**This chart analysis is for educational purposes only, and should not
be construed as a recommendation to buy, sell or sell-short said securities**
Stocks started the week under selling pressure, but finished strong with a rally on Thursday and Friday. The major index ETFs closed up for the week with the Nasdaq 100 ETF (QQQ) and Russell 2000 ETF (IWM) leading the way. Both gained around 1.5%. Eight of the nine sectors gained, but these gains were not that impressive. In fact, the Basic Materials SPDR (XLB) was the only sector to gain more than 1% (1.01% to be exact). On a positive note, the Consumer Discretionary SPDR (XLY) and the Technology SPDR (XLK) did lead the market last week. The Industrials SPDR (XLI) and the Finance SPDR (XLF), however, showed relative weakness with sub-par gains. This means there was a split decision among the four offensive sectors. The Home Construction iShares (ITB) ended the week on a sour note and closed down 1.31% as new home sales disappointed on Friday. Overall, the major index ETFs are in the midst of a short-term oversold bounce. Medium-term, I think the stock market is in corrective mode. This means we could see choppy trading in the coming weeks. Short-term uptrends will be brief, but short-term downtrends could also be cut short as the stock market simply churns. There is a lot of uncertainty as we head into September-October.
be construed as a recommendation to buy, sell or sell-short said securities**
Stocks started the week under selling pressure, but finished strong with a rally on Thursday and Friday. The major index ETFs closed up for the week with the Nasdaq 100 ETF (QQQ) and Russell 2000 ETF (IWM) leading the way. Both gained around 1.5%. Eight of the nine sectors gained, but these gains were not that impressive. In fact, the Basic Materials SPDR (XLB) was the only sector to gain more than 1% (1.01% to be exact). On a positive note, the Consumer Discretionary SPDR (XLY) and the Technology SPDR (XLK) did lead the market last week. The Industrials SPDR (XLI) and the Finance SPDR (XLF), however, showed relative weakness with sub-par gains. This means there was a split decision among the four offensive sectors. The Home Construction iShares (ITB) ended the week on a sour note and closed down 1.31% as new home sales disappointed on Friday. Overall, the major index ETFs are in the midst of a short-term oversold bounce. Medium-term, I think the stock market is in corrective mode. This means we could see choppy trading in the coming weeks. Short-term uptrends will be brief, but short-term downtrends could also be cut short as the stock market simply churns. There is a lot of uncertainty as we head into September-October.
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Key Reports and Events (all times Eastern):
Mon - Aug 26 - 08:30 - Durable Goods Orders
Tue - Aug 27 - 09:00 - Case-Shiller 20-city Index
Tue - Aug 27 - 10:00 - Consumer Confidence
Wed - Aug 28 - 07:00 - MBA Mortgage Index
Wed - Aug 28 - 10:00 - Pending Home Sales
Wed - Aug 28 - 10:30 - Crude Oil Inventories
Thu - Aug 29 - 08:30 - Initial Jobless Claims
Thu - Aug 29 - 08:30 - GDP
Thu - Aug 29 - 10:30 - Natural Gas Inventories
Fri - Aug 30 - 08:30 - Personal Income & Spending
Fri - Aug 30 - 09:45 - Chicago PMI
Fri - Aug 30 - 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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