Good morning Wall Street! After a little sand and sun, I am back in the saddle and ready to tackle the markets. Stocks and oil are running with the bulls as global economic prospects improve. Treasuries extended their downtrends as non-farm payrolls continued to improve. Money moving out is Treasuries is finding its way into the stock market. Gold is getting an oversold bounce, while the currency markets remain volatile as the Fed muddies the water on tapering. Stocks have been on tear since the employment report on July 5th, and for good reason. June non-farm payrolls reached 195,000 and the prior two months were revised higher. More importantly, the three month moving average is near 200,000, which ain't shabby at all. With big moves since June 24th, the Russell 2000 and Nasdaq cleared their May highs and led the market. The S&P 500 and the Dow Industrials are challenging their prior highs. Relative strength in small-caps and techs is positive for the market overall. Sector-wise, the Consumer Discretionary SPDR (XLY) and the Finance SPDR (XLF) are leading the market the last three weeks. XLY is up over 9% and XLF is up over 8%. The finance sector is benefitting from a steepening yield curve, while the consumer discretionary sector is benefitting from steady improvements in the employment picture (more spending money). Today's retail sales report will provide more insight for the consumer discretionary sector. Despite strength overall, the major index ETFs are short-term overbought after big runs the last three weeks and ripe for a rest as earnings season kicks into high gear.
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Key Reports and Events (all times Eastern):
Mon - Jul 15 - 08:30 - Retail Sales
Mon - Jul 15 - 08:30 - Empire State Manufacturing
Mon - Jul 15 - 10:00 - Business Inventories
Tue - Jul 16 - 08:30 - Consumer Price Index (CPI)
Tue - Jul 16 - 09:15 - Industrial Production & Capacity Utilization
Tue - Jul 16 - 10:00 - NAHB Housing Market Index
Wed - Jul 17 - 07:00 - MBA Mortgage Index
Wed - Jul 17 - 08:30 - Housing Starts & Building Permits
Wed - Jul 17 - 10:30 - Oil Inventories
Wed - Jul 17 - 14:00 - Fed Beige Book
Thu - Jul 18 - 08:30 - Jobless Claims
Thu - Jul 18 - 10:00 - Philadelphia Fed
Thu - Jul 18 - 10:00 - Leading Economic Indicators
Thu - Jul 18 - 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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