Chart Advisor for August 24 2014

Tickers in this Article: SPY, DIA, QQQ, IWM

Major U.S. indices moved higher over the past week led by the Dow Jones Industrial Average as of Thursday’s close. In July, the Conference Board’s index of leading indicators rose 0.9% for the sixth straight month, signaling that the economic recovery remains on track. The biggest sources of strength were the financials, falling applications for unemployment benefits, and a rise in building permits, although economists remain concerned about the unemployment rate.

International markets also moved higher over the past week as of Thursday’s close. Japan’s Nikkei 225 rose 1.79%; Germany’s DAX 30 rose 1.91%; and Britain’s FTSE 100 rose 1.3%. German stocks rebounded as Ukrainian concerns subsided, although French manufacturing declined and job creation remains a key concern. In Asia, investors grew concerned over soft readings of manufacturing activity in both China and Japan during August. (For more, see: ChartAdvisor for Aug. 15.)

SPDR S&P 500 (ARCA:SPY)

The SPDR S&P 500 (SPY) ETF rose 1.94% over the past week, as of Thursday’s close. After rising past its R1 resistance at 197.11, the index moved closer to retest its prior highs and R2 resistance at around 201.13. Traders should watch for a breakout from these levels or a move back down to R1 resistance or the 50-day moving average at 195.87. Looking at technical indicators, the RSI appears lofty at 65.61, but the MACD remains in a bullish trend after its crossover.
SEE: Profiting In Bear And Bull Markets

SPDR Dow Jones Industrial Average (ARCA:DIA)
The SPDR Dow Jones Industrial Average (DIA) ETF rose 2.29% over the past week, as of Thursday’s close. After moving past its R1 resistance at 168.89, the index moved to retest its prior highs of around 170.50. Traders should watch for a breakout from these levels towards its upper trend line and R2 resistance at 172.78 or a move back down to R1 resistance at 168.89. Looking at technical indicators, the RSI appears overbought at 64.01, but the MACD remains in a bullish uptrend. (For more, see: A Primer On The MACD.)
PowerShares QQQ (Nasdaq:QQQ)
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The PowerShares QQQ (QQQ) ETF rose 1.54% over the past week, as of Thursday’s close. After breaking past its prior highs and R1 resistance at 97.14, the index moved towards its upper trend line and R2 resistance at 99.27. Traders should watch for a breakout from these levels to new highs or a break down to retest its R1 resistance or lower trend line support before a move up. Looking at technical indicators, the RSI appears overbought at 71.16 while the MACD remains in a bullish uptrend. (For more, see: An Introduction To The Relative Strength Index.)
iShares Russell 2000 (NYSE:IWM)
The iShares Russell 2000 (IWM) ETF rose 1.59% over the past week, as of Thursday’s close. After briefly breaking through the pivot point at 114.25, the index has treaded water around the 50-day moving average at 114.98. Traders should watch for a breakout to the R1 resistance at 117.45 or a retracement back down to its lower trend line and S1 support at 107.99. Looking at technical indicators, the RSI is relatively neutral and the MACD remains in a bullish uptrend. (For more, see: Retracement or Reversal: Know The Difference.)
The Bottom Line
Positive economic news propped up the major U.S. indices over the past week as of Thursday’s close. Next week, traders will be watching a number of key economic indicatorsincluding new home sales on Aug. 25, durable goods orders on Aug. 26, GDP and jobless claims on Aug. 28, and personal income and outlays Aug. 29. (For more, see: Leading Economic Indicators Predict Market Trends.)

Charts courtesy of StockCharts.com.

Chart Advisor for July 21 2014

Tickers in this Article: SPY, DIA, QQQ, IWM

Major U.S. indices were mixed over the past week, led by the Dow Jones Industrial Average and lagged by small-cap stocks, as of Thursday’s close. Despite concerns that the equity market might be overextended, the U.S. economy showed some signs of strength in June after unemployment claims unexpectedly fell and manufacturing activity in the mid-Atlantic region accelerated to its highest level in years.

International markets moved largely higher over the past week, as of Thursday’s close. Japan’s Nikkei 225 jumped 1.07%; Britain’s FTSE 100 jumped 0.85%; and, Germany’s DAX 30 jumped 0.91%. In Europe, investors grew concerned over a slowdown in Germany’s economy, as Germany has generally served as an anchor for the region. In Asia, China’s economy grew at a 7.5% annualized rate–a positive sign.

SPDR S&P 500 (ARCA:SPY)

The SPDR S&P 500 (SPY) ETF fell 0.45% over the past week, as of Thursday’s close. After reaching new highs earlier this month, the index moved lower toward its pivot point at 194.42. Traders should watch for a rebound from those levels to retest its R2 resistance at 199.87 or a move lower to its lower trend line and 50-day moving average at 193.02. Looking at technical indicators, the RSI remains neutral at 50.95 and the MACDexperienced a bearish crossover.
SEE: Profiting In Bear And Bull Markets

SPDR Dow Jones Industrial Average (ARCA:DIA)
The SPDR Dow Jones Industrial Average (DIA) ETF rose 0.24% over the past week, as of Thursday’s close. After moving off of its R2 resistance at 171.02, the index moved lower towards its R1 resistance at 169.45. Traders should watch for a rebound higher from these levels to retest its R2 resistance or a breakdown from its lower trend line towards its 50-day moving average at 167.44. Looking at technical indicators, the RSI and MACD both appear to be neutral.
PowerShares QQQ (Nasdaq:QQQ)
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The PowerShares QQQ (QQQ) ETF fell 0.69% over the past week, as of Thursday’s close. After reaching new highs earlier this month, the index moved lower toward its trend line support. Traders should watch for a breakdown from these levels toward its pivot point at 92.82 or a rebound higher to retest its R2 resistance at 96.56. Looking at technical indicators, the RSI appears neutral at 56.21 but the MACD appears a little top-heavy.
iShares Russell 2000 (NYSE:IWM)
The iShares Russell 2000 (IWM) ETF fell 2.27% over the past week, as of Thursday’s close. After moving toward the upper portion of its price channel, the index retreated toward its 200-day moving average at 112.58. Traders should watch for a rebound from these levels towards its pivot point at 115.83 or a breakdown to its lower trend line and S2 support at 108.06. Looking at technical indicators, the RSI appears oversold at 35.31 but the MACD remains bearish.
The Bottom Line
The major U.S. indices were mixed over the past week, as of Thursday’s close. Although many of them appear top-heavy judging by technical indicators. Traders will be watching a number of key economic events next week, including the consumer price index and existing home sales on July 22nd, jobless claims and new home sales on July 24th, and durable goods orders on July 25th.

Charts courtesy of StockCharts.com.
Disclosure – At the time of writing, the author did not own shares of any company mentioned in this article.

Chart Advisor for July 13 2014

Commentary

Tickers in this Article: SPY, DIA, QQQ, IWM

Major U.S. indices moved lower over the past week, as of Thursday’s close, driven by equity valuation concerns and turmoil in European banks. After the Dow Jones Industrial Average broke through 17,000 last week, traders have become increasingly worried about a near-term correction given lofty P/E ratios along with a questionable economy. Wage growth also remains weak at just 2% this year, which means that consumers aren’t feeling any healthier in the financial sense.

International markets followed the U.S. with lower yields over the past week. After Thursday’s U.S markets closed, Japan’s Nikkei 225 fell 1.6%; Britain’s FTSE 100 fell 2.82% and Germany’s DAX 30 fell 3.5%. In Europe, Germany expressed concerns over its second quarter performance given the crisis in Ukraine, while banking institutions in the region remain on unstable ground. In Asia, China’s growth rates picked up with GDP growth rates of 7.4% projected for 2014 and 7.6% projected in 2015.

SPDR S&P 500 (ARCA:SPY)

The SPDR S&P 500 (SPY) ETF fell 0.96% over the past week, as of Thursday’s close. After reaching all-time highs earlier this month, the index moved lower to trade just above its pivot point at 194.42. Traders should watch for a rebound from these levels toward the R1 resistance at 197.80 or a move lower to strong support (S1, 50-day MA, trend line) at 192.02. Looking at technical indicators, the RSI and MACD both appear to be relatively neutral.
SEE: Profiting In Bear And Bull Markets

SPDR Dow Jones Industrial Average (ARCA:DIA)
The SPDR Dow Jones Industrial Average (DIA) ETF fell 0.81% over the past week, as of Thursday’s close. After reaching new highs earlier this month, the index broke below its lower trend line towards its pivot point at 167.86. Traders should watch for a sustained move down towards S1 support at 166.29 or a rebound back up to its R1 resistance and trend line at 169.45. Looking at technical indicators, the RSI and MACD both appear to be trading at relatively neutral levels.
PowerShares QQQ (Nasdaq:QQQ)
chart
The PowerShares QQQ (QQQ) ETF fell 1.03% over the past week, as of Thursday’s close. After reaching new highs earlier this month, the index fell sharply and moved toward its pivot point at 92.82. Traders should watch for a move down to these levels or even S1 support at 91.49 before major trend line support or a rebound to re-test its R1 resistance at 95.23. Looking at technical indicators, the RSI still appears overbought at 64.03 while the MACD appears relatively neutral.
iShares Russell 2000 (NYSE:IWM)
The iShares Russell 2000 (IWM) ETF fell 3.66% over the past week, as of Thursday’s close. After testing its prior highs, the index moved sharply lower below its pivot point at 115.83 to its 50-day moving average at 113.84. Traders should watch for a rebound from these levels back to its pivot point, or a move even lower towards its 200-day moving average at 112.36. Looking at technical indicators, the RSI looks modestly oversold but the MACD experienced a bearish crossover.
The Bottom Line
The major U.S. indices moved lower over the past week, as of Thursday’s close, although many of the high RSI readings moderated. Looking ahead, traders will be watching a number of key economic events over the coming week, including retail sales on July 15th, PPI and industrial production on July 16th, and jobless claims and housing on July 17th. Concerns over lofty equity valuations may also cast a shadow over any potential upside over the coming weeks.

Charts courtesy of StockCharts.com.
Disclosure – At the time of writing, the author did not own shares of any company mentioned in this article.

Three Traps to Avoid in This Market by David Bartosiak – 07/05/2014

Three Traps to Avoid in This Market

By: David Bartosiak

July 05, 2014


Like the old Atari game “Pitfall”, this market is full of traps that investors can easily fall into. With the S&P 500 and Dow Jones Industrial Average at all-time highs, the sleepy crawl upwards can lure investors into traps. In this article I’ve identified three ways that the market can trick you into losing money.


1) Blindly Buying Dips

It may sound easy enough to jump in and buy a stock on a pullback in this market. After all, the practice has worked very well during the stock market’s run we’ve seen off the lows of March 2009. However, as we reach higher highs, the market is likely to become more discriminatory. That is, sector selection and individual stock selection will become increasingly important.

Buying a stock just because it pulled back could prove to be quite dangerous. When buying on a pullback, it’s important to make sure there has not been a change in its long-term trend. The pullback could mark the end of a trend and not just a retreat to a support level, especially in the short-term. Always remember: “The trend is your friend, until it ends.”

2) Chasing Winners

While buying that hot cloud-based technology stock or electric car company may sound like a great idea, it’s also a great way to lose money. We’ve all heard the old adage: “Past performance is no guarantee of future results” and it couldn’t be truer when it comes to individual stocks.

The stock market is always looking forward to the next quarter’s and next year’s results. Earnings stories that were great in Q1 could quickly reverse as Q2 results and guidance are announced. Make sure you investigate these earnings pictures and outlooks before you jump onto last quarter’s winners. Luckily for you, the Zacks Rank system is here to help you identify which of these stocks are in the best positions to continue higher.

3) Taking Profits Too Soon

While nobody wants to let a winner turn into a loser, it’s equally as important not to cut off your nose just to spite your face. Let your winners run and cut your losses short. By selling a stock just because it’s made a large run, you could be leaving a tremendous amount of money on the table.

Treat each day that you own a stock like it’s the first day you bought it. Always have a stop-loss where you will take your risk off the table. You can move this stop-loss up as the stock moves up. This way you maximize your potential gain along the uptrend of a stock. Nobody wants to be the guy that sold Google at $250 just because they thought it went up too fast.

Easy Trap Avoidance

These are three of the biggest mistakes an investor can make in this market we have today. Perpetually higher highs can give investors a false sense of security that Mr. Market can easily snatch away at the drop of a dime.

Good Investing,

David

David Bartosiak is Zacks’ resident technical and momentum expert. He selects stocks and delivers daily commentary for our newly launched Momentum Trader.

Chart Advisor for May 11 2014

Tickers in this Article: SPY, DIA, QQQ, IWM

Major U.S. indices were mixed over the past week with the Dow Jones Industrial Average outperforming Nasdaq and small-cap stocks as of Thursday’s close. After the U.S. Federal Reserve’s decision to continue tapering at a rate of $10 billion per month, investors are caught between optimism about the U.S. economic recovery and the bearish prospects of higher interest rates in the near term. The latter has been at least delayed, however, judging by the latest FOMC minutes.

International markets were somewhat mixed over the past week. Britain’s FTSE 100 jumped 0.25%; Japan’s Nikkei 225 fell 2.03%; and Germany’s DAX 30 rose 0.54% over the past week, as of Thursday’s close. In Europe, investors remain concerned over developments in Ukraine, but the European Commission expects 1.6% growth in 2014. In Asia, China’s growth remains a key concern for investors with many experts predicting performance similar to last year’s lackluster turnout.

SPDR S&P 500 (ARCA:SPY)

The SPDR S&P 500 (ARCA:SPY) ETF rose 0.45% over the past week, as of Thursday’s close. After rebounding in mid-April, the index trades just above its 50-day moving average in a potential rising wedge reversal pattern. Traders should watch for a breakdown below the lower trend line at around 184.00 for a reversal or a rebound above R1 resistance at 191.57 to break the pattern. Looking at technical indicators, both RSI and MACD appear to be relatively neutral.
SEE: Profiting In Bear And Bull Markets

SPDR Dow Jones Industrial Average (ARCA:DIA)
The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF rose 0.76% over the past week, as of Thursday’s close. After rebounding in mid-April, the index remains trapped under a 166.00 resistance level above its 50-day moving average. Traders should watch for a breakout above these levels towards R1 resistance at 167.67 given the ascending triangle pattern or a move below 163.71 pivot point levels. Technical indicators are relatively neutral for both the RSI and MACD.
PowerShares QQQ (Nasdaq:QQQ)
chart
The PowerShares QQQ (Nasdaq:QQQ) ETF fell 0.05% over the past week, as of Thursday’s close. After moving higher towards its 50-day moving average and upper trend line at 87.97, the index retraced below its pivot point at 86.78. Traders should watch for a move down to retest its S1 support at 83.89 given the descending triangle pattern or a potential breakout above its upper trend line. Looking at technical indicators, the RSI and MACD both appear relatively neutral.
iShares Russell 2000 (NYSE:IWM)
The iShares Russell 2000 (NYSE:IWM) ETF fell 1.09% over the past week, as of Thursday’s close. After barely reaching its pivot point at 113.04, the index moved lower to re-test its supper at around 109.00. Traders should watch for a breakdown from these levels towards its S2 support at 103.22 given the descending triangle pattern or a breakout higher from its upper trend line and pivot point. RSI appears to be oversold at 33.67, but MACD remains in a very bearish down trend.
The Bottom Line
The major U.S. indices have sent somewhat mixed signals over the past week, with bullish patterns for SPY and DIA and bearish patterns for IWM and QQQ. Traders will be watching a number of key economic events next week, including retail sales on May 13th, producer prices on May 14th, jobless claims, consumer prices, and industrial production on May 15th, and housing starts on May 16th. Further guidance from the U.S. Federal Reserve will also be closely watched over the coming weeks.
Disclosure – At the time of writing, the author did not own shares of any company mentioned in this article.

Momentum Stocks Have a Day in the Sun

Momentum stocks stabilized on Wednesday while the Dow Jones Industrial Average stalled.

In recent weeks, the primary stock market trend was significant weakness in risky sectors like social media and biotech, while lower-beta groups like utilities marched up steadily.

However, today we started seeing signs that the ugly selling in momentum stocks may be coming to an end.

The closely watched iShares NASDAQ Biotechnology Index ETF (IBB) finished in the red and utilities rose again, but the Global X Social Media ETF (SOCL) rose an impressive 2.4%.

Additionally, hot tech names like FireEye (FEYE), Splunk (SPLK), and Netflix (NFLX) were all solidly in the green following huge declines in March and early April.

We also saw significant outperformance in the Russell 2000 and Nasdaq Composite, which both rose 0.8%.

By comparison, the Dow was up just 0.1%.

Emerging markets, which have been red hot as of late, were generally green, but the iShares MSCI Brazil Index ETF (EWZ) fell. That ETF had risen 25% in a virtual straight  line since March 14, so it was due for some profit-taking.

In currencies, the USD/JPY fell sharply after Bank of Japan Governor Haruhiko Kuroda announced that the bank was not considering additional monetary easing, as Japan is on track to meet its 2% inflation goal.

And after the close, aluminum giant Alcoa (AA) reported first-quarter earnings that beat Wall Street’s expectations.

On the domestic data front, we’ll see MBA Mortgage Applications, Wholesale Inventories, and, most importantly, the FOMC minutes from last month’s meeting.

Overseas, Australian Consumer Confidence and the German and British Trade Balances will be reported.

In earnings, Constellation Brands (STZ) and Bed, Bath & Beyond (BBBY), will report, but neither is likely to be market-moving.

Market Review for the Week Ending January 31, 2014

Commentary

Tickers in this Article QQQ, DIA, SPY, IWM

Major U.S. indices moved lower this week, led by the Dow Jones Industrial Average and lagged by the S&P 500 index. While the U.S. economy reported robust 3.2% growth during the fourth quarter, investors were preoccupied with trouble in emerging markets, like India, Turkey and South Africa, as well as falling inflation in the eurozone. A slowdown in global growth could put the brakes on the relatively strong U.S. recovery.

International markets fared worse than U.S. markets this week. Japan’s Nikkei 225 fell 3.1%; Britain’s FTSE 100 fell 2.3%; and, Germany’s DAX 30 fell 1.16%. In Asia, investors remained concerned with capital outflows despite rising interest rates. In Europe, falling inflation suggested that the region’s economy may not be quite as strong as the market had hoped.

SPDR S&P 500 (ARCA:SPY)

The SPDR S&P 500 (ARCA:SPY) ETF fell 0.18% as of early trading on Friday morning. After breaking down from its trend line support, the index moved below its pivot point and S1 support to new trend line support at around 176.00. Traders should watch for a rebound from this level towards its pivot point at 181.96 or a move lower to S2 support at 173.77. Looking at technical indicators, the MACD remains in a bearish downtrend although the RSI appears oversold with a reading of 40.81.
SEE: Markets: Random, Cyclical Or Both?

SPDR Dow Jones Industrial Average(ARCA:DIA)
The SPDR Dow Jones Industrial Average (ARCA:DIA) ETF fell 0.85% as of early trading on Friday morning. After breaking below its lower trend line and 50-day moving average, the index settled at new support at around 156.00. Traders should watch for a rebound from these levels towards its 50-day moving average at 160.99 or a move lower to S2 support at 153.61. Looking at technical indicators, the MACD remains in a bearish downtrend although the RSI appears oversold with a reading of 34.68.
PowerShares QQQ (NASDAQ:QQQ)
chart
The PowerShares QQQ (NASDAQ:QQQ) ETF fell 0.69% as of early trading on Friday morning. After breaking below its lower trend line and pivot point, the index settled near its S2 support at 85.18 and 50-day moving average. Traders should watch for a rebound from these levels towards its trend line resistance at 87.50 or a move down to S2 support at 82.39. Looking at technical indicators, the MACD remains in a bearish downtrend while the RSI is neutral with a reading of 46.62.

iShares Russell 2000 (NYSE:IWM)
The iShares Russell 2000 (NYSE:IWM) ETF fell 0.73% as of early trading on Friday morning. After breaking below its trend line, the index settled at its S1 support and trend line at 110.85. Traders should watch for a rebound from this level towards its upper trend line and pivot point at 113.41 or a move down towards its S2 support at 106.34. Looking at technical indicators, the MACD remains in a downtrend and the RSI is relatively neutral with a reading of 44.77.

The Bottom Line
The major U.S. indices moved lower this week. MACD trends point to an ongoing decline, although RSI readings suggest that some indices may be oversold. Next week, traders will be watching a number of economic indicators including construction spending on February 3rd, manufacturing data on February 4th, and international trade data on February 6th. Traders will also be watching for any comments or signals from the U.S. federal reserve.

Charts courtesy of StockCharts.com.

Justin Kuepper has many years of experience in the market as an active trader and a personal retirement accounts manager.

Disclosure – At the time of writing, the author did not own shares of any company mentioned in this article.