Stocks were hit with selling pressure on Tuesday, but there were some pockets of strength in the technology sector. The Dow Industrials SPDR (DIA) led the way lower with a 1.77% decline. The Russell 2000 ETF (IWM) held up the best with a .50% decline. Go figure. Materials stocks were hit especially hard as the Basic Materials SPDR (XLB) fell 3% on the day. Strength in technology came from the Networking iShares (IGN), the Semiconductor SPDR (XSD), the FirstTrust Internet ETF (FDN) and the Software iShares (IGV). IGN has an interesting pattern at work with a falling channel that retraced 50% of the prior advance and broken resistance turning into support. A channel breakout would be bullish.
On the 30-minute chart, the S&P 500 ETF (SPY) broke out of its range with a move below support. SPY is now down around 3.5% in just three trading days and clearly oversold. This means traders should prepare for an oversold bounce or consolidation. Broken support now turns into resistance in the 143 area. I am going to set key resistance at 143.70 for now.
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The 20+ Year T-Bond ETF (TLT) surged above resistance at 122 to turn the short-term swing bullish. The ETF is all over the place and today's Fed policy statement is not going to help matters. StochRSI broke above .60 to signal an upturn in momentum. I am marking support at 120.90 for now. Treasuries are dependent on stocks and the Euro for their upswing and further weakness in both would be bullish.
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The US Dollar Fund (UUP) extended its gains with a surge to resistance from the October highs. A breakout here would be medium-term bullish. The short-term swing is up within the six week trading range and I am marking swing support in the 21.775 area.
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No change. The US Oil Fund (USO) broke down in mid September and held this breakdown as broken support turned into resistance. With a sharp decline the last three days, USO broke short-term support from last week's low to signal a continuation lower. This breakdown further reinforces resistance in the 34.5-34.75 area.
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A surge in the Dollar and plunge in equities hit gold. The Gold SPDR (GLD) extended its short-term downtrend with a plunge below 166 on Tuesday. A falling channel is taking shape with first resistance at 168. I am marking key resistance at 170 for now.
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Key Reports and Events:
Wed - Oct 24 - 07:00 - MBA Mortgage Index
Wed - Oct 24 - 10:00 - New Home Sales
Wed - Oct 24 - 10:00 - FHFA Housing Price Index
Wed - Oct 24 - 10:30 - Oil Inventories
Wed - Oct 24 - 14:15 - FOMC Policy Statement
Thu - Oct 25 - 08:30 - Jobless Claims
Thu - Oct 25 - 08:30 - Durable Goods Orders
Thu - Oct 25 - 10:00 - Pending Home Sales
Thu - Oct 25 - 16:00 – AAPL Earnings
Fri - Oct 26 - 08:30 - GDP
Fri - Oct 26 - 09:55 - Michigan Sentiment
Charts of Interest: Tuesday and Thursday
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.
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The 20+ Year T-Bond ETF (TLT) surged above resistance at 122 to turn the short-term swing bullish. The ETF is all over the place and today's Fed policy statement is not going to help matters. StochRSI broke above .60 to signal an upturn in momentum. I am marking support at 120.90 for now. Treasuries are dependent on stocks and the Euro for their upswing and further weakness in both would be bullish.
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The US Dollar Fund (UUP) extended its gains with a surge to resistance from the October highs. A breakout here would be medium-term bullish. The short-term swing is up within the six week trading range and I am marking swing support in the 21.775 area.
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No change. The US Oil Fund (USO) broke down in mid September and held this breakdown as broken support turned into resistance. With a sharp decline the last three days, USO broke short-term support from last week's low to signal a continuation lower. This breakdown further reinforces resistance in the 34.5-34.75 area.
**************************************************************************
A surge in the Dollar and plunge in equities hit gold. The Gold SPDR (GLD) extended its short-term downtrend with a plunge below 166 on Tuesday. A falling channel is taking shape with first resistance at 168. I am marking key resistance at 170 for now.
**************************************************************************
Key Reports and Events:
Wed - Oct 24 - 07:00 - MBA Mortgage Index
Wed - Oct 24 - 10:00 - New Home Sales
Wed - Oct 24 - 10:00 - FHFA Housing Price Index
Wed - Oct 24 - 10:30 - Oil Inventories
Wed - Oct 24 - 14:15 - FOMC Policy Statement
Thu - Oct 25 - 08:30 - Jobless Claims
Thu - Oct 25 - 08:30 - Durable Goods Orders
Thu - Oct 25 - 10:00 - Pending Home Sales
Thu - Oct 25 - 16:00 – AAPL Earnings
Fri - Oct 26 - 08:30 - GDP
Fri - Oct 26 - 09:55 - Michigan Sentiment
Charts of Interest: Tuesday and Thursday
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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