June 7, 2011
Mish's Daily
By Mish Schneider
Today the market rallied initially in anticipation of some positive news coming out of the Federal Reserve. Instead, the news was sobering with no talk of any quantitative easing. Typically I avoid expressing opinions about news related items, but at this point I feel compelled to say that Fed intervention ultimately would not be a good thing and I would rather see the market run its course and find support on its own volition. With that said, SPY almost had an inside day taking out yesterday's low by a couple of ticks and then recovering somewhat after the markets closed. The volume was insignificant as far as a distribution day however, the warnings phase has gathered some momentum with a negative slope now on the 50 day moving average. Looking at SDS, that did have an inside day which means a move over 21.97 and it looks like the action from the middle of March could be a base.
QQQ still has resistance at yesterdays hi to contend with should we get a rally. And it's ultrashort doesn't look as basing as SDS nor is it as good a trader. But, the warning phase is accelerating in all of the market indexes although all are also oversold on the 2 day RSI which means we need a rally for a better management of risk on the short side.
DIA has a bearish engulfing pattern today although it too is oversold.
IWM** actually worked off some of its oversold condition and posted an inside day. Therefore, this will be my primary focus tomorrow.
ETF's: several had inside days today. Most interesting are the oil and energy related ones.
XLE and OIH look like it can fail further from here.
EWZ** Has broken beneath all moving averages and with any more weakness, could be heading towards a death cross.
IYR** the recommended short yesterday, held up well but could not get through the fast moving average. If it fails would take another shot at looking at the short side.
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