February 12, 2012
Mish's Daily
By Mish Schneider
Even with Friday's selloff, we just touched the surface of working off overbought market internals leaving the big question of whether with the trend very much intact, and the 2 key indexes S&P 500 (SPY) and NASDAQ (QQQ) holding key support, was that it to the downside? After all, the rally began this year with the familiar fundamental knowledge of European woes and Greek games-not of the Olympian sort. The rotation of who becomes "it" in "tag" as far as sectors and groups are concerned, made both the rally as the year began predictable, as well as Friday's correction beginning with Thursday's weakness in Financials (XLF) and Transportation (IYT) equally predictable.
S&P 500 (SPY) Held the fast moving average and the gap low from last week. Use Friday' high as an area of resistance, or a good place to sigh with relief if penetrates.
Russell 2000 (IWM) Takes 2 days to confirm an island top therefore we have only one and counting. Was clearly the first one to show signs of weakness, but since 81.00 was the August 1st high and place where the next leg up began from on February 1st, watch to see what happens at that level.
NASDQ (QQQ) If there is an index that could totally tank from here after not budging from overbought conditions, this is it. Tank might be a bit dramatic, but the bigger they are...you know the rest. I never like to see the weekly Bollinger band tested with a close beneath. If QQQ do have more downside, where will it stop? Let's see what happens at 61.45 first.
ETFs:
GLD I'm beginning to think the yellow metal has no mind of its own. But, I have had a negative sense about it all along, only with lack of direction, keeping away long or short for now.
XLF (Financials) Did not get the weekly close under 14.55, the number I would have considered trouble. Now, unless it breaks 14.40, would not discount this getting back in the lead since it had been since the end of 2011.
XRT (Retail) Inside day to end the week, with some signs of vitality left unless it breaks and closes under 56.50.
IBB* (Biotechnology) Held 118.67 with Friday's close. Besides the Financials, the first place I would go to re enter from the long side if takes out Friday's high.
SMH (Semiconductors) Watching to see what happens at 33.80.
IYT (Transportation) Ended the week with a DOJI. Under 93.00 see 91.00, back above 95.00 could surprise.
XLE (Energy) Held the fast moving average with 72.50 now support to hold or return over 73.26 a good sign.
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