More Like Driftwood Than Quicksand $SPY $QQQ $IWM $DIA

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Folks at home will hear the reports that the Dow closed up 118 after trading much higher intraday. It closed very close to the intraday lows, but also held the gap way better than any of the other indexes did. Yes, NASDAQ looks particularly nasty, especially given its ginormous bearish engulfing pattern-one that engulfs almost entirely, the trading range from last week. But not quite! 77.59 is last week’s low. Going back to DIA, a couple of interesting patterns. First, it was the last index to cross the 50 DMA to change to a bullish phase. Second, after it did so, its move including Monday’s, was the most dramatic. Third, it held the gap but failed to clear the 2013 high from early August. The small caps made a run in the first 30 minutes to make new 2013 highs only to drift lower the rest of the session. Ditto with the S&P 500 (although also held the gap). That leaves us really focusing mainly on QQQ and DIA then. Will NASDAQ find us sinking in quicksand, or will the Dow throw us a life preserver in the form of driftwood? Active investors took profits early, tightened stops and looked for shorts. Logically, the answer to the market’s next direction may not come until after the FED meeting-til then, all we have is the trend.

S&P 500 (SPY) The volume pattern registers as an accumulation day. Not so bad really, provided it doesn’t gap lower and sell off much more on Tuesday

Russell 2000 (IWM) 104.50 a good level to watch for a hold

Dow (DIA) With the failure to cross the old 2013 high, big focus here. If the Monday gap holds, good sign, if not, a warning sign for sure

Nasdaq (QQQ) When I look back at what I have written since I returned from the summer vacation, I see that I noted this was the leader of this entire move up. If that’s the case, today put a halt to that for sure. Now, we are asking if we should take its lead or notch this one up to a rotten AAPL

ETFs:

XLF (Financials) Gap above the 50 DMA for an unconfirmed phase change back to bullish provided the 50 DMA holds up

SMH (Semiconductors) New high close for 2013-even with the sell off

XRT (Retail) 80.40 is the 50 DMA to watch

IYT (Transportation) Possible double top-but only a possibility at this point

IBB (Biotechnology) Then there’s this-new high close even with the sell off

IYR (Real Estate) Had a chance to clear the 50 DMA but closed beneath by a decent margin. Rates will impact this for sure

XHB (Homebuilders) 30.00 would be good to hold

GLD With all its pressure, the island bottom from June remains intact

USO (US Oil Fund) The 50 DMA very close indeed

OIH (Oil Services) over 47.76 still looks good

XLE (Energy) Second failure of 84.00 which means one to watch for short possibilities.

XOP (Oil and Gas Exploration) Like QQQ, a nasty bearish engulfing pattern and reversal from new highs.

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