Stocks got an oversold bounce with the major index ETFs gaining over 1% on the day. All nine sectors moved higher with the consumer discretionary, finance, technology, healthcare and utilities sectors gaining over 1%. The Home Construction iShares (ITB) lagged with a small loss and the Retail SPDR (XRT) only gained .83% on the day. The big moves came from the Internet ETF (FDN), Networking iShares (IGN), Semiconductor SPDR (XSD) and Software iShares (IGV). Facebook (FB) led the internet group with a new high and F5 Networks (FFIV) led networking stocks with a new high. I am still giving the bulls the benefit of the doubt for the short-term, but am concerned that this week's bounce could evolve into a short-term bearish consolidation. Notice that XLI could have a bearish pennant working this week and XLF could have a bearish wedge. For now, both are bouncing off support zones from the December consolidations. Watch this week's support lines for signs of failure.
**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):
Fri - Jan 31 - 08:30 - Personal Income & Spending
Fri - Jan 31 - 09:45 - Chicago PMI
Fri - Jan 31 - 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.
