July 10, 2011
Mish's Daily
By Mish Schneider
SPY closed down .7% with a Distribution day in volume, the first since June 23. If filled the gap that was left from Thursday and closed above 134.10 which was the high that was made for three days before the gap higher from last Wednesday. Now, a move back above 134.88, especially on a closing basis should resume the move up. A break and close below 134.10, and we could see a further correction at least down to the 50 day moving average 131.93. The slope on the 50 day moving average declined slightly indicating that although we are still in a bullish phase, Friday's activity took some of the strength away.
QQQ closed down .3%, and also filled the gap left from last Thursday. The slope on that 50 day moving average is neutral. It also had a distribution day in volume.
IWM filled the gap, held the adaptive moving average at 84.11 and also had a slight decline in the 50 day moving average’s slope.
Eminis-held key support at 1330 then took out the intraday consolidation at 1338, closing above. An open and hold above 1338 and next resistance at the 1352 area.
Looking ahead, the volume patterns and the decline of the 50 day moving average's slope suggests that more correction is necessary. The phase is definitely bullish. QQQ has been leading because of the movement of the major stocks such as NFLX, AMZN, AAPL. A lot of the overbought condition has been alleviated with Friday's decline. Now, I would either like to see a bit more of a correction closer to the key moving averages or a bit more sideways action at these levels to establish a new base of support before reentering any already extended stocks or ETF's for anything more than a day or mini swing trade.
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SMH could not confirm into a bullish phase which is the reason why I take note of not only the price action relative to the 50 day moving average, but also its slope which had declined last Thursday and Friday. Therefore, will now wait to see if it continues to hold last Friday's low, can get back through the 50 day moving average, and for the slope to at the very least neutralize before reentry.
SLV closed right on the 50 day moving average which is still sharply declining. However, with this recent rally, it is holding the exponential moving average. Now, if last Thursday and Friday's low holds, and it can get some volume through the 50 day moving average, still has overhead resistance at 37.90 area, but through there, the last two month's price action will look like a base which could easily give it enough momentum to get through all time high and possibly onto new highs.
UUP appears to be basing, but still needs to clear 21.50 on a closing basis. 21.19 is the key area to hold. Looking at the Euro, has been holding 1.42. Also has big resistance at 1.45. For now, it is range bound and waiting to see which way the range breaks for the next direction.
XLF gapped lower after failing to get above the 200 day moving average. Now, there is underlying support at the 10 day moving average down to 15.20. Will continue to watch the financials carefully as a key component to the next overall move in the market.
XRT still looks very strong as it continues to hold the gap that was made last Thursday provided it continues to hold above 54.75. It also worked off some of its overbought condition.
IBB after getting within two tics of the all time high last Thursday, held last Thursday's low and closed basically unchanged. On the daily chart it is overbought but not on the weekly. 110.02 is the old high.
IYR which did take out the old high last Thursday, sold off with the rest of the market on Friday, working off some of its overbought condition.
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