The Grand Illusion $SPY $QQQ $IWM

July 26, 2012

Mish's Daily

By Mish Schneider

David Copperfield is a master of sleight of hand. The market is a master of illusion as well. It gapped over Wednesday's high for sure. But once the rabbit was pulled out of the hat, it wiggled its nose at the audience saying, "Oh, you want more, do you? Now, I am going to sit here having given you all I got in the first 30 minutes of the day and just nibble on some carrots." Let's look at the numbers and try to discern reality from illusion.

S&P 500 (SPY) Filled the gap from the drop on 7/23. Closed above the fast moving average. If the week ends over 136.25, will setup for more upside. If not, could see another test of 134.50.

Russell 2000 (IWM) Just eked out a close on the 50 and 200 DMAs. Looking at this, hard to get too excited.

Dow (DIA) Most promising looking of the bunch, but this represents only a few names comparatively. Left a potential island provided it does not break 127.80 area

NASDAQ 100 (QQQ) Back in an unconfirmed bullish phase which means has to hold today's low. And since this did not fill the gap the way SPY did, needs to do that or we are back to examining the illusion.

ETFs:

GLD 157.72 last swing high from 7/03. Big move last couple of days. Would not be surprised to see it rest

XLF (Financials) Confirmed phase change to bullish.

IBB (Biotechnology) Wait a minute, this might keep its monthly higher close intact-if 130 holds that is

SMH (Semiconductors) Unconfirmed recovery phase.

XRT (Retail) Subs: Could not return to a bull phase. Would like this better over 58.75. Otherwise, still defensive here

IYT (Transportation) Could not get over Monday high. That is another reason to suspect illusion.

IYR (Real Estate) Through 65.15 looks a lot better, but underperformed.

USO (US Oil Fund) Another one that could not fill the gap.

XLE (Energy) The big winner. Now pressing up against the 200 DMA

For more detailed analysis join me, along with hundreds of other subscribers, at Mish's Market Minute and get my daily trade picks, trade alerts, training videos, and exclusive analysis tools. Sign up for Mish's Market Minute now and get a free 2 week trial!