May 25, 2011
Mish's Daily
By Mish Schneider
SPY guess what today was? An accumulation day in volume. But before I would jump in and load up, let's look at some other indications. SPY rallied a bit beyond the 50 day moving average and settled beneath. However, it did settle above the 70 day exponential moving average at 132.12. One accumulation day is not enough, but at least it is a start.
QQQ also had an accumulation day but never got close to either the 70 EMA or the 50 DMA. In today's live coaching Keith showed you the VIX. Although it bounced from its lows, it must hold 16.50 area and work its way back up to the 200 day moving average at 19.43. Today it closed at 17.07.
IWM also had an accumulation day and after a bearish engulfing pattern yesterday, today followed with a bullish engulfing pattern. The wick stopped just at the 70 day exponential moving average at 82.23.
DIA did not have an accumulation day in volume and that typically has been the strongest of the indexes. Therefore, I will continue to focus on this index. Needs to close above 123.90 where the 50 day moving average is and then we will see what happens at 124.50 where the gap low remains from May 20. In all four indexes, the MACD has not indicated any shift in momentum, therefore I am still cautious.
Other ETF's:
As expected, IYR held the 50 and closed well. As did IBB and XRT.
SMH has some catching up to do and is an extremely important participant for a sustained rally. It closed just on the 50 day moving average like a slide into third with the bases full. Now, the next batter must hit over 35.15 for the grand slam or with 2 outs, all on base will return to the dugout and wait for the next inning.
The bottom line is that we are better than where we were Monday, but still not out of the woods since I anticipated some sort of rally and happy about the volume that came along with it, but with other conflicting signals, especially in the financials and semiconductors, keeping a defensive posture.
FXE is holding the 140 area. This is still very much an anything can happen market. And just to add one more layer, we are heading into a long weekend.
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