Stocks edged lower on Tuesday with the major index ETFs ending with small losses. The S&P Midcap SPDR (MDY) fell .63% and the S&P 500 ETF (SPY) lost .32%, but the Nasdaq 100 ETF (QQQ) bucked the selling with a fractional gain (+.11%). Eight of the nine sectors were lower with the Energy SPDR (XLE) leading the way. Perhaps falling oil prices are finally started to weigh on energy-related shares. The Consumer Staples SPDR (XLP) was the lone gainer as money moved into this defensive sector. The Home Construction iShares (ITB) and REIT iShares (IYR) were hit again as the 10-year Treasury Yield ($TNX) surged to 2.662%. The 20+ Year T-Bond ETF (TLT) advanced as the ISM Services Index beat expectations with a 55.4 reading in October. Anything above 50 supports economic expansion and this reading was well above 50. Furthermore, the ISM Manufacturing Index was also strong (56.2) for September. The arguments for a weak economy are unfounded when both manufacturing and services are strong. This is why bonds fell and yields surged. Will rising yields hurt housing stocks or will a strong economy counter the rise in rates?
**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 - Nov 06 - 07:00 - MBA Mortgage Index
Wed - Nov 06 - 10:00 - Leading Economic Indicators
Wed - Nov 06 - 10:30 - Crude Oil Inventories
Thu - Nov 07 - 07:30 - Challenger Job Report
Thu - Nov 07 - 08:30 - Initial Jobless Claims
Thu - Nov 07 - 10:30 - Natural Gas Inventories
Fri - Nov 08 - 08:30 - Employment Report
Fri - Nov 08 - 08:30 - Personal Income & Spending
Fri - Nov 08 - 09:55 - Michigan Sentiment
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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