The Euro and US Treasuries were hit again on Monday, but both are getting short-term oversold and ripe for a bounce. Even an oversold bounce in these two could provide a boost for stocks. On the daily chart, SPY is trading near the lower trendline of the rising price channel, which marks the first support level to watch. A move below this trendline would be the first significant negative since the rally began in late August. In the indicator window, CCI broke to its lowest level since early September, but remains in positive territory. This is a tricky area because CCI still remains positive and momentum has a slight bullish bias when CCI is positive.
Even though signs of a short-term reversal are in the making, SPY has yet to break support and trigger an actual bearish signal. In addition, the short-term breadth indicators shown yesterday have yet to turn bearish. This means the bull has yet to fall. On the 60-minute chart, a falling flag is taking shape as the ETF hits support from broken resistance. Also notice that the decline retraced 62% of the prior advance. I chose the advance from 27-Oct to 9-Nov because it started with the flag breakout in late October. A move above yesterday's high would break short-term resistance and call for a continuation of the uptrend. But what about RSI? Technically, RSI is in bear mode after breaking below 40 and hitting 30. This means the 50-60 zone will now act as resistance. Admittedly, the evidence is a bit mixed at the moment, but the bulk of the evidence still favors the bulls. This evidence includes short-term breadth, the overall trend, support around 119.5-120 and the falling flag.
Key Economic Reports:
Nov 16 - 08:30 - PPI
Nov 16 - 09:15 - Industrial Production
Nov 16 - 10:00 - NAHB Market Housing Index
Nov 17 - 07:00 - MBA Mortgage Applications
Nov 17 - 08:30 - CPI
Nov 17 - 08:30 - Housing Starts/Building Permits
Nov 17 - 08:30 - Oil Inventories
Nov 18 - 08:30 - Jobless Claims
Nov 18 - 10:00 - Leading Indicators
Nov 18 - 10:00 - Philadelphia Fed Survey
Charts: Tuesday and Thursday in separate post.
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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.
Key Economic Reports:
Nov 16 - 08:30 - PPI
Nov 16 - 09:15 - Industrial Production
Nov 16 - 10:00 - NAHB Market Housing Index
Nov 17 - 07:00 - MBA Mortgage Applications
Nov 17 - 08:30 - CPI
Nov 17 - 08:30 - Housing Starts/Building Permits
Nov 17 - 08:30 - Oil Inventories
Nov 18 - 08:30 - Jobless Claims
Nov 18 - 10:00 - Leading Indicators
Nov 18 - 10:00 - Philadelphia Fed Survey
Charts: Tuesday and Thursday in separate post.
-----------------------------------------------------------------------------
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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