Friday's Bulls Might Feel Trapped

---

Today's Mish's Daily was prepared by Geoff Bysshe, co-founder of MarketGauge. Friday's Bulls Might Feel Trapped

Today was the opposite of Friday. Later comer bulls could be feeling trapped by the gap down to start the day virtually under the Friday lows.

Europe may have been the markets' excuse to sell off, but it was not a strong enough reason for the market to be as weak as it was. The size of the move down was not very significant but the mood of the move was decidedly down.

The result was a close under the 10-DMA in 3 of the 4 major indexes - a first in a long time. One day is not enough of a rest for this market so another few days of chop or down would be constructive and should be anticipated.

S&P 500 (SPY) Any new longs put on Friday are now trapped by today's gap and drop. The 149.50 area is pivotal with resistance at today's high area. Subs: Pivots are negative and R1 lines up with a significant resistance area at 150.30.

Russell 2000 (IWM) No surprise that is could not get back over the 90.20 level after the gap down. Now 89.90 is a likely key resistance level. Support to consider is at 88.70-.50.

Dow (DIA) The only one of the 4 major indexes to hold the 10-DMA, but a break of 138.30 could lead to a quick drop to 136.50. Key resistance at 139.40
NASDAQ 100 (QQQ) I think the best way to look at this is to play the range levels of around 66.00 and 67.80.

GLD No change from Monday's point of view...Trapped between the 200 and 50 DMA. I think that if you want to trade this right now on the long side you should consider SLV instead - the chart is cleaner. Either way, I'd wait for a break of the last three day range for a momentum trade.

SLV (Silver) Like GLD, same thoughts as yesterday's comments, but now it's more compressed.... Friday's range defines the tipping point of a multi-day wedge. Therefore, a break of this range could lead to a nice directional move. I'll only trade the long side move and 31.22 and 31.41 are key levels to break with a target of 32.40.

XLF (Financials) Into support but needs to get back over 17.50 or pull back to 17.25 to be interesting

IBB (Biotechnology) Into support but like most other indexes, let's wait for a better pattern.

SMH (Semiconductors): This was one of the stronger groups today. If the market looks bullish tomorrow, this is interesting over 34.80. The 10-DMA could be support at 34.36.

XRT (Retail) A very well defined range with a clean support line at 66.20, then a clean shot down to 65.70.

IYT (Transportation) 102.50 is the key support and 104.30 is the resistance.

IYR (Real Estate) Nice pull back, traded well on Friday and held up well today. Look for support at Friday's low, 67.40 and potential for a move back to the highs if it clears Friday's high of 67.85.

USO (US Oil Fund) Most of its move was in the gap, but it looks vulnerable if it moves lower.

OIH (Oil Services) Inside day and basically held its 30 minute O.R. low. Today's high at 43.86 is the level to break for a move higher. Look at the weekly chart. Draw the wedge resistance line from the 2/24 high (let it also extend back to the week of 8/19/2012. It may be a rough ride up but there's big potential here.

XLE (Energy) Very similar to OIH but the short-term is still a little unclear, but long-term looks very similar if not better than OIH. Subs: watch this and OIH together.

TBT (Ultrashort Lehman 20+ Year Treasuries) Very strange inside day pattern in the middle of a larger range day. I favor the break to the upside, but a break below today's low could follow through too.

XOP (Oil and Gas Exploration) Held its 10-DMA, but not a clear pattern. Subs: Watch the 10 DMA now to hold, but action is getting choppy.

XHB (Homebuilders) The low of the day is at the 20 DMA. The next level lower is the 28.00 level. There's a fair amount of resistance at today's highs of 28.82.

For more detailed analysis join Mish, along with hundreds of other subscribers, at Mish's Market Minute and get my daily trade picks, trade alerts, training videos, and exclusive analysis tools. Sign up for Mish's Market Minute now!

Best wishes for your trading,

Geoff Bysshe
President

For more detailed analysis join me, along with hundreds of other subscribers, at Mish's Market Minute and get my daily trade picks, trade alerts, training videos, and exclusive analysis tools. Sign up for Mish's Market Minute now and get a free 2 week trial!