The S&P 500 ETF (SPY) broke support with a gap down and then consolidated around 122-124. This zone marks support on the daily chart. Broken resistance from the late August and mid September peaks turns support on this chart. On the 60-minute chart, the rise over the last 1-2 days formed a potential bear flag. A move below the lower trendline and Wednesday afternoon low would signal a continuation lower. Will support in the 122-124 area ultimately hold? That is the big question. Continued strength above 126 would fill Tuesday's gap and negate this flag. Such a move would also reverse the short-term downtrend.
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No change. The 20+ year Bond ETF (TLT) broke resistance to fully reverse the short-term downtrend. Marking support is tricky at this stage. Broken resistance around 117 turns into potential support. There is also support in the 113 area from the mid October lows. The indicator window shows RSI moving to overbought levels for the first time since early October.
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No change. The US Dollar Fund (UUP) followed Treasuries higher again and broke resistance at 21.70. Even though the mid October consolidation may offer more resistance near current levels, this breakout surge has reversed the short-term downtrend. Marking new support is difficult after this surge so I will wait a day or two. RSI broke above the 50-60 resistance zone and also hit 70 for the first time since early October. The 40-50 zone now becomes support.
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No change. The US Oil Fund (USO) continues to hold up relatively well. However, I think the short-term trend is down with a lower high late last week and a lower low today. It is possible that a falling flag is taking shape with resistance just above 36. Look for a break above this level to revive the uptrend. I expect oil to take its cue from stocks and the Dollar.
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The Gold SPDR (GLD) broke resistance with a big surge last week and broken resistance turned into support. This support test held as the ETF bounced back above 169 the last two days. There is still a support zone around 162-164 and I am setting key support at 163. This is the bullish line-in-the-sand for bullion.
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Key Economic Reports:
Thu - Nov 03 - 08:30 - Jobless Claims
Thu - Nov 03 - 10:00 - Factory Orders
Thu - Nov 03 - 10:00 - ISM Services
Fri - Nov 04 - 08:30 - Employment Report
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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