There is no change on the daily or 60-minute charts. SPY built on its breakout with a 1.28% gains. Perhaps more importantly, the finance sector led the way with a huge move. Megabanks, regional banks and brokers led the way. On the daily chart, SPY held support around 118 and surged above consolidation resistance with a gap. The medium-term trend was never in jeopardy with the November decline. Wednesday's gap and breakout reversed the short-term downtrend and both trends are now up again. The November lows mark key support on the daily chart. CCI moved above zero to turn short-term momentum bullish again.
On the 60-minute chart, SPY continued its string of gaps with the biggest gap in the last three weeks. The broken resistance zone around 120-120.5 turns into the first support zone to watch for signs of weakness (cold feet). A truly strong breakout should hold and a move back below 120 would increase the chances of a breakout failure. At this point, I will set key support at 117.5, which is based on the November lows. RSI broke above the 50-60 zone to turn momentum bullish. At this point, the 40-50 zone should act as support. A move below 40 would suggest underlying weakness.
Key Economic Reports:
Fri – Dec 03 - 08:30 - Employment Report
Fri - Dec 03 - 10:00 - Factory Orders
Fri - Dec 03 - 10:00 - ISM Services
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.
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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