Happiness is Largely a Matter of Digestion $SPY $QQQ $IWM $DIA

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By all accounts a good digestion day. Financials continued to shine on the heels of strong earnings in that sector. Retail made new highs once again and transportation made up for some its lag from last week. Rates dropped, the dollar was unchanged and biotechnology took a breather. The big news for the next session is the inside day setup (when the range of the day is inside the range of the day prior). That often indicates a pause or some hesitation in the particular instrument that sets up with the inside day. It also often provides great low risk opportunities to follow the way the range breaks the following day.

S&P 500 (SPY)169.07 the May 22^nd high next critical place to clear. With the gap last Thursday, that low has to hold for now

Russell 2000 (IWM) See no reasons for concern at this point unless the gap low from Thursday is violated

Dow (DIA)155.54 the May 22^nd high to clear with last Thursday’s gap low the point to hold

NASDAQ 100 (QQQ) Other than some short-term high relative strength indicators, looks pretty good here

ETFs:

XLF (Financials)New 2013 highs making 20.35 a pivotal area and 20.70 next point of resistance.

SMH (Semiconductors) Lovely pause at the 2013 highs which I would not hesitate to follow up

XRT (Retail) Rested Friday, made new highs today

IYT (Transportation) Still not close to the 2013 highs, but over 115.33 clears recent congestion with 113 support

IBB (Biotechnology) after the huge run last Friday on double the average volume, today it made new highs and closed slightly lower. Still on watch for a reversal but that’s more to be ready for anything

IYR (Real Estate)Inside day.67.40 the 200 DMA and key support to hold. Like over 69.00

GLDAs long as 122.35 holds, an island bottom remains. Quiet session

USO (US Oil Fund)High oil prices are not want anyone wants to see, but technically, this made new 2013 highs

OIH (Oil Services) Has to clear 45.50 last Thursday’s high. Subscribers: A dip near 43.90 would be into the monthly moving average support

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