Market Remains in Uptrend, but Cautious

The good news on Monday was the selling wasn’t more aggressive based on the economic data. That leaves the upside still in place and the short term trend positive. The earnings data from Citigroup was positive and kept the financial services sector in play along with other sectors. The following are some key sectors to watch as we move forward.

Commodities continue to move higher as agriculture sets the pace. CORN jumped another 3.8% on Monday leading the soft commodities on the drought news building momentum. DBA, PowerShares Agriculture ETF gaining as well. The outlook remains strong for the sector and worth watching moving forward. OIL broke above resistance continues to post gains. Look for a break above the $21.65 mark on the upside resistance. UGA, United States Gasoline ETF is moving higher as well and setting the pace in the energy sector. The move above $51.50 was bullish and the continued move higher is worth playing as a trade.

Pharmaceutical (XPH) stocks made a solid move higher on Monday as well. The gain of 2% pushed the ETF back to the previous high. IHE, iShares Pharamceutical ETF is attempting to break above the $88 high set last week. The Healthcare sector remains a sector to hold short term. Watch Biotech at these levels as well on the test of the move hgiher. Manage your risk and the upside.

In the global markets Mexico (EWW) is pushing back towards the previous high at $63. Singapore (EWS) equally is pushing back towards the resistance at $13. The global markets are challenged by the consistent downgrades from the IMF and other analyst. Watch and scan through the emerging markets as well as other foreign opportunities looking forward.

The weak data from the retail sector is now in play relative to the downside. Support for XRT, SPDR Retail ETF is $56.40 and the 200 day moving average. This is the level we are watching and any short opportunities if the downside starts to accelerate. There are stocks breaking higher despite the news. Target (TGT), TJ Maxx (TJX), Urban Outfitters (URBN) and Costco (COST) are all looking strong on the upside. The bigger question in place is whether these type of stocks will hold up as the consumer sentiment waffles on the data.

The dollar weakness the last couple of days has been noted by analyst as a new trend short term. The chart isn’t showing any big change in the trend, but the shift in sentiment towards the dollar could see a move lower towards support at $22.40 on UUP. Weaker dollar will impact the commodities above. Crude oil will be the biggest benefactor of the downside in the buck and worth watching short term.

Plenty happening short term to keep our attention, but as we have been stating the last couple of months, take it one day at a time and remain focused on your discipline.