October 30, 2011
Mish's Daily
By Mish Schneider
Not unexpectedly, all the indexes had low volume, narrow ranges with inside days. SPY ran 18% from its peak low October 4th to the high made on October 27th . The other 4 times this occurred, (single month rallies of 20% or more), was during the depression. Statistically, October is a flat month, with May, the worst. Interesting that one of the worst performing months has now become one of the best. One more day to go. Lots of reasons to look for a correction especially in the midcaps (IWM) that have resistance at the 200 DMA. However, at this point, Nasdaq (QQQ) is not overbought and the most likely reason we could continue higher first. PSA climbed to all time highs last week. It owns and develops self-storage facilities in the US and Europe. Reports this week. An interesting leader in an environment where foreclosures remain a concern.
SPY: Inside day and 2 closes above the 200 DMA. Breakaway gap last Thursday, with inside day Friday. Gap low should hold, which if breaks, suspect.
IWM: Midcaps were a big reason market rallied and now, have crossed an important weekly moving average at 75.20. Gap low from Thursday 74.49. Like to see that breakaway gap hold.
QQQ: Not far from the high made in July. No gaps to be concerned with nor overbought condition, which is why the leaders must perk up and lead or market could start to lose upward momentum.
ETFs:
TBT (Ultrashort 20 Year Treasuries) Right here, right now, total flexibility is crucial. 2 closes above the 50 DMA which sits just below Thursday's low 21.88. If holds that number, lots of room to 24.40. If fails, 19.80 next big support.
GLD Inside day and holding the 50 DMA with a declining slope which makes the return to the recovery phase weak.
SLV (Silver) Had a death cross with price bumping up against the 160 EMA and 50 DMA. Overbought on daily, not weekly.
FXI* (China) Gap up but not a breakaway from the high put from August 31st at 38.72. Has not crossed the 160 EMA or even close to the 200 weekly moving average.
XLK (Technology) Breakaway gap by one tick made with Thursday low 26.05 from October 14th high 26.04. Momentum in its favor yet AAPL underperformed which is 15% of the ETF
SMH (Semiconductors) Similar situation with breakaway gap over the 200 DMA which now must hold for continued upward momentum.
IBB (Biotechnology) Second close over the 200 DMA without a breakaway gap which could be interpreted as weakness, but also could mean that sideways action or digestion to come.
XLF (Financials) inside day and hovering on the 160 EMA with a weekly RSI overbought. 13.45 now support but if good, should not break 13.68, the gap low from Thursday.
OIH (Oil Service Holders) Breakaway gap on the 160 EMA.
XLE (Energy) Another breakaway gap to hold at important levels (the 200 DMA).
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