Stocks opened weak and remained weak, but selling pressure was not that intense as the major index ETFs closed modestly lower. The Dow SPDR (DIA) and S&P Midcap SPDR (MDY) led the way by falling around .75 percent. All sectors were lower with the Consumer Discretionary SPDR (XLY) falling just over 1 percent. Weakness in retail and housing weighed on this most economically sensitive sector. The Home Construction iShares (ITB) finally broke neckline support from a head-and-shoulders pattern. This break is bearish and the ETF continues to show relative weakness as interest rates rise. Gold and silver miners were the stand out performers as the Gold Miners ETF (GDX) surged over 5 percent and the Silver Miners ETF (SIL) advanced almost 4 percent. For the broader market, it looks like sellers are getting the upper hand, albeit a slight upper hand. Also keep in mind that stocks can decline simply from a lack of buying pressure. This means we could see short-term support breaks in the major index ETFs, which in turn would argue for a correction within the bigger uptrends. Warnings from some big players could keep buyers on the sidelines and even prompt some selling pressure. Macy's, which is a good retail benchmark, guided lower and this means back-to-school sales could be soft. Cisco, which is a tech bellwether, declined sharply after hours as the company guided lower and announced layoffs. The Nikkei 225 ($NIKK) is feeling the heat again today with a 2 percent decline.
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Key Reports and Events (all times Eastern):
Thu - Aug 15 - 08:30 - Initial Jobless Claims
Thu - Aug 15 - 08:30 - Consumer Price Index (CPI)
Thu - Aug 15 - 08:30 - Empire State Manufacturing Index
Thu - Aug 15 - 09:15 - Industrial Production
Thu - Aug 15 - 10:00 - Philadelphia Fed
Thu - Aug 15 - 10:00 - NAHB Housing Market Index
Thu - Aug 15 - 10:30 - Natural Gas Inventories
Fri - Aug 16 - 08:30 - Housing Starts/Building Permits
Fri - Aug 16 - 09:55 - Michigan Sentiment
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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