$&P 500 Goes Nearly Comatose-Don't Get Used to It

January 8, 2012

Mish's Daily

By Mish Schneider

Three days of digestion last week near the top of the recent trading range, which is potentially really exciting considering that the internals in conjunction with the pause show no particular fear in the market or a long term overbought condition. If you have been lulled into a coma (unless you traded Weight Watchers (WTW) or Netflix (NFLX) take that drip out of your arm because the market will awaken.

SPY: Inside day. Over 128.40 would not be surprised to see another leg up. Under 126.00 and fear will return.

QQQ: Ended the week holding the breakaway gap, but with overbought condition on the 2-Day RSI. Has room to the October high 59.20.

IWM: Last earnings season, many midcap stocks reported well bolstering this index to 76.97. That was under the 200 DMA. Now, with the 200 DMA at 76.11 and an inclining slope on the 50 DMA which the price is very near to, I still see this as having the best potential for a big blast through. With that said, take off the rose colored glasses and one can also see a panic should it break 73.00.

ETFs:

GLD Tested the 200 DMA and retreated first time around. So dull on Friday, hard to gauge what that means at these critical levels. Could be bottoming for sure; but could just as easily be just teasing the overhead resistance before selling off again.

XRT (Retail) Inside day. Last week talked about this failing a trendline breakout. Not one I would consider shorting. Would rather stand aside and consider buying over 52.70.

XLF (Financials) Inside day closing right beneath the 160 EMA.

IBB (Biotechnology) Took the lead in 2011 and stopped dead in its tracks at 110.

SMH (Semiconductors) Through 31.32 should see another leg up-but the volume has been at the lowest levels in a year. Need to see some conviction.

XLE (Energy) Good one to watch.

OIH (Oil Service) Filled the gap from a couple of days ago and held. Likes the 116 level now so watch that to break or looking at 121 next stop.

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