Stocks finally took a breather with small-caps leading the way lower. The Russell 2000 ETF (IWM) fell 1.37% and the Russell Microcap ETF (IWC) fell 1.70%. All sectors were down, but the losses were relatively modest. The Consumer Staples SPDR (XLP) led the way lower with a .86% loss and a bearish engulfing on the day. The Home Construction iShares (ITB) was also hit pretty hard with a 1.92% decline. Last week's breakout is holding, but a triangle will evolve should the ETF form a lower high in late October. The four day low marks upswing support and triangle support is set at 21. Elsewhere, the Networking iShares (IGN) and Semiconductor SPDR (XSD) weighed on the tech sector as both fell over 1.5% on the day. Biotechs were also quite weak as the Biotech SPDR (XBI) broke wedge support with a sharp decline. This means three of the five Nasdaq industry groups are looking quite weak. The FirstTrust Internet ETF (FDN) and Software iShares (IGV) are still holding up.
**This chart analysis is for educational purposes only, and should not
be construed as a recommendation to buy, sell or sell-short said securities**
**This chart analysis is for educational purposes only, and should not
be construed as a recommendation to buy, sell or sell-short said securities**
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Key Reports and Events (all times Eastern):
Wed - Oct 30 - 07:00 - MBA Mortgage Index
Wed - Oct 30 - 08:15 - ADP Employment Report
Wed - Oct 30 - 08:30 - Consumer Price Index (CPI)
Wed - Oct 30 - 10:30 - Crude Oil Inventories
Wed - Oct 30 - 14:15 - FOMC Policy Statement
Thu - Oct 31 - 07:30 - Challenger Job Report
Thu - Oct 31 - 08:30 - Initial Jobless Claims
Thu - Oct 31 - 09:45 - Chicago PMI
Thu - Oct 31 - 10:30 - Natural Gas Inventories
Fri - Nov 01 - 10:00 - ISM Manufacturing Index
Fri - Nov 01 - 14:00 - Auto Sales/Truck Sales
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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