Trading was a bit strange last week, but stocks remain in short-term uptrends and still show no signs of sustained selling pressure. First, the trading week was short because of the Thanksgiving holiday and shortened day on Friday. Second, volume levels were low. Third, trading was rather mixed with the Russell 2000 ETF (IWM) gaining 1.5% and the S&P 500 ETF (SPY) gaining just .11%. The sectors were also mixed with the consumer discretionary and tech sectors putting in good gains, while the energy and utilities sectors fell over 1%. It is quite positive to see the small caps, the consumer discretionary sector and the tech sector showing upside leadership. The Home Construction SPDR (ITB) gained over 2% and is challenging resistance from the Sep-Oct highs and the Retail SPDR (XRT) hit another new high last week. Even though stocks still look short-term overbought and ripe for a corrective period, the trends are still up and the seasonals are positive in December. In addition, under-invested fund managers are likely to buy any dips and prevent a decent correction from taking place. It is a big week on the economic front with auto-truck sales on Tuesday, ISM and new home sales on Wednesday, jobless claims on Thursday and the employment report on Friday. The economic numbers continue to show modest growth and the employment indicators reflect modest improvement in the labor market, which supports a continued grind higher for the stock market.
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**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):
Mon - Dec 02 - 10:00 - ISM Manufacturing Index
Mon - Dec 02 - 10:00 - Construction Spending-Sep
Mon - Dec 02 - 10:00 - Construction Spending-Oct
Tue - Dec 03 - 14:00 - Auto/Truck Sales
Wed - Dec 04 - 07:00 - MBA Mortgage Index
Wed - Dec 04 - 08:15 - ADP Employment Report
Wed - Dec 04 - 10:00 - New Home Sales-Sep
Wed - Dec 04 - 10:00 - New Home Sales-Oct
Wed - Dec 04 - 10:00 - ISM Services Index
Wed - Dec 04 - 10:30 - Crude Oil Inventories
Wed - Dec 04 - 14:00 - Fed Beige Book
Thu - Dec 05 - 07:30 - Challenger Job Report
Thu - Dec 05 - 08:30 - Initial Jobless Claims
Thu - Dec 05 - 08:30 - GDP
Thu - Dec 05 - 10:00 - Factory Orders
Thu - Dec 05 - 10:30 - Natural Gas Inventories
Fri - Dec 06 - 08:30 - Employment Report
Fri - Dec 06 - 08:30 - Personal Income & Spending
Fri - Dec 06 - 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.
