Dollar Holds its Breakout - Treasuries Remain Oversold
Programming note: I will be on vacation from June 28 to July 12 (Friday to Friday). This is the all important two-week family vacation. My contributions to Art's Charts and the Market Message will resume on Monday, July 15. This will be the pause that refreshes! Thanks in advance for your understanding.
After a gap down and oversold conditions on Monday, stocks firmed with indecisive trading. This gave way to an oversold bounce on Tuesday and many ETFs filled Monday's gap. Of note, the Finance SPDR (XLF) led the way with a 1.86% gain. The steepening yield curve is viewed as positive for many banks. Similarly, the Regional Bank SPDR (KRE) surged over 2% and broke flag resistance. Also note that KRE recorded a 52-week high and the price relative (KRE:SPY ratio) hit a 52-week high. Regional banks are showing both absolute strength and relative strength. This is certainly a positive for the market overall. In fact, leadership from the finance means the current correction could be more of a trading range than a pullback.
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Key Reports and Events (all times Eastern):
Wed - Jun 26 - 07:00 - MBA Mortgage Index
Wed - Jun 26 - 08:30 - GDP - Third Estimate
Wed - Jun 26 - 10:30 - Crude Inventories
Thu - Jun 27 - 08:30 - Initial Claims
Thu - Jun 27 - 08:30 - Personal&Spending
Thu - Jun 27 - 10:00 - Pending Home Sales
Thu - Jun 27 - 10:30 - Natural Gas Inventories
Fri - Jun 28 - 09:45 - Chicago PMI
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.
