Programming note: I am on the road Friday and commentary for Art's charts will not be published on Friday. The next commentary will be on Monday. Taper talk allegedly weighed on the market Wednesday, but the declines in the major index ETFs were minimal. The S&P 500 ETF (SPY) lost just .31% and the Russell 2000 ETF (IWM) was off a mere .04%. Selling pressure did hit high-yielding stocks and the so-called bond proxies as XLU, IYR and IYZ fell around 1%. The Home Construction SPDR (ITB) held up fairly well with a .44% loss, which is pretty good considering that the 10-YR Treasury Yield ($TNX) surged to 2.792% and looks headed to 3%. Will higher mortgage rates be offset by economic strength? Personally, I think rising rates signal strength in the economy and the 10-YR Treasury Yield is simply returning to a more normalized level. ITB is at a moment-of-truth as it stalled near the breakout at 22.50. A break above 23 would be short-term bullish and keep this upswing alive.
Note that the green annotations and lines mark bullish features, while the red annotations and lines highlight bearish features. The blue annotations and lines highlight patterns at work. Note that I am using the Aroon indicators instead of RSI on the IWM and QQQ charts. I focus mainly on the price chart because indicator signals are dependent on the time parameter. In any case, a 40-period Aroon Oscillator turns bullish with a move above 50 and stays bullish until there is a move below -50, which is bearish.
**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):
Thu - Nov 21 - 08:30 - Initial Jobless Claims
Thu - Nov 21 - 08:30 - Producer Price Index (PPI)
Thu - Nov 21 - 10:00 - Philadelphia Fed
Thu - Nov 21 - 10:30 - Natural Gas Inventories
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.
