Stocks worked their way higher last week with volatile trading. SPY started the week strong with a surge on Monday-Tuesday, but then got hit with selling pressure after the FOMC policy statement and conference call. Stocks rebounded on Thursday and continued higher on Friday morning, but selling pressure appeared in the afternoon and pushed SPY below Thursday's close. Overall, SPY ended the choppy week with a 1.33% gain, IWM gained .91% and QQQ gained just .60%. Strength in the finance sector and banking stocks helped SPY, while weakness in biotechs and internet stocks weighed on QQQ. Amazon (AMZN) and Gilead (GILD) fell 3.51% and 3.97%, respectively, last week. The chart below shows SPY with the 20-day EMAs for AD Percent and AD Volume Percent. There are sometimes clear support and resistance breaks in these indicators to foreshadow short-term reversals on the price chart. Notice the break down on 23-Jan, the breakouts on 6-Feb and the break down on 11-Mar. A clear upside breakout did not trigger before last week's SPY advance, but the indicators did cross into positive territory. A break into negative territory by both would provide the first sign of weakness in the S&P 500 (stock market).
**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 25 - 09:00 - Case-Shiller 20-city Index
Tue - Mar 25 - 09:00 - FHFA Housing Price Index
Tue - Mar 25 - 10:00 - Consumer Confidence
Tue - Mar 25 - 10:00 - New Home Sales
Wed - Mar 26 - 07:00 - MBA Mortgage Index
Wed - Mar 26 - 08:30 - Durable Orders
Wed - Mar 26 - 10:30 - Crude Inventories
Thu - Mar 27 - 08:30 - Initial Claims
Thu - Mar 27 - 08:30 - GDP
Thu - Mar 27 - 10:00 - Pending Home Sales
Thu - Mar 27 - 10:30 - Natural Gas Inventories
Fri - Mar 28 - 09:55 - Michigan Sentiment
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.
