Art's Charts

Short-Term Trend, Breadth and Intermarket Analysis

Arthur Hill

Arthur Hill

Chief Technical Strategist, TrendInvestorPro.com

The S&P 500 has been flat as a pancake the last three days, but the Nasdaq 100 and Russell 2000 continued higher. Note that the S&P 500 is up .02% this week, the Nasdaq 100 is up .63% and the Russell 2000 is up .39%. The gains are not earth shattering, but relative strength in large-cap techs and small-caps is positive. Techs got a lift from Facebook on Thursday as the stock surged 3.53%. Elsewhere, the Consumer discretionary sector got a lift from Ford (F) as the stock advanced over 1%. 


**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, 20-February-2015): 

  • Short-term breadth remains bullish overall.   
  • All five risk indicators are positive.
  • SPY, QQQ and IWM are in short-term uptrends, but overbought after big moves this month. 
  • TLT fell back again on Thursday and remains oversold.     
  • UUP is testing the lower trend line of a triangle as the Euro hangs on the Greek negotiations.        
  • USO remains stuck in a trading range.         
  • GLD broke down on 29-Jan and extended its downtrend again this week.   

The E-mini extended its stall and has now closed with a three point range the last four days. The intraday price movements have also been quite narrow the last two days, and yesterday marked the smallest high-low range of the year. Stalling just means buying and selling pressure have equalized. At this point it is just a small consolidation after a sharp advance (1990 to 2100).   

Breadth remains short-term bullish overall. S&P 1500 AD Percent ($SUPADP) dipped into negative territory on Thursday, but this negative dip was not deep at all and selling pressure was minimal. The 10-day SMA remains firmly in positive territory and not even close to a bearish signal.  

All five risk indicators remain positive for stocks. Of note, the RSP:SPY ratio turned up this week as the Equal-Weight S&P 500 ETF (RSP) started outperforming the S&P 500 SPDR (SPY) again. 

The short-term evidence remains bullish for stocks. The short-term situation, however, is challenging because stocks are overbought and we could see a 1-2% pullback in SPY or QQQ. At this point, I would like to allow room for a short pullback or consolidation within the short-term uptrend. 


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Key Reports and Events (all times Eastern):
                                    
Mon - Feb 23 - 10:00 - Existing Home Sales        
Tue - Feb 24 - 09:00 - Case-Shiller 20-city Index
Tue - Feb 24 - 10:00 - Consumer Confidence    
Wed - Feb 25 - 07:00 - MBA Mortgage Index        
Wed - Feb 25 - 10:00 - New Home Sales    
Wed - Feb 25 - 10:30 - Oil Inventories        
Thu - Feb 26 - 08:30 - Initial Jobless Claims    
Thu - Feb 26 - 08:30 - Consumer Price Index (CPI)         
Thu - Feb 26 - 08:30 - Durable Goods Orders        
Thu - Feb 26 - 09:00 - FHFA Housing Price Index        
Thu - Feb 26 - 10:30 - Natural Gas Inventories    
Fri - Feb 27 - 08:30 - GDP 
Fri - Feb 27 - 09:45 - Chicago PMI
Fri - Feb 27 - 09:55 - Michigan Sentiment     
Fri - Feb 27 - 10:00 - Pending Home Sales    

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. 

Arthur Hill
About the author: , 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. Learn More