Stocks extended their correction with relatively mild selling pressure. The Russell 2000 ETF (IWM) led the decline with a .81% loss, but the S&P 500 SPDR (SPY) only lost .29% on the day. The sectors were mixed with the Consumer Discretionary SPDR (XLY) and Industrials SPDR (XLI) edging lower, and the Finance SPDR (XLF) and Utilities SPDR (XLU) edging higher. XLF remains the strongest sector this year as money moves into big banks. The Home Construction iShares (ITB) took a hit with a 1.59% loss and retailers were under pressure as the Retail SPDR (XRT) declined around 1%. While relative weakness in these two ETFs is negative, the overall trends remain up and the declines still look corrective in nature. Materials-related stocks were under pressure as the Shanghai Composite ($SSEC) fell 1.8% on Monday and hit a four month low. The Coal ETF (KOL), Copper Miners ETF (COPX) and Steel ETF (SLX) were all down over 1%. These three groups were laggards in 2013 and continued to lag in 2014. As the PerfChart below shows, gold and silver miner ETFs are bucking the selling pressure with strong gains to start the year.
**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 - Jan 06 - 10:00 - Factory Orders
Mon - Jan 06 - 10:00 - ISM Services Index
Tue - Jan 07 - 08:30 - Trade Balance
Wed - Jan 08 - 07:00 - MBA Mortgage Index
Wed - Jan 08 - 08:15 - ADP Employment Report
Wed - Jan 08 - 10:30 - Crude Oil Inventories
Wed - Jan 08 - 14:00 - FOMC Minutes
Thu - Jan 09 - 07:30 - Challenger Job Cut Report
Thu - Jan 09 - 07:45 - European Central Bank Policy Statement
Thu - Jan 09 - 08:30 - Initial Jobless Claims
Thu - Jan 09 - 10:30 - Natural Gas Inventories
Fri - Jan 10 - 08:30 - Employment Report
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.
