May 16, 2011
Mish's Daily
By Mish Schneider
Seriously, I am not trying to sound like a desperate bull, but there are a couple of reasons why this may not be completely a done deal. First, SPY did not hit the 50 day moving average at 132.45 or the bottom of the channel. Second, did not have a distribution day in volume. Third, it did not break the low from April 20 at 132.79, which was the day it gapped higher. Fourth, the slope of the 50 day moving average is still pointing up. What does this mean for tomorrow? It could mean that if we hold 132.79 and begin to turn around, especially if we can get through 133.60, the next hurdle will be the adaptive moving average at 134.61. What would make me change my mind? If we gap open lower beneath the 50 day moving average.
QQQ got hit harder. Did have a distribution day in volume, but also managed to hold not only the gap from that same April 20, but also the 50 day moving average at 57.25. However, the slope on that 50 day moving average turned down. This makes perfect sense when you look at the biggest stocks and how far they got hit today and it is hard to imagine any kind of rally without the market leaders in full participation.
IWM closed beneath the 50 day moving average without a distribution day in volume with a neutral slope on that moving average. Now we will be watching the last swing low made April 14 at 81.45.
ETF's:
SMH hung on to the adaptive moving average and the low from last week. Clearly, that would be the first place to go if the market firms not only to the ETF, but anything in that group and sector that is holding up well.
XRT the same.
GLD had an inside day today and outperformed the market. That would be another place to go should the market firm as the slope of the 50 day moving average which is still quite a distance from current price, is pointing up. Now, that has four days under key pivots, so we should be looking first at 145.75 where the FTP comes in and since we had an inside day, above today's high 146.67 as the second place for it to get through.
FXE has a neutral slope on the 50 day moving average. Had an inside day, therefore I would not rule out the possibility of the dollar going in either direction from here. 140 is your support and 142 the resistance.
Looking at the ultra-shorts:
FAZ had an opening range reversal yet could not close above the last swing high made on April 18 at 43.64. Today's high was made in the early morning at 43.85. Now, watch today's high 43.85 as the number to penetrate.
TWM is the ultrashort for the mid-caps. For the first time since March this went into an unconfirmed recovery phase closing just above the 50 day moving average at 43.08. Last time it was at this level was on May 5 when it made a high of 43.21. Today's high was 43.20. The obvious move is to buy above 43.21 in anticipation that if this market is to continue to correct, that will have more upside.
Every day you'll be prepared to trade with:
