The on-off deal in Washington DC was off on the open and back on by the close. Accordingly, stocks opened weak and closed strong with the Russell 2000 ETF (IWM) and Nasdaq 100 ETF (QQQ) hitting new highs. This means small-caps and big techs are showing relative strength, which is positive overall. Also note that the Semiconductor SPDR (XSD) surged to a new high and semis are showing upside leadership. The short-term trends are up, but I am concern that we could get a fade when Wall Street moves its focus from Washington to earnings. In addition, we could get a buy-the-rumor sell-the-news scenario when Congress finally puts a deal together and passes it. Wall Street, after all, is expecting this and a deal is pretty much priced into the market after the three day surge. IWM is up over 4% in three days, while SPY and QQQ are up over 3%.
**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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