Stocks surged on the open on Monday, fell back in the afternoon and then popped near the close. Intraday price action was not that impressive because there was really no follow through to the morning surge. Even though the major index ETFs finished with modest gains on the day, they closed below their morning highs. All sectors were up with the Energy SPDR (XLE) leading the way. The Healthcare SPDR (XLV) and the Utilities SPDR (XLU) underperformed with the smallest gains. In addition to channel resistance on the 60-minute charts, I will be watching the short-term downtrends in the AD Line and AD Volume Line for confirming breakouts. The first chart shows the S&P 500 and its AD Line moving above the mid May trend lines. This is positive, but the early June high marks the key resistance level. A follow through breakout would fully reverse these short-term downtrends. The second chart shows the AD Volume Line stalling in June. A break above the early June highs is needed to reverse the five week downtrend. S&P 500 resistance is set at 1650. All three need breakouts to produce a robust short-term trend reversal. Note: there is a glitch with the intraday ratio charts, which is why the indicator windows in IWM and QQQ are blank.
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Key Reports and Events (all times Eastern):
Tue - Jun 18 - 08:30 – Consumer Price Index (CPI)
Tue - Jun 18 - 08:30 - Housing Starts/Building Permits
Wed - Jun 19 - 07:00 - MBA Mortgage Index
Wed - Jun 19 - 10:30 - Oil Inventories
Wed - Jun 19 - 14:00 - FOMC Policy Statement
Thu - Jun 20 - 08:30 - Jobless Claims
Thu - Jun 20 - 10:00 - Existing Home Sales
Thu - Jun 20 - 10:00 - Philadelphia Fed
Thu - Jun 20 - 10:00 - Leading Economic Indicators
Thu - Jun 20 - 10:30 - Natural Gas Inventories
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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