June 19, 2011
Mish's Daily
By Mish Schneider
On Friday, the divergence in the market continued with DIA closing marginally higher with a marginal accumulation of volume and QQQ ending down .5% with yet another distribution day in volume. SPY closed down .1% and ended with an inside day.
IWM also firmed slightly with no interesting volume pattern.
All in all, with a couple of times last week the market trying its hand at $100-$150 moves up, all were met with selling and none of the indexes made a big push above the 200 day moving average. Furthermore, the 50 day moving averages continue to slope downward and NASDAQ ended not only in a distribution phase but also with a bearish engulfing pattern. Sounds messy. Since nobody can deny that the obvious is not always obvious, the spike low on March 16 in QQQ at 53.77 has now been tested twice last week on an intraday basis and both times managed to close above. I'm just saying that if one were looking for any possible daily chart point, one certainly would have to not only respect that, but also the fact that the 50 weekly moving average in QQQ is not so far below at 53.13.
Looking at the ultra short QID, the corresponding March high was 58.47. In SDS the high was 23.67.
Just as TWM retreated from 48.24 last Thursday, it might be prudent to watch the ultra shorts and how they react to those key areas before we completely say sayonara to the markets.
ETFs:
XRT rallied to the Exponential moving average closing up on the day although the 50 DMA continues to decline. Above 51.15, the retail sector could be a beacon for the market. Otherwise, below 50.16, which was also the closing and opening price on Thursday when it had its DOJI day, and we got ourselves yet another negative indication.
IBB also failed to get above the 70 Day Exponential Moving average and ended badly with a bearish engulfing pattern. There is support on the weekly at around 100. Will watch to see if that area can hold as we are approaching oversold on the 2-Day RSI.
SMH broke the 200 daily moving average but held the 50 weekly.
XLF held 14.63 but could not get above 15.00.
XLE closed right on the Exponential moving average and not quite oversold.
No surprise was the follow through in GLD to the upside after an inside day on Thursday and a continuing bullish phase. SLV also closed higher but unlike GLD could not take out the high of the week at 35.07, remaining in a warning phase with price action still below both the 50 DMA and the 70 EMA. Worthy to watch is the spread between gold and silver.
The sectors and groups are all breaking down based on the accelerated warning and in some cases, distribution phases. Same can be said for the indexes. But, since the market has had huge volatility lately, it does seem that everyday one can count on one of the major sectors trading counter. And by that I mean, up when the market is down and down when the market is up. This makes it a bit harrowing for anything other than daytrading and perhaps a 1-2 day momentum play in the major stocks and groups. A lot of the divergence depends on the direction of the dollar which is basically range bound against the Euro 1.40 to 1.44.
Of course there are always instruments trading in their own universe-often they are the smaller stocks. For example, somebody on twitter pointed out VUQO a new Filipino vodka brand apparently all the buzz in New York now trading at .19 and looking poised to take out .20. I make no claims about any expertise in penny stocks or those that trade with an average volume less than 500,000 shares per day. But, this has an average daily volume of 62.5K and traded over 229K in volume last Friday. Just mentioning.
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