Stocks retreated after the Fed announcement. Of course, the fiscal cliff deadlock got the blame. Never mind that the S&P 500 was up some 6% from its mid November lows and ripe for a pullback or consolidation. Thursday's decline was not enough to reverse the short-term uptrend in the major index ETFs. In addition, the intermarket picture remains positive for stocks. The Euro is strong and Treasuries are weak. This is what the risk-off trade is all about. As the PerfChart below shows, SPY, FXE and USO are up over the last 22 days, while TLT and UUP are down. The environment for stocks will remain positive as long as the Euro trends higher and Treasuries trend lower. Gold is on a planet of its own right now.
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Key Reports and Events:
Fri - Dec 14 - 08:30 – Consumer Price Index (CPI)
Fri - Dec 14 - 09:15 - Industrial Production/Capacity Utilization
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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