Stocks remained under pressure on Wednesday, but the losses were relatively muted. Techs were again under pressure with declines in the Semiconductor SPDR (XSD), Networking iShares (IGN) and FirstTrust Internet ETF (FDN). These three held up relatively well on Tuesday, but gave it all back on Wednesday. There has been a lot of this give and take over the last few weeks. Even though stocks are still oversold, the short-term trends are clearly down and the third quarter earnings trend remains negative. Amazon and Apple report after the close today. This means we could see some fireworks on Friday. Both stocks have been in downtrends since mid September and show relative weakness.
There is no change on the 30-minute SPY chart. The ETF is down around 3.5% the last five trading days and clearly oversold. This means traders should prepare for an oversold bounce or consolidation. Broken support now turns into resistance in the 143 area. I am going to set key resistance at 143.70 for now.
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The 20+ Year T-Bond ETF (TLT) is in a medium-term downtrend since late July and a short-term downtrend since the late September peak. The decline since late September has been very choppy with sharp reaction rallies and even sharper declines. TLT surged as stocks fell, but then fell back the last two days. At this point, I am tempted to go with the bigger downtrends. This means the failure in the 50-61.80% retracement zone and the rising channel break are bearish. First resistance is at 122.25
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The US Dollar Fund (UUP) is consolidating at resistance from the October highs, which marks a key make-or-break level. A breakout here would be quite bullish and signal a move towards the risk-off trade. Failure at resistance and a downturn would signal a move towards risk-on. I am going to add a little buffer and set upswing support at 21.825.
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No change. The US Oil Fund (USO) broke down in mid September and held this breakdown as broken support turned into resistance. With a sharp decline the last three days, USO broke short-term support from last week's low to signal a continuation lower. This breakdown further reinforces resistance in the 34.5-34.75 area.
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No change. The Gold SPDR (GLD) extended its short-term downtrend with a plunge below 166 on Tuesday. A falling channel is taking shape with first resistance at 168. I am marking key resistance at 170 for now.
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Key Reports and Events:
Wed - Oct 24 - 07:00 - MBA Mortgage Index
Wed - Oct 24 - 10:00 - New Home Sales
Wed - Oct 24 - 10:00 - FHFA Housing Price Index
Wed - Oct 24 - 10:30 - Oil Inventories
Wed - Oct 24 - 14:15 - FOMC Policy Statement
Thu - Oct 25 - 08:30 - Jobless Claims
Thu - Oct 25 - 08:30 - Durable Goods Orders
Thu - Oct 25 - 10:00 - Pending Home Sales
Thu - Oct 25 - 16:00 – AAPL Earnings
Fri - Oct 26 - 08:30 - GDP
Fri - Oct 26 - 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.
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The 20+ Year T-Bond ETF (TLT) is in a medium-term downtrend since late July and a short-term downtrend since the late September peak. The decline since late September has been very choppy with sharp reaction rallies and even sharper declines. TLT surged as stocks fell, but then fell back the last two days. At this point, I am tempted to go with the bigger downtrends. This means the failure in the 50-61.80% retracement zone and the rising channel break are bearish. First resistance is at 122.25
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The US Dollar Fund (UUP) is consolidating at resistance from the October highs, which marks a key make-or-break level. A breakout here would be quite bullish and signal a move towards the risk-off trade. Failure at resistance and a downturn would signal a move towards risk-on. I am going to add a little buffer and set upswing support at 21.825.
**************************************************************************
No change. The US Oil Fund (USO) broke down in mid September and held this breakdown as broken support turned into resistance. With a sharp decline the last three days, USO broke short-term support from last week's low to signal a continuation lower. This breakdown further reinforces resistance in the 34.5-34.75 area.
**************************************************************************
No change. The Gold SPDR (GLD) extended its short-term downtrend with a plunge below 166 on Tuesday. A falling channel is taking shape with first resistance at 168. I am marking key resistance at 170 for now.
**************************************************************************
Key Reports and Events:
Wed - Oct 24 - 07:00 - MBA Mortgage Index
Wed - Oct 24 - 10:00 - New Home Sales
Wed - Oct 24 - 10:00 - FHFA Housing Price Index
Wed - Oct 24 - 10:30 - Oil Inventories
Wed - Oct 24 - 14:15 - FOMC Policy Statement
Thu - Oct 25 - 08:30 - Jobless Claims
Thu - Oct 25 - 08:30 - Durable Goods Orders
Thu - Oct 25 - 10:00 - Pending Home Sales
Thu - Oct 25 - 16:00 – AAPL Earnings
Fri - Oct 26 - 08:30 - GDP
Fri - Oct 26 - 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.
About the author:
Arthur Hill, 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.
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