Stocks Take A U-turn.
Stocks Take A U-turn.
After two days of consolidating in response to weak economic data, today the market got what it wanted - better than expected economic data.
The markets swift and sustained move higher in reaction to the positive news suggested that the bulls were confidently in charge in the morning. But after lunch the market rolled over on what was most likely profit taking that accelerated as markets returned to the prior day's range.
The U-turn pattern, most prominently displayed by the IWM, is cause for concern for the bulls, especially in the face of good economic data.
S&P 500 (SPY) Closed in the middle of the day's wider than average range. I expect Wednesday's upside to be limited by the day's range, but the downside is not so easy to say that about. There is support at 140.21, and then below the range at 139.49.
Russell 2000 (IWM) The weakest of the four indexes and the reason to be bearish. Its complete round trip which only exceeded the previously mentioned gap resistance level by 4 pennies creates an ominous doji at the 50 DMA. The better than average volume further supports my feeling that an OR breakdown tomorrow should be shorted.
Dow (DIA) A stark contrast to the IWM. It closed at a new multi-year high and that's what the media will focus on. The divergences are blatant and dangerous for the bulls, but if the market moves higher I'll look to be long DIA.
NASDAQ 100 (QQQ) Just as disappointing as the IWM, but a little stronger. It needs a rest and could get weak. Look for resistance at 67.20 and 67.40.
Gold Trust (GLD) The economic report at 10:00 pushed it modestly lower to the FTP where is consolidated all day. This could be enough consolidation to move it nicely in either direction tomorrow.
XLF (Financials) Managed to close over last week's swing high by a penny. All things considered it looks ok.
IBB (Biotechnology) It did not trade over Monday's high. It took a much deserved rest, and may need more time to rest.
SMH (Semiconductors) Now has three days of tight consolidation at the 50 DMA. Don't be surprised by a move in either direction.
XRT (Retail) An wide range today which began and ended at the low of the day just like the IWM.
IYT (Transportation) It closed over the last 3 days of highs and if it continues higher on Wednesday it will be a good breakout of the wedge on the daily chart from the lows in Feb. and the highs in March.
IYR (Real Estate) Moved higher and held up well.
OIH (Oil Services) A strong day the topped out at the 50 and 200 DMA level. Look for support at the 41.80 level.
XLE (Energy) One of the best performing ETF's here. It stopped at the 50 DMA. Expect resistance at 73.
TBT (Ultrashort Lehman 20+ Year Treasuries) Positive economic data moved this higher as you would expect, and it held up. It has a good base to move higher from.
