The major index ETFs extended their uptrends with new highs last week. These advances are getting extended with the Russell 2000 ETF (IWM) and S&P MidCap SPDR (MDY) up around 10% in the last five weeks. Nevertheless, the short-term trends are up and we have yet to see any material selling pressure. Some of the sectors are also getting extended with XLY, XLI, XLB and XLF up 9 to 11%. Six of my ten key industry-group ETFs are up over 11% (see PerfChart below). Overbought is a pretty good problem to have for the bulls because it takes strong buying pressure to create overbought conditions. In other words, overbought is only a short-term issue. Overbought is not bearish, it just suggests that the odds of a pullback or consolidation are above average. It is a light week for economic indicators with Thursday's retail sales report marking the highlight. This is especially interesting because the Retail SPDR (XRT) is up over 12% from its early February low and just a few percentage points from a new high.
**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):
Tue - Mar 11 - 10:00 - JOLTS - Job Openings
Wed - Mar 12 - 07:00 - MBA Mortgage Index
Wed - Mar 12 - 10:30 - Crude Oil Inventories
Thu - Mar 13 - 08:30 - Initial Jobless Claims
Thu - Mar 13 - 08:30 - Retail Sales
Thu - Mar 13 - 10:00 - Business Inventories
Thu - Mar 13 - 10:30 - Natural Gas Inventories
Fri - Mar 14 - 08:30 - Producer Price Index (PPI)
Fri - Mar 14 - 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.
