Things that make you go hmm.... Stocks declined and a few media reports blamed a better-than-expected GDP report. Also note that October same-store retail sales were up 4%, which ain't bad considering all that shutdown stuff. The reasoning suggested that strength in the economy would lead to Fed tapering. Sorry, but I do not buy it. First, the bulk of the economic evidence is positive and this is positive for stocks. Second, Fed tapering would actually be bullish for stocks because it would suggest that the economy is strong enough to stand on its own. Washington DC is the only thing holding the Fed back. Stocks probably sold off because they were ripe for a correction. All sectors were down with the Consumer Discretionary SPDR (XLY) leading the way (-2.07%). Techs were hit hard as the Semiconductor SPDR (XSD) and FirstTrust Internet ETF (FDN) fell over 2%. On the chart below, notice that XSD held the gap from late October and the price relative broke down in late October. Commodity related stocks were also hit hard as the Dollar surged.
**This chart analysis is for educational purposes only, and should not
be construed as a recommendation to buy, sell or sell-short said securities**
**************************************************************
**************************************************************
**************************************************************
**************************************************************
***************************************************************
Key Reports and Events (all times Eastern):
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.
