Turnaround Tuesday took hold as stocks bounced to end the 2014 slump, which lasted a whole three days. The gains, however, were relatively muted as participants held back ahead of Friday's employment report. The employment numbers will start coming in with the ADP Report today, the Challenger report on Thursday and jobless claims also on Thursday. We will have a pretty good idea of Fridays' non-farm payrolls after these three reports. Regardless of the results, I am going into the report with a bullish bias because the overall trends are clearly up and we have yet to see any major selling pressure. Even though the major index ETFs gained on Monday, there were some pockets of relative weakness that should be watched. The Home Construction iShares (ITB), Retail SPDR (XRT) and Consumer Discretionary SPDR (XLY) underperformed the market on Tuesday. XRT remains in an uptrend, but a lower high could be forming because the ETF failed to take out its late November high. The price relative (XRT:SPY ratio) shows the ETF performing in line with the market from July to December. This relative performance indicator broke to a seven month low this year as XRT started underperforming SPY.
**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 - 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.
