SPY hit 117 eleven days ago and then stalled the last 10 days. Daily ranges were relatively wide from March 19th until March 26th (six days). The daily range narrowed this week with three indecisive candlesticks. This is hardly surprising considering the four day trading week, the Good Friday employment report and an upcoming three day weekend. With stocks overbought and stalling, not many traders are willing to take a big bet on Thursday when the employment report is on Friday and there is a 3-day weekend ahead. There is no change in the overall trend, which remains up. First support on the daily chart is marked at 115. Just a quick note: I will be taking vacation the next two weeks. The next Art's Chart posting will be on Monday, April 19th. Time for some fresh air to clear the mind and rejuvenate!
On the 60-minute chart, SPY broke flag/wedge resistance and then stalled. Monday's opening gap was the only excitement the whole week. The flag breakout is holding, but a larger triangle could now be taking shape. A break below triangle support would be the first sign of weakness. Key support remains at 116 and RSI is testing its support zone in the 40-50 area. Even though this looks like a classic make-or-break area, we may have to wait until Monday for some real action.
The economic docket is full this week and we have a short trading week with the Good Friday holiday. The employment report will be reported on Friday, but the stock market will have to wait until Monday for a reaction.
Economic reports due:
Thu - Apr 01 - 08:30 - Initial Claims
Thu - Apr 01 - 10:00 - ISM Index
Thu - Apr 01 - 14:00 - Auto Sales
Fri - Apr 02 - 08:30 - Nonfarm Payrolls
Fri - Apr 02 - Stock Markets Closed
Charts of interest: ACN, ASEI, BWA, KO, LAZ
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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