Stocks surged with the major index ETFs opening strong and finishing strong. We did not see a pop and drop, and this is positive. The gains were relatively even with IWM gaining 1.25%, QQQ advancing 1.37% and SPY surging 1.20%. All sectors were up with technology and finance leading the way. Within the consumer discretionary sector, the Home Construction iShares (ITB) surged 1.5%, but the Retail SPDR (XRT) gained less than 1% and lagged a bit. Note that retail sales will be reported today. Elsewhere, the Oil & Gas Equip & Services SPDR (XES) surged almost 3% and broke wedge resistance. This surge comes on the heels of a 5% surge in oil over the last two days.
**This chart analysis is for educational purposes only, and should not
be construed as a recommendation to buy, sell or sell-short said securities**
Short-term Overview (Wednesday, 10-June-2015):
- Short-term breadth is bearish, but there was an up thrust on Wednesday.
- Three of the five equal-weight sectors are in short-term downtrends.
- SPY surged off medium-term support with a gap, but has yet to break short-term resistance.
- QQQ formed a higher low and reversed its downswing with a gap-surge.
- IWM broke triangle resistance to extend its uptrend and shows relative strength.
- TLT remains in a strong downtrend.
- UUP broke support to negate the breakout and start a short-term downtrend.
- USO is challenging resistance of a bull flag.
- GLD surged over the last few days, but remains in a downtrend overall.
The Equal-Weight S&P 500 ETF (RSP) got a big oversold bounce with a gap and strong close. Technically, the swing remains down with resistance at 82.10. Follow thru and a breakout are needed to reverse this slide.
AD Percent surged to +80% and recorded its highest reading since early February. AD Volume Percent surged to +71% and recorded its highest reading since early May. A breadth surge is the first sign that a low may be in place. Overall, the 10-day SMAs remain in negative territory and bearish.
Three of the five equal-weight sector ETFs are in downtrends. The Equal-weight Finance ETF (RYF) broke falling wedge resistance to reverse its downtrend. RYF is also the only one of the five that is trading above its June high. The Equal-weight Healthcare ETF (RYH) ultimately held support in the 157.5 area and surged above first resistance. The Equal-Weight Consumer Discretionary ETF (RCD) is the next one to watch because a breakout at 92 would be quite positive for the broader market.
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Key Reports and Events (all times Eastern):
Thu - Jun 11 - 08:30 - Initial Jobless Claims
Thu - Jun 11 - 08:30 - Retail Sales
Thu - Jun 11 - 10:00 - Business Inventories
Thu - Jun 11 - 10:30 - Natural Gas Inventories
Fri - Jun 12 - 08:30 - Producer Price Index (PPI)
Fri - Jun 12 - 10:00 - Michigan Sentiment
Mon - Jun 15 - 08:30 - Empire State Manufacturing
Mon - Jun 15 - 09:15 - Industrial Production
Mon - Jun 15 - 10:00 - NAHB Housing Market Index
Tue - Jun 16 - 08:30 - Housing Starts & Building Permits
Wed - Jun 17 - 07:00 - MBA Mortgage Index
Wed - Jun 17 - 10:30 - Crude Oil Inventories
Wed - Jun 17 - 14:00 - FOMC Rate Decision
Thu - Jun 18 - 08:30 - Initial Jobless Claims
Thu - Jun 18 - 08:30 - Consumer Price Index (CPI)
Thu - Jun 18 - 10:00 - Philadelphia Fed
Thu - Jun 18 - 10:00 - Leading Economic Indicators
Thu - Jun 18 - 10:30 - Natural Gas Inventories
Mon - Jun 22 - 10:00 - Existing Home Sales
Tue - Jun 23 - 08:30 - Durable Goods Orders
Tue - Jun 23 - 09:00 - FHFA Housing Price Index
Tue - Jun 23 - 10:00 - New Home Sales
Wed - Jun 24 - 07:00 - MBA Mortgage Index
Wed - Jun 24 - 08:30 - GDP
Wed - Jun 24 - 10:30 - Crude Oil Inventories
Thu - Jun 25 - 08:30 - Initial Jobless Claims
Thu - Jun 25 - 08:30 - Personal Income & Spending
Thu - Jun 25 - 08:30 - PCE Prices
Thu - Jun 25 - 10:30 - Natural Gas Inventories
Fri - Jun 26 - 10:00 - Michigan Sentiment
This commentary is 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.
