Stocks edged lower during the day and then took a hit in the final hour. The S&P 500 ETF (SPY) fell .74% and the Nasdaq 100 ETF (QQQ) declined .43% on the day. The losses were modest and the market was ripe for some profit taking. Keep in mind that stocks are up sharply since mid November. SPY is up over 5%. The Industrials SPDR (XLI) and Finance SPDR (XLF) are up over 7%, while the Technology SPDR (XLK) and Consumer Discretionary SPDR (XLY) are up over 6%. These were some very strong moves. Stocks could be moving higher for a number of reasons. The Fed is priming the pump for more QE in 2013 and we could see a deal to avert the fiscal cliff. Strength in stocks is further reinforced by a rising Euro and falling Treasuries (falling Dollar and rising yields). I would expect the stock market rally to continue as long as the 10-year Treasury Yield ($TNX) and Euro Currency Trust (FXE) rise.
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Key Reports and Events:
Thu - Dec 20 - 08:30 - Jobless Claims
Thu - Dec 20 - 08:30 - GDP
Thu - Dec 20 - 10:00 - Existing Home Sales
Thu - Dec 20 - 10:00 - Philadelphia Fed Report
Thu - Dec 20 - 10:00 - Leading Economic Indicators
Fri - Dec 21 - 08:30 - Personal Income & Spending
Fri - Dec 21 - 08:30 - Durable Good Orders
Fri - Dec 21 - 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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