Stocks got off to a rough start in 2014, but the big trends were unaffected by this relatively shallow pullback. In fact, a two day pullback after an eleven day advance is pretty normal. Techs were hit Thursday and Friday as the Nasdaq 100 ETF (QQQ) fell 1.5%. Small-caps held up better as the Russell 2000 ETF (IWM) bounced on Friday and fell just .58% over the last two days. Among the sectors, the Finance SPDR (XLF) got off to the best start with a .14% gain. In fact, XLF is the only sector showing a gain over the last two days (year-to-date). The Technology SPDR (XLK), Energy SPDR (XLE), Consumer Staples SPDR (XLP) and Utilities SPDR (XLU) are the weakest sectors year-to-date. Utilities are smarting from the prospects of less quantitative easing and rising rates. Financials are benefitting from an improving economy and steepening yield curve. It is a big week on the economic front with the ISM Services Index on deck for Monday and Fed minutes on Wednesday. We will also get the year's first look at employment with jobless claims on Thursday and non-farm payrolls on Friday.
**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.
