Stocks bucked the intermarket headwinds and mixed economic data to finish positive again last week. The S&P 500 ETF (SPY) and the Russell 2000 ETF (IWM) are now up six consecutive weeks. The Nasdaq 100 ETF (QQQ) also got into the bull mood with a close above its mid January highs. Even though QQQ has underperformed SPY this year, it has never been down on an absolute basis and continues to attract more buyers than sellers (just a few more though). Strength in stocks was a bit surprising because Treasuries also edged higher and the Euro fell sharply. Oil was also down. Such movements in these three intermarket players are normally negative for stocks. Something may need to give this week. Either stocks correct or Treasuries turn lower to provide fodder for equity bulls. It is also an important week on the news front. We have the State of the Union on Tuesday evening and Retail Sales on Wednesday. This means Wednesday will be the big day this week. While I am more interested in the retail sales report, politics could cast a dark shadow over the market in the next 2-3 weeks because the sequester deadline is fast approaching (March 1st). Will they pass another kick-the-can-down-the-road measure?
**************************************************************************
**************************************************************************
**************************************************************************
**************************************************************************
**************************************************************************
Key Reports and Events:
Tue - Feb 12 - 10:00 – Tim Cook Speaks at Goldman Sachs Tech Conference
Tue - Feb 12 - 20:30 – State of the Union
Wed - Feb 13 - 07:00 - MBA Mortgage Index
Wed - Feb 13 - 08:30 - Retail Sales
Wed - Feb 13 - 10:00 - Business Inventories
Wed - Feb 13 - 10:30 - Oil Inventories
Thu - Feb 14 - 08:30 - Jobless Claims
Thu - Feb 14 - 10:30 - Natural Gas Inventories
Fri - Feb 15 - 08:30 – Empire State Manufacturing
Fri - Feb 15 - 09:15 - Industrial Production/Utilization
Fri - Feb 15 - 09:55 - Michigan Sentiment
Sun - Feb 24 - 10:00 – Italian Parliamentary Elections
Fri – Mar 01 - 23:59 – Sequester Takes Effect (unless...)
Wed – Mar 27 - 23:59 – Government Shut Down Deadline
Wed – May 15 - 23:59 – New Debt Ceiling Deadline
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.
