AD Volume Line Breaks Support - GLD Challenges Resistance
The Shanghai Composite ($SSEC) and the Hang Seng Index ($HSI) surged over 2% on Monday, but the Nikkei 225 ($NIKK) fell and US stock futures are trading lower. Chinese shares are up because there were some positive economic reports late last week. Gold is also up and going for a breakout. Turning to US stocks, the short-term trends are up, but the going is getting tougher. Stocks fell early last week and then consolidated in the second half of the week. The S&P 500 AD Volume Line ($SUPUDP) actually broke support from the late July low, but the S&P 500 AD Line ($SUPADP) held support, as did the S&P 500. I am therefore watching the late July lows in the AD Line and the S&P 500. A break below these support levels would turn the short-term evidence bearish and argue for a correction. It is a big economic week with Retail Sales getting things started on Tuesday. Recent warnings from AEO and ARO could set the stage for a weak back-to-school season, which in turn could also hurt ANF.
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Key Reports and Events (all times Eastern):
Tue - Aug 13 - 08:30 - Retail Sales
Wed - Aug 14 - 07:00 - MBA Mortgage Index
Wed - Aug 14 - 08:30 - Producer Price Index (PPI)
Wed - Aug 14 - 10:30 - Crude Oil Inventories
Thu - Aug 15 - 08:30 - Initial Jobless Claims
Thu - Aug 15 - 08:30 - Consumer Price Index (CPI)
Thu - Aug 15 - 08:30 - Empire State Manufacturing Index
Thu - Aug 15 - 09:15 - Industrial Production
Thu - Aug 15 - 10:00 - Philadelphia Fed
Thu - Aug 15 - 10:00 - NAHB Housing Market Index
Thu - Aug 15 - 10:30 - Natural Gas Inventories
Fri - Aug 16 - 08:30 - Housing Starts/Building Permits
Fri - Aug 16 - 09:55 - Michigan Sentiment
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.
