May 24, 2011
Mish's Daily
By Mish Schneider
SPY did not have a good close. Wasn't so much the .1% down, more that we could not get above the 50 day moving average, closed beneath the 70 day exponential moving average, and had a bearish engulfing pattern although the volume was light therefore no Distribution day. It is starting to look oversold on the 2 day RSI indicator. Although I will always look for individual stocks that are moving on their own volition, at this point in time, I will most likely avoid buying any of the indexes until I see a good solid up day with an accumulation in volume. Interesting, is that SDS didn't do very much either. Although it confirmed in a recovery phase, it did not take out yesterday's high nor could it get through the 70 day exponential moving average at 21.23.
QQQ also looking oversold, never came close to the 50 day moving average which ultimately put the nail in the coffin of the rally. Plus, after yesterday's low of 56.65, it closed lower today which is also a sign of weakness.
QID did better as a result. Confirmed in a recovery phase, closed above the 70 day exponential moving average and yesterday's high.
IWM looks the weakest although it is also oversold. And unlike the other two indexes, it did have yet another Distribution day in volume. TWM closed above the 70 EMA and with a bullish engulfing pattern.
DIA closed beneath the 50 day moving average confirming the warning phase although that still has an upward sloping 50 day moving average making the phase weak. Now, must get back above 123.96 for any indication of a turnaround otherwise, if it breaks down under 123, would expect the next move down to 122.49.
Other ETF's: should the market firm IBB, IYR, IYT and XRT are still in bullish phases.
FAZ closed firm, but not above the last swing high made on March 16 at 45.71 even though it rallied at one point to 45.95.
Although XLE and OIH firmed today, neither closed above the adaptive moving average and since they both still have downward sloping 50 day moving averages, still look at these as potential shorts with today's movement a rally into resistance.
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