Stocks meandered on Monday with the Nasdaq 100 ETF (QQQ) edging higher (.41%) and the Russell 2000 ETF (IWM) closing fractionally lower (-.03%). Seven sectors were up and two were down (XLU and XLY). Despite weakness in the consumer discretionary sector, the Home Construction SPDR (ITB) and the Retail SPDR (XRT) edged higher. Home builders will be in focus today as Toll Brothers (TOL) reports before the open. The group went into a slump this summer and then consolidated over the last three months. Traders and investors will be looking at the forward guidance more than the prior slump. Even though the major index ETFs remain in short-term uptrends, note that the S&P 500 AD Line ($SPXADP) formed a bearish divergence over the last few weeks. The S&P 500 moved to new highs in late November and again yesterday, but the AD Line formed a lower high in late November and remains below this high now. The AD Line is clearly not keeping pace with the index. Moreover, notice that the AD Line broke support to trigger a bearish signal. Even though the AD Line as an important breadth indicator, it is still just an indicator and secondary to price action. At the very least, the S&P 500 needs to show some weakness or selling pressure with a break back below 1800.
**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):
Tue - Dec 10 - 10:00 - JOLTS - Job Openings
Wed - Dec 11 - 07:00 - MBA Mortgage Index
Wed - Dec 11 - 10:30 - Crude Oil Inventories
Thu - Dec 12 - 08:30 - Initial Jobless Claims
Thu - Dec 12 - 08:30 - Retail Sales
Thu - Dec 12 - 10:00 - Business Inventories
Thu - Dec 12 - 10:30 - Natural Gas Inventories
Fri - Dec 13 - 08:30 - Producer Price Index (PPI)
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.
