Today I asked hundreds of traders which way the market is going and 95% said…

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My two surprises from the market today

Today's commentary was written by Geoff Bysshe, co-founder of MarketGauge.

Today I asked hundreds of traders in a webinar whether the markets were going to breakdown from the current levels or rally.

I’ve done this before, but never had such a one sided response. 95% were in agreement. This surprised me more so than the direction they all picked. I’ll reveal the answer below.

A second surprise I noticed today was the remarkably muted reaction in the markets to the selloff in stocks. As the stocks sold off rather sharply, bonds did not even flinch.

I would have expected more of a rally from TLT as SPY, DIA, IWM all attacked their 50 DMA. Plus AAPL was breaking hard below it major support level and down over 2% on the day.

Technicians are certainly aware that he QQQ has just rejected its attempt to break back above the 50 and 200 DMA. This is very bearish pattern.

For the more astute trader, the Semiconductors and the Transports seemed also to be in a free fall.

Yet TLT, didn’t budge, and even the VXX didn’t rally. In fact the VXX, the “fear gauge”, closed down on the day.

The TLT and VXX observation led me to believe that despite the ominous looking chart patterns, the market was not afraid of further declines today. So I was not surprised to see it bounce off the 50 DMA.

The other reason I was not surprised to see it bounce today was because 95% of my webinar attendees said the market was going down.

My experience in asking this question of webinar attendees has demonstrated that when sentiment is too far in one direction AND that direction is the current direction of the market over several weeks, the move in the market is almost over.

It’s hard to pick a bottom with confidence when the markets don’t react (as they did today). Regardless, as you’ll read below, there are several reasons to believe it may be time to follow the next move higher. However, the market has to start to move higher before I’ll assume it’s actually going in that direction.

S&P 500 (SPY) Bounced off of the 50 DMA, and closed back over the key 206 level and 10 DMA. Maybe that was a short-term flush.

Russell 2000 (IWM) Tested the May 6^th swing low by taking it out by a few cents. Bounced to close over the 50 DMA. This means 109.50 is the big line in the sand for the bulls to defend.

Dow (DIA) Same story as SPY.

Nasdaq (QQQ) Down morning bounced from an area of support, and closed on the 10 DMA. 105 should be support, but big picture is that the range to focus on is 108 to 104. Held up well considering AAPL was down 2.5%.

XLF (Financials) Bounced off expected support level of 23. Looks interesting over 23.40

KRE (Regional Banks) Look at it as consolidating between 40 and 38.30.

SMH (Semiconductors) Didn’t stop at any support and closed at the May 6th low. Next support is 50. Very weak day on huge volume.

IYT (Transportation) Very weak day on big volume that closed under key support. Look for support at 134.

XRT (Retail) Continued to slide, but 41 to 40 area is support from prior swing lows, and the 200-week moving average.

IYR (Real Estate) Nice Opening Range reversal today and closed higher. Sitting on support at 78.30.

GLD (Gold Trust) Closed under prior day low and slightly under the pivotal level of 131.30. Support area is 120.50 to 120.

SLV (Silver) Weak day as 10 DMA appears to have held it down. Needs to hold 16.

GDX (Gold Miners) Held up better than GLD and sitting on the 10 DMA.

USO (US Oil Fund) 11.50 is the high to break then the 200 DMA is at 12. For support the big level is 11.

XOP (Oil and Gas Exploration) Cleared the resistance at the 34.60 area but couldn’t hold it. Closed over the 10 DMA. 33.60 is the level to hold, and 34.60 is the number to clear to move higher.

TAN (Guggenheim Solar Energy) Down trend continues.

TLT (iShares 20+ Year Treasuries) Gapped under key support at 131 but held prior day low. It was remarkably calm during the selloff in stocks. 130.50 could be big inflection point if it breaks below. Needs to clear 131.20 to move higher. A break over 132 is a big breakout.

UUP (Dollar Bull) Resumed its recent uptrend. If it rallies back over 24.45 further upside is likely.