and AD Volume Line in short-term downtrends. The red lines mark short-term resistance. Both need a breakout to validate a short-term trend reversal in the S&P 500 (or S&P 1500). The advance over the last two days does look a little tepid, but this is understandable because it is a big week for economic reports. Today we get the ISM Services Index, Initial Jobless Claims and Factory Orders. Tomorrow is the big employment report. Watch the claims number closely because this is the best predictor of non-farm payrolls.
be construed as a recommendation to buy, sell or sell-short said securities**
Techs took the lead on Wednesday with semiconductor and networking stocks scoring nice gains. The Nasdaq 100 ETF (QQQ) relative strength with a 1% gain, while the S&P MidCap 400 SPDR (MDY) rebounded with a 1.17% gain. Market breadth was pretty good with S&P 1500 AD Percent hitting 61% and AD Percent reaching 60%. Even so, the charts below show the AD Line and AD Volume Line in short-term downtrends. The red lines mark short-term resistance. Both need a breakout to validate a short-term trend reversal in the S&P 500 (or S&P 1500). The advance over the last two days does look a little tepid, but this is understandable because it is a big week for economic reports. Today we get the ISM Services Index, Initial Jobless Claims and Factory Orders. Tomorrow is the big employment report. Watch the claims number closely because this is the best predictor of non-farm payrolls.
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Key Reports and Events (all times Eastern):
Thu - Sep 05 - 07:30 - Challenger Job Cuts
Thu - Sep 05 - 08:15 - ADP Employment Change
Thu - Sep 05 - 08:30 - Initial Claims
Thu - Sep 05 - 10:00 - Factory Orders
Thu - Sep 05 - 10:00 - ISM Services
Thu - Sep 05 - 10:30 - Natural Gas Inventories
Thu - Sep 05 - 11:00 - Crude Inventories
Fri – Sep 06 – 08:30 – Employment Report
Sun – Sep 22 – 10:00 – German Elections
Tue – Oct 15 - 09:00 – Debt Ceiling Deadline
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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