Don't Just Blame AAPL

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Today's Mish's Daily was prepared by Geoff Bysshe, co-founder of MarketGauge.

Better than expected jobs data led to a gap higher, but worse than expected sentiment data, Fiscal Cliff banter, and AAPL made it difficult for stocks to hold onto their opening prices. The daily consolidation patterns around the 50 day moving average define the levels to watch in each index. The markets are neatly in sync. Each index is in a slightly different position relative to their consolidation's key levels. One thing they all had in common on Friday - very low volume.

3 of the 4 indexes are acting constructively. The QQQ, however, is struggling under the pressure of the negative slope on the 50 DMA and the inflection point of its 200 DMA which are both right over head. Plus, Friday's miserable performance can't just be blamed on one bad AAPL. In addition to AAPL's 2.6% decline, four more of the top 10 holdings in the QQQ were down at least .5% (GOOG, MSFT, CSCO, QCOM).

S&P 500 (SPY) First close over the 50 DMA since late October puts it an unconfirmed bull phase. Let's see if it can clear last week's high of 142.92. Look for support at 142.16 - 142.00. Subs: Positive Pivots

Russell 2000 (IWM) Still dancing on the 50 DMA. Has to get above 82.80 to make the 50 DMA a distant memory. On a positive note, the 10 DMA has now crossed the 50 DMA for the first time since late Oct. Subs: Pivots Positive

Dow (DIA) Broke out of consolidation and closed both over the 50 DMA and on the highs of the day. Clearly the strongest of the 4 on Friday, and more importantly, many of its bigger components have constructive bases that would support substantial moves higher. This makes this the index one to favor on the long side going into year end. Look for support at Friday's lows and resistance at 133. Subs: Pivots Positive

NASDAQ 100 (QQQ) As noted above, its largest components dragged it down on Friday. The bullish case is that, while messy, it is consolidating. However, below 64.50 that's in question, and under 64.25 the down trend may gain momentum. If it moves higher, 65.77 is a key level to break before the bigger test of the consolidation highs at 66.37. Subs: Pivots Flat

ETFs:
GLD 165.00 -165.50 is a very pivotal area. Friday's range could be used to define next week's direction. Upside looks like 166 then 167.50. Down side looks like 163.20 then 162.30.

SLV Inside day right on the 50 DMA. 32.20 is the breakout up which could run quickly to the 33 area. Look for support at Friday low, 31.84 and 31.60 areas.

XLF (Financials) Nice confirmed bullish phase led by a nice breakout by its top 3 component - JPM. Should find support at Friday's lows. Next level on the upside is 16.20

IBB (Biotechnology) Struggling at the 50 DMA and closed under the 10 DMA again. I'm staying away until it breaks 139 on a move up or tests the 134.20 support below.

SMH (Semiconductors) Nice breakout over daily consolidation with upside held back by the 200 DMA. A break of Friday's highs improves its phase and confirms a break of the weekly resistance line from the 2012 highs. Must hold 32.20 to remain positive.

XRT (Retail) A struggling transition into a bullish phase. Has potential to go either way.

IYT (Transportation) Broke 91.70 consolidation high but closed under it. Buying strength at the top of a daily range in this index has been the wrong thing to do all year. Below 92 this is a good short candidate in a weak market.

IYR (Real Estate) Nice breakout and confirmation of a bullish phase change. Look for 64.90 on the upside with support at 64.15.

XLI (Industrial Spdr Fund) Closed over breakout area of 37.40. That should be support with resistance at 37.60.

OIH (Oil Services) Will last week's death cross prevent a breakout over the 200 DMA and daily consolidation high of 39.28? Under 38.50 it is very vulnerable.

XLE (Energy) Subs: Nice strong day on Friday moving toward the top of a good two week base on the 200 DMA. Needs to break out over the base and 50 DMA at 71.80. Support is in the 70.40 area.

TBT (Ultrashort Lehman 20+ Year Treasuries) Back over the 10 DMA but in the middle of a 3 week range..

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Best wishes for your trading,

Geoff Bysshe