SPY edged above Wednesday's high yesterday, but late selling pressure drove the ETF below Wednesday's low. This weak close affirms resistance from broken support. If I were to write a bearish script, it would be pretty much just what is playing out on the daily and 30-minute charts. After becoming oversold last week, SPY rebounded and met resistance near broken support. RSI also met resistance near 50. Monday's gap is still holding, but trading could be quite tricky in the coming days. Last week's plunged and support break are bearish, while this week's the gap and surge are bullish. There is plenty of fodder for both bulls and bears here.
Additional resistance in the 117-118 area can be seen on the 30-minute chart. There is last week's small consolidation and the 62% retracement mark. In addition, RSI met resistance in the 50-60 zone all week. Thursday's move below 50 is negative for momentum. Notice that this move below 50 coincided with the channel break in SPY. The ETF remains above the green support line at 115.50 now, but we could see a retracement of this week's surge. As such, I am showing the Fibonacci Retracements Tool with a possible support zone in the 114 area.
Retail stocks and the consumer discretionary will be in the spotlight today. Retail sales will be reported before the open. There is some evidence of weakening with disappointments from Kohl's yesterday. We also have Michigan sentiment. Negative reactions to both numbers could weigh on Wall Street today.
Key Economic reports:
Fri - May 14 - 08:30AM - Retail Sales
Fri - May 14 - 09:15AM - Industrial Production
Fri - May 14 - 09:55AM - Mich Sentiment
Charts of Interest: AAPL, AMZN, CAT, GME, X
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.
Retail stocks and the consumer discretionary will be in the spotlight today. Retail sales will be reported before the open. There is some evidence of weakening with disappointments from Kohl's yesterday. We also have Michigan sentiment. Negative reactions to both numbers could weigh on Wall Street today.
Key Economic reports:
Fri - May 14 - 08:30AM - Retail Sales
Fri - May 14 - 09:15AM - Industrial Production
Fri - May 14 - 09:55AM - Mich Sentiment
Charts of Interest: AAPL, AMZN, CAT, GME, X
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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