Programming note: I will be on vacation from June 28 to July 12 (Friday to Friday). This is the all important two-week family vacation. My contributions to Art's Charts and the Market Message will resume on Monday, July 15. This will be the pause that refreshes! Thanks in advance for your understanding.
Stocks got a two day bounce to work off short-term oversold conditions. As with Tuesday's gains, Wednesday's gains were fairly modest with the S&P 500 advancing around 1%. All sectors were higher with the defensive sectors putting in a strong performance. XLU, XLP and XLV were all up more than 1%. Materials-related industry groups were hit again with stocks tied to gold, silver, steel, coal and copper all falling. Overall, the two day advance in stocks occurred on pretty good breadth, but it was not the kind of breadth that typically signals the end of a correction and the start up a renewed uptrend. The charts below show the AD Line and AD Volume Line for the S&P 1500, as well as AD Percent and AD Volume Percent. The AD Line and AD Volume Line are in downtrends. AD Percent and AD Volume Percent did not exceed even 75% this week. I would like to see both surge above 85% to show strong buying pressure that has legs.
Stocks got a two day bounce to work off short-term oversold conditions. As with Tuesday's gains, Wednesday's gains were fairly modest with the S&P 500 advancing around 1%. All sectors were higher with the defensive sectors putting in a strong performance. XLU, XLP and XLV were all up more than 1%. Materials-related industry groups were hit again with stocks tied to gold, silver, steel, coal and copper all falling. Overall, the two day advance in stocks occurred on pretty good breadth, but it was not the kind of breadth that typically signals the end of a correction and the start up a renewed uptrend. The charts below show the AD Line and AD Volume Line for the S&P 1500, as well as AD Percent and AD Volume Percent. The AD Line and AD Volume Line are in downtrends. AD Percent and AD Volume Percent did not exceed even 75% this week. I would like to see both surge above 85% to show strong buying pressure that has legs.
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Key Reports and Events (all times Eastern):
Thu - Jun 27 - 08:30 - Initial Claims
Thu - Jun 27 - 08:30 - Personal&Spending
Thu - Jun 27 - 10:00 - Pending Home Sales
Thu - Jun 27 - 10:30 - Natural Gas Inventories
Fri - Jun 28 - 09:45 - Chicago PMI
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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