The government reopened as congress passed a deal and the president signed off. That is the good news. The bad news is that this process will repeat itself early next year. This would be funny, if it weren't so sad. Stocks, however, don't seem to care what about the shenanigans in Washington as the Nasdaq 100 ETF (QQQ) and Russell 2000 ETF (IWM) moved to new 52-week highs. Now that the deal is done, Wall Street can turn its focus to earnings, which have been mixed up to this point. We are seeing negative reactions to Citibank, Ebay, IBM, Intel and Xilinx, but positive reactions to American Express, Bank of America and Yahoo. Goldman Sachs, Fifth Third Bancorp and Huntington Bancshares report tomorrow. The shutdown debt-ceiling debacle has come and gone with no major changes in existing trends. Stocks are in uptrends, while Treasuries, oil, gold and the Dollar are trending lower. I am, however, seeing signs of a potential trend change in the 20+ Year T-Bond ETF (TLT) and Dollar Bullish ETF (UUP). TLT has a falling flag working the last few weeks and the UUP is challenging short-term resistance. The chart below shows sector performance over the last 13 trading days, which covers the 16 calendar days of the government shutdown. Note that all sector show absolute gains, but two of the three defensive sectors outperforming and three of the four offensive sectors underperformed. Relative weakness in the consumer discretionary, technology and industrials sectors is negative for the market. On a positive note, the finance sector outperformed with a 3.92% gain.
**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):
No government reports during the shutdown
Tue - Oct 15 - 08:30 - Empire Manufacturing
Wed - Oct 16 - 07:00 - MBA Mortgage Index
Wed - Oct 16 - 08:30 - Consumer Price Index (CPI)
Wed - Oct 16 - 10:00 - NAHB Housing Market Index
Wed - Oct 16 - 14:00 - Fed's Beige Book
Thu - Oct 17 - 08:30 - Initial Jobless Claims
Thu - Oct 17 - 08:30 - Housing Starts & Building Permits
Thu - Oct 17 - 09:15 - Industrial Production
Thu - Oct 17 - 10:00 - Philadelphia Fed
Thu - Oct 17 - 10:30 - Natural Gas Inventories
Thu - Oct 17 - 11:00 - Crude Oil Inventories
Thu - Oct 17 - 23:59 - Debt Ceiling Deadline
Fri - Oct 18 - 10:00 - Leading Economic Indicators
Thu - Oct 24 - 09:00 - Government Runs out of Money (estimate)
Thu – Jan 15 - 09:00 – Next Round of Sequester
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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