Art's Charts

SPY Hits Middle of Range as TLT Extends Uptrend

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It was a choppy week, but the major index ETFs managed to finish with small gains. The S&P MidCap SPDR (MDY) led with a 1.85% advance and QQQ lagged with a .77% gain. The sectors were mostly higher with industrials, materials and healthcare leading. Healthcare has been a strong sector all along. Industrials and materials are just getting oversold bounces. Utilities were the star performers as the Utilities SPDR (XLU) gained almost 4%. XLU seems to like the rise in the 20+ YR T-Bond ETF (TLT) and the decline in the 10-YR Treasury Yield ($TNX). Bonds will remain in the spotlight because it is a big week on the economic front. ISM Manufacturing Index and Auto-Truck Sales kick it off today. We then get ISM Services Index on Wednesday, Initial Jobless Claims on Thursday and the Employment report 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**

Short-term Overview (Monday, 3-August-2015): 

  • Short-term breadth is bearish overall.  
  • The five sector ETFs are split: two up, two down and one flat. 
  • SPY is holding its breakout and in a short-term uptrend.           
  • QQQ shows relative weakness, but remains in a four day upswing.   
  • IWM got a weak oversold bounce and shows relative weakness.  
  • TLT bounced off support to extend its short-term uptrend. 
  • UUP has become choppy, but remains in an uptrend overall.       
  • USO is in a short-term downtrend. 
  • GLD is in a short-term downtrend. 

While I hate to focus on a five day trend, I am focused on last week's move and erring on the side of caution with the current upswing. RSP formed lower highs and lower lows in June and July. The current bounce was from a lower low and the ETF is in the middle of its four month range. RSP is in a four-month trading range at best and a two month downtrend at worst. The Raff Regression Channel and Wednesday's low define the current upswing with support marked at 79.8. A close below this level would reverse the upswing. 

Breadth is bearish overall because both 10-day SMAs remain in negative territory. In fact, both 10-day SMAs are below -5%. In an interesting twist, AD Volume Percent finished slightly positive the last two days and AD Percent finished slightly negative (both days). This shows relative strength in large-caps and relative weakness in small-caps. 

No change. The equal-weight sector ETFs are split: two in uptrends, two in downtrends and one flat. The Equal-Weight Consumer Discretionary ETF (RCD) got a strong bounce off support the last three days. The Equal-weight Finance ETF (RYF) and Equal-weight Healthcare ETF (RYH) remain in uptrends and are leaders overall. The Equal-weight Technology ETF (RYT) held its early June lows and bounced towards resistance. The Equal-weight Industrials ETF (RGI) got a big oversold bounce, but remains below resistance. 

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Key Reports and Events (all times Eastern):
                                                        
Mon - Aug 03 -    08:30 - Personal Income & Spending
Mon - Aug 03 -    08:30 - PCE Prices 
Mon - Aug 03 -    10:00 - ISM Manufacturing Index 
Mon - Aug 03 -    10:00 - Construction 
Mon - Aug 03 -    17:00 - Auto/Truck Sales
Tue - Aug 04 -    10:00 - Factory Orders        
Wed - Aug 05 -    07:00 - MBA Mortgage Index    
Wed - Aug 05 -    08:15 - ADP Employment Report    
Wed - Aug 05 -    10:00 - ISM Services
Wed - Aug 05 -    10:30 - Crude Oil Inventories
Thu - Aug 06 -    07:30 - Challenger Job Report    
Thu - Aug 06 -    08:30 - Initial Jobless Claims    
Thu - Aug 06 -    10:30 - Natural Gas Inventories
Fri - Aug 07 -    08:30 - Employment Report
Wed - Aug 12 -    07:00 - MBA Mortgage Index    
Wed - Aug 12 -    10:00 - JOLTS Jobs Report    
Wed - Aug 12 -    10:30 - Crude Oil Inventories        
Wed - Aug 12 -    14:00 - Treasury Budget        
Thu - Aug 13 -    08:30 - Initial Jobless Claims    
Thu - Aug 13 -    08:30 - Retail Sales        
Thu - Aug 13 -    10:00 - Business Inventories    
Thu - Aug 13 -    10:30 - Natural Gas Inventories
Fri - Aug 14 -    08:30 - Producer Price Index (PPI)     
Fri - Aug 14 -    09:15 - Industrial Production
Fri - Aug 14 -    10:00 - Michigan Sentiment    
Mon - Aug 17 -    08:30 - Empire Manufacturing    
Mon - Aug 17 -    10:00 - NAHB Housing Market Index
Tue - Aug 18 -    08:30 - Housing Starts/Building Permits
Wed - Aug 19 -    07:00 - MBA Mortgage Index
Wed - Aug 19 -    08:30 - Consumer Price Index (CPI) 
Wed - Aug 19 -    10:30 - Crude Oil Inventories        
Wed - Aug 19 -    14:00 - FOMC Minutes                    
Thu - Aug 20 -    08:30 - Initial Jobless Claims        
Thu - Aug 20 -    10:00 - Existing Home Sales        
Thu - Aug 20 -    10:00 - Philadelphia Fed        
Thu - Aug 20 -    10:00 - Leading Indicators    
Thu - Aug 20 -    10:30 - Natural Gas Inventories
Tue - Aug 25 -    09:00 - Case-Shiller Housing Index    
Tue - Aug 25 -    09:00 - FHFA Housing Price Index    
Tue - Aug 25 -    10:00 - New Home Sales    
Tue - Aug 25 -    10:00 - Consumer Confidence    
Wed - Aug 26 -    07:00 - MBA Mortgage Index
Wed - Aug 26 -    08:30 - Durable Goods Orders    
Wed - Aug 26 -    10:30 - Crude Oil Inventories        
Thu - Aug 27 -    08:30 - Initial Jobless Claims        
Thu - Aug 27 -    08:30 - GDP 
Thu - Aug 27 -    10:00 - Pending Home Sales    
Thu - Aug 27 -    10:30 - Natural Gas Inventories    
Fri - Aug 28 -    08:30 - Personal Income & Spending    
Fri - Aug 28 -    08:30 - PCE Prices
Fri - Aug 28 -    10:00 - Michigan Sentiment
Mon - Aug 31 -    09:45 - Chicago PMI
Tue - Sep 01 -    10:00 - Construction Spending
Tue - Sep 01 -    10:00 - ISM Manufacturing Index 
Tue - Sep 01 -    17:00 - Auto/Truck Sales    
Wed - Sep 02 -    07:00 - MBA Mortgage Purchase Index        
Wed - Sep 02 -    08:15 - ADP Employment Report    
Wed - Sep 02 -    10:00 - Factory Orders    
Wed - Sep 02 -    10:30 - Crude Oil Inventories        
Wed - Sep 02 -    14:00 - Fed's Beige Book    
Thu - Sep 03 -    07:30 - Challenger Job Report        
Thu - Sep 03 -    08:30 - Initial Jobless Claims    
Thu - Sep 03 -    10:00 - ISM Services    
Thu - Sep 03 -    10:30 - Natural Gas Inventories    
Fri - Sep 04 -    08:30 - Employment Report     

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.

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at TrendInvestorPro.com. Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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