It was a strange day on Wall Street. The Dow Industrials surged over 100 points, but the Russell 2000 fell .43%. The Consumer Staples SPDR (XLP) and Utilities SPDR (XLU) led the market higher, but the Technology SPDR (XLK) also showed relative strength with a 1.01% gain. Strength in staples and utilities suggests that the market is getting defensive. Also note that utilities are rising even as interest rates rise. Money is clearly rotating out of biotechs because the Biotech SPDR (XBI) got slammed for a 3.72% loss. Today is a big day for the Euro, which means it could also be a big day for the Dollar and gold. The ECB meets today and there is talk of a less hawkish stance, perhaps even a dovish stance. The ECB is the most hawkish of the central banks and this has kept the Euro strong, much to the chagrin of European exporters and the EU economy. An about face by the ECB would be quite the event and likely send the Euro sharply lower. This, of course, would send the Dollar sharply higher and likely weigh on gold. Admittedly, I do not know what the ECB and Mario Draghi are thinking. Many a pundit has argued for looser monetary policy at the ECB, but super Mario has proven resistant for a long time and may continue holding out.
**This chart analysis is for educational purposes only, and should not
be construed as a recommendation to buy, sell or sell-short said securities**
**This chart analysis is for educational purposes only, and should not
be construed as a recommendation to buy, sell or sell-short said securities**
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Key Reports and Events (all times Eastern):
Wed - Nov 06 - 07:00 - MBA Mortgage Index
Wed - Nov 06 - 10:00 - Leading Economic Indicators
Wed - Nov 06 - 10:30 - Crude Oil Inventories
Thu - Nov 07 - 07:30 - Challenger Job Report
Thu - Nov 07 - 08:30 - Initial Jobless Claims
Thu - Nov 07 - 10:30 - Natural Gas Inventories
Fri - Nov 08 - 08:30 - Employment Report
Fri - Nov 08 - 08:30 - Personal Income & Spending
Fri - Nov 08 - 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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