Stocks surged on Thursday with the S&P 500 hitting multi year highs. The Nasdaq and the Dow also surged and are poised to challenge their September highs. Stocks were buoyed by a surprisingly large jump in housing starts and a large decline in initial jobless claims. Even though the trends may be subtle, the economy is clearly trending up and jobless claims are trending down. Eight of the nine sectors were up on the day. Surprisingly, the Finance SPDR (XLF) was the lone loser with a fractional decline. In contrast to JPM and GS on Wednesday, Citigroup and Bank of America did not respond well to their earnings reports. The Home Construction iShares (ITB) and the Market Vectors Semiconductor ETF (SMH) were the big industry group leaders. SMH will likely come under pressure on Friday because Intel traded sharply lower after the close.
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Key Reports and Events:
Fri - Jan 18 - 09:55 - Michigan Sentiment
Wed - Jan 23 – 16:30 – Apple Earnings
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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