Just Tryin To Bring Relief To Those Who Need It

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R. Kelly-Relief

As lots of damage was done last week, coming into this week, there were many reasons to expect the relief rally that Monday brought forth.

First, on a short-term basis, the relative strength indicators showed oversold conditions. Secondly, the Russell 2000s held above May lows while the QQQs never broke down the 50 DMA, maintaining the bullish phase. Third, the volume last Thursday and Friday registered 2-3 times the daily average, thereby pointing towards the possible “blow-off.

What I do like now, is the possible reversal candle in the small caps (IWM) posted during Monday’s session-the new 60-day low, close on the highs type of reversal candle! That, plus the unconfirmed return to a bullish phase in Semiconductors, and the firming of the rates on an “up” day. This could add up to some fine setups for Tuesday should the market confirm that this isn’t just a one day wonder or relief rally.

Since the Dow closed down for the year last week, it seems that watching how DIA acts around 166 on Tuesday might be further elucidating. For now, we can at least say that the Dow is back to slightly up for the year.

One caveat even with all the potential positives-once phases begin a cycle of deterioration, they tend to continue to deteriorate. Therefore, note the market tone which continues to suggest delta neutral, at least until that indicator changes.

S&P 500 (SPY) A possible reversal candle here with a lot of resistance overhead at 195.50

Russell 2000 (IWM) This had a reversal but did not clear R1-threfore, 112.32 next hurdle then we can looks at the 200 DMA

Dow (DIA) Marginally up for the year with 166-167 major resistance

Nasdaq (QQQ) Not surprising to see this strongest-now, has to hold 94.65 and see what it has at last Thursday high 96.34

XLF (Financials) Inside day-good piece of the puzzle depending on the way the range breaks

SMH (Semiconductors) Unconfirmed bullish phase if holds 49.00 area

IYT (Transportation) Inside day

IBB (Biotechnology) Inside day back over the 50 DMA for an Unconfirmed bullish phase

XRT (Retail) Closed just shy of the 200 DMA after testing it

ITB (US Home Construction) The weakest with possible reversal candle but lighter than average daily volume

GLD Best I can say here is that the moving averages are getting ready to converge

OIH (Oil Services) Reversed but there is the overhead double top as well

XOP (Oil and Gas Exploration) One of the stronger performers off the 200 DMA

TBT (Ultrashort Lehman 20+ Year Treasuries) Inside day in the TBTs sitting over the fast moving average Subscribers: R1 tomorrow is 59.27 with