Stocks were all over the place on Thursday. The major index ETFs opened higher, quickly pulled back and then moved back into positive territory in the afternoon. The end result was uneventful as the Russell 2000 ETF (IWM) and Nasdaq 100 ETF (QQQ) advanced around 1/2 percent. A gain, however, is a gain. The sectors were higher with the Materials SPDR (XLB) leading the way (+1.81%). Materials-related groups were strong because copper surged over 2.45% and gold was up around 2%. The Copper Miners ETF (COPX) surged 5%, the Gold Miners ETF (GDX) advanced over 8% and the Metals and Mining ETF (XME) was up over 4%. These are certainly big moves, but these ETFs remain in larger downtrends. China took credit for strength in materials-related stocks because July exports surged 5.1% and imports were up 10.9%, both of which were above consensus. The Shanghai Composite ($SSEC), however, was not that impressed. The chart below shows this key Chinese index edging lower on Thursday. The index edged back above 2050 on Friday. Personally, I would have expected a bigger pop out of China, especially considering the pop in materials stocks. Overall, the Shanghai Composite is in a long-term downtrend. After a breaking down in June, the index consolidated with a triangle. A break below triangle support would signal a continuation lower.
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Key Reports and Events (all times Eastern):
Fri - Aug 09 - 10:30 - TGIF
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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