On the daily chart, SPY gapped above 132 on March 30th and gapped below this level on April 12th. Technically, an island reversal formed because the gaps match around 132. Combined with last week's bearish engulfing and resistance from the February high, this little breakdown could argue for a deeper correction. Yesterday's gap holds the first key. SPY is down four days straight and getting short-term oversold. Also note that CCI is near the zero line, which can act as momentum support in an uptrend. A quick move back above 132.5 would leave the bears scratching their heads and the bulls rejuvenated. The economic data starts to roll in today with Retail Sales and the Beige Book grabbing the headlines.
On the 60-minute chart, the gap down and support break at 132 are clear. The ETF lost around 1 point and closed at 131.47. A bear trap would take shape if the ETF can recoup this loss with a move back above 132.5 in the next day or two. At this point, the onus is on the bulls to prove the short-term bears wrong. I view the gap down, support break and RSI move below 35 as short-term bearish. A quick undoing of these signals is needed to put the short-term bulls back on track.
Key Economic Reports/Events:
Wed - Apr 13 - 07:00 - MBA Mortgage Index
Wed - Apr 13 - 08:30 - Retail Sales
Wed - Apr 13 - 10:00 - Business Inventories
Wed - Apr 13 - 10:30 - Oil Inventories
Wed - Apr 13 - 14:00 - Fed Beige Book
Thu - Apr 14 - 08:30 - Jobless Claims
Thu - Apr 14 - 08:30 – Producer Price Index
Fri - Apr 15 - 08:30 – Consumer Price Index
Fri - Apr 15 - 08:30 - Empire Manufacturing Index
Fri - Apr 15 - 09:15 - Industrial Production
Fri - Apr 15 - 09:55 - Michigan Sentiment
Charts of Interest: 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/Events:
Wed - Apr 13 - 07:00 - MBA Mortgage Index
Wed - Apr 13 - 08:30 - Retail Sales
Wed - Apr 13 - 10:00 - Business Inventories
Wed - Apr 13 - 10:30 - Oil Inventories
Wed - Apr 13 - 14:00 - Fed Beige Book
Thu - Apr 14 - 08:30 - Jobless Claims
Thu - Apr 14 - 08:30 – Producer Price Index
Fri - Apr 15 - 08:30 – Consumer Price Index
Fri - Apr 15 - 08:30 - Empire Manufacturing Index
Fri - Apr 15 - 09:15 - Industrial Production
Fri - Apr 15 - 09:55 - Michigan Sentiment
Charts of Interest: 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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