The S&P 500 did just the opposite of Tuesday. The index opened weak on Tuesday, rebounded and then traded flat. On Wednesday, the index opened strong, immediately fell back and then traded flat. This is par for the course because it has been swinging above/below 2100 the last five weeks. Elsewhere, the sector action was mixed with strength coming from technology and industrials. The XLI is poised for a triangle breakout. The utilities and consumer discretionary sectors were weak. Utilities were hit with rising Treasury yields as the 10-YR Treasury Yield ($TNX) moved higher.
**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 (Wednesday, 13-May-2015):
- Short-term breadth indicators are bearish.
- Three equal-weight sectors are in downtrends and two are flat.
- SPY remains volatile, but refuses to break down.
- QQQ fell into Friday's gap zone to affirm resistance and the short-term downtrend.
- IWM has turned volatile in May, but remains below its short-term support break (now resistance).
- TLT hit a new low for the move and remains in a short-term downtrend.
- UUP moved to new lows for the move and remains in a short-term downtrend.
- USO bounced off the pennant break zone and I raised key support for the current uptrend.
- GLD expanded on its mini breakout with a surge to resistance.
The Equal-Weight S&P 500 ETF (RSP) edged higher and is just below the late April trend line. Friday's gap is holding for the most part and a break above 82.5 would reverse the short-term downtrend.
AD Percent and AD Volume Percent were slightly positive, very slightly. The 10-day SMAs remain in bear mode. A big down day (30-Apr) will drop off the 10-day SMA after today's trading. This means the addition of a big up day today could push the 10-day SMAs above +5%.
The five equal-weight sector ETFs remain tough calls. The Equal-Weight Consumer Discretionary ETF (RCD) fell back from the early May high and remains in a downtrend. The Equal-weight Finance ETF (RYF) fell back from its resistance zone and remains flat since March. The Equal-weight Technology ETF (RYT) has been trending lower since late April with lower highs, but is close to a breakout. The Equal-weight Industrials ETF (RGI) is showing some strength with a surge over the last five days. One more surge would trigger a range breakout. The Equal-weight Healthcare ETF (RYH) remains below its resistance zone.
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Key Reports and Events (all times Eastern):
Thu - May 14 - 08:30 - Initial Jobless Claims
Thu - May 14 - 08:30 - Producer Price Index (PPI)
Thu - May 14 - 10:30 - Natural Gas Inventories
Fri - May 15 - 08:30 - Empire State Manufacturing
Fri - May 15 - 09:15 - Industrial Production
Fri - May 15 - 10:00 - Michigan Sentiment
Mon - May 18 - 10:00 - NAHB Housing Market Index
Tue - May 19 - 08:30 - Housing Starts/Building Permits
Wed - May 20 - 07:00 - MBA Mortgage Index
Wed - May 20 - 10:30 - Crude Oil Inventories
Wed - May 20 - 14:00 - FOMC Minutes
Thu - May 21 - 08:30 - Initial Jobless Claims
Thu - May 21 - 10:00 - Existing Home Sales
Thu - May 21 - 10:00 - Philadelphia Fed
Thu - May 21 - 10:00 - Leading Indicators
Thu - May 21 - 10:30 - Natural Gas Inventories
Fri - May 22 - 08:30 - Consumer Price Index (CPI)
Tue - May 26 - 08:30 - Durable Goods Orders
Tue - May 26 - 09:00 - Case-Shiller 20-city Index
Tue - May 26 - 09:00 - FHFA Housing Price Index
Tue - May 26 - 10:00 - New Home Sales
Tue - May 26 - 10:00 - Consumer Confidence
Wed - May 27 - 07:00 - MBA Mortgage Index
Thu - May 28 - 08:30 - Initial Jobless Claims
Thu - May 28 - 10:00 - Pending Home Sales
Thu - May 28 - 10:30 - Natural Gas Inventories
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.
