October 16, 2011
Mish's Daily
By Mish Schneider
Slope in the 50 Day Moving Average in SPY finally turned positive just as the 2-Day RSI closes in on overbought. QQQ cleared the summer/fall range, posted a fourth accumulation day in volume and has gone beyond overbought on the RSI. The midcaps are of most concern since after a third accumulation day in volume and an overbought condition, the slope remains stubbornly negative; perhaps the best case for at the very least, an inevitable healthy correction. But, markets do not go down simply because they are overbought (weekly RSI not overbought). Just look at AMZN and IBM, both of which had been overbought beginning last Wednesday and could not care less. No one piece of a puzzle defines a market. On October 4th, volume and candle patterns along with reasonable risk parameters gave the "bottom in place" clues. Traders trade their belief systems. Let the market speak to you and have a plan.
SPY: September high 123.51. 50 DMA 117.50
DIA: 117.03 September high. 111.60 50 DMA.
QQQ: 57.35 September high now should be area of support. Then, 56.28 the 200 DMA. Best reason that a dip will look more like a correction then a failure.
IWM:I September high 73.39. 50 DMA 68.33.
ETFs:
GLD clearly not overbought and has this looming gap up to 167.48. Not to mention a gap higher over 165.75 leaves a potential island bottom. 8 days of ridiculously low volume. Wakey wakey.
XLK (Technology) SMH (Semiconductors) Overbought with no signs of rolling over yet
IBB (Biotechnology) Just cleared the range of the bear candle from last Thursday. Not overbought. September high 99.24. Good support at 95.25 the low from last week
XLF (Financials) If closes above 12.70, has room to upside. On the other hand, 12.10 must now hold.
OIH (Oil Service Holders) Like textbook, rallied to the 50 DMA at 122.50 and closed right there. Support at 119.55 so we will see what this is made of.
TBT (The 20 year Treasuries Ultrashort) 21.73 last week's high to clear.
XRT* (Retail) Retail sales were up in September although consumer confidence remains low. Like IBB, not overbought and unlike IBB has cleared September high. 56.50 target not out of the question.
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