Stocks sank on the open, but quickly firmed and rebounded somewhat in the afternoon. For the day, the major index ETFs finished fractionally lower, but the S&P SmallCap iShares (IJR) bucked a little with a fractional gain. The sectors were mostly lower with energy and industrials leading the way down. The materials and utilities sectors attracted some buying interest and closed slightly higher. Techs were once again in the spotlight as the Cyber Security ETF (HACK) and Networking iShares (IGN) surged over 1%. IGN finished at a new high and HACK closed at a 52-week closing high.
**This chart analysis is for educational purposes only, and should not
be construed as a recommendation to buy, sell or sell-short said securities**
Short-term Overview (Friday, 29-May-2015):
- Short-term breadth is split: AD Percent is bearish and AD Volume Percent is bullish.
- All five equal-weight sectors are still in uptrends.
- SPY and QQQ bounced off support to keep their short-term uptrends alive.
- IWM bounced, but remains within a contracting range.
- TLT firmed last week and surged above short-term resistance on Tuesday to reverse its short-term downtrend.
- UUP broke out last week and the short-term trend is up.
- USO has a series of lower lows and lower highs working since early May (downtrend)
- GLD failed to hold last week's breakout and broke support this week to start a short-term downtrend.
The Equal-Weight S&P 500 ETF (RSP) edged lower on Thursday, but remains in a choppy uptrend. From low to high, the ETF is up 5% over a 45-50 day period. This is clearly a grind higher and I will err with the bulls as long as 81.5 holds.
AD Percent and AD Volume Percent edged lower with mild selling pressure on Thursday. The 10-day SMA for AD Percent is in bear mode after dipping below -5% on Tuesday, but the 10-day SMA for AD Percent remains in bull mode. This means breadth is split and this fits into the narrative of a choppy uptrend.
All five equal-weight sector ETFs are in uptrends. The Equal-Weight Consumer Discretionary ETF (RCD) and the Equal-weight Industrials ETF (RGI) are the weakest of the five and underperforming this week. The Equal-weight Technology ETF (RYT) and Equal-weight Healthcare ETF (RYH) remain the strongest. The Equal-weight Finance ETF (RYF) is somewhere in the middle. The balance remains bullish until three of the five break down.
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Key Reports and Events (all times Eastern):
Thu - May 28 - 11:00 - Crude Oil Inventories
Fri - May 29 - 08:30 - GDP
Fri - May 29 - 09:45 - Chicago PMI
Fri - May 29 - 10:00 - Michigan Sentiment
This commentary is 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.
