**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 got the old pop and drop on Monday. The major index ETFs opened higher on the heels of Asian and European strength. It was also the first trading day of the month. These gains held into a strong ISM report, but faded in the afternoon as stocks closed modestly higher. The inability to hold the early gains is negative, as is the inability to rally after a strong ISM report. ISM Manufacturing was very positive at 55.7 and the new orders component surged to 63.2. Anything above 50 supports an economic expansion. This news pushed Treasury yields higher and weighed on interest rate sensitive shares, such as the Utilities SPDR (XLU) and Real Estate iShares (IYR). The Fed is obviously waiting on Friday's jobs report, but these ISM numbers support tapering in the coming months. Perhaps the market is still concerned on tapering. Elsewhere, both Boehner and McCain support a strike on Syria and this means the resolution will probably pass the House and the Senate soon. Oil edged higher on the prospects and this will only increase uncertainty in the Middle East. On the price charts, last week's down gaps are holding for IWM, SPY and QQQ. In addition, the trend since early August remains down. Filling these gaps is the first significant step to reversing the short-term downtrend.
be construed as a recommendation to buy, sell or sell-short said securities**
Stocks got the old pop and drop on Monday. The major index ETFs opened higher on the heels of Asian and European strength. It was also the first trading day of the month. These gains held into a strong ISM report, but faded in the afternoon as stocks closed modestly higher. The inability to hold the early gains is negative, as is the inability to rally after a strong ISM report. ISM Manufacturing was very positive at 55.7 and the new orders component surged to 63.2. Anything above 50 supports an economic expansion. This news pushed Treasury yields higher and weighed on interest rate sensitive shares, such as the Utilities SPDR (XLU) and Real Estate iShares (IYR). The Fed is obviously waiting on Friday's jobs report, but these ISM numbers support tapering in the coming months. Perhaps the market is still concerned on tapering. Elsewhere, both Boehner and McCain support a strike on Syria and this means the resolution will probably pass the House and the Senate soon. Oil edged higher on the prospects and this will only increase uncertainty in the Middle East. On the price charts, last week's down gaps are holding for IWM, SPY and QQQ. In addition, the trend since early August remains down. Filling these gaps is the first significant step to reversing the short-term downtrend.
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Key Reports and Events (all times Eastern):
Wed - Sep 04 - 07:00 - MBA Mortgage Index
Wed - Sep 04 - 14:00 - Auto/Truck Sales
Wed - Sep 04 - 14:00 - Fed's Beige Book
Thu - Sep 05 - 07:30 - Challenger Job Cuts
Thu - Sep 05 - 08:15 - ADP Employment Change
Thu - Sep 05 - 08:30 - Initial Claims
Thu - Sep 05 - 10:00 - Factory Orders
Thu - Sep 05 - 10:00 - ISM Services
Thu - Sep 05 - 10:30 - Natural Gas Inventories
Thu - Sep 05 - 11:00 - Crude Inventories
Fri – Sep 06 – 08:30 – Employment Report
Sun – Sep 22 – 10:00 – German Elections
Tue – Oct 15 - 09:00 – Debt Ceiling Deadline
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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