Why Tuesdays Volume Patterns Are So Important for the Major Indices

September 13, 2021

Mish's Daily

By Mish Schneider


Written by Forrest Crist-Ruiz

The major indices closed surprisingly well on Monday.

Although the initial morning gap-up did not hold, the Dow Jones (DIA) and the Russell 2000 (IWM) were able to make a comeback with support from IWM’s 50-DMA at $221.58 and the low of 8/19 at $347.31 for DIA.

On the other hand, the S&P 500 (SPY) and the Nasdaq 100 (QQQ) have not run into main support from their major moving averages and are most likely holding due strength found in the DIA and IWM.

This means that if the SPY and the QQQ are going continue higher without making a full pullback to support they will need both the DIA and IWM to lead them.

The reason why DIA and IWM are qualified to lead the market higher is that both held key support levels while the SPY and QQQ did not.

However, if the QQQ and the SPY do not hold over Monday’s low, watch for them to head towards their 50-Day moving averages at $441 for the SPY and $368 for the QQQ.

With that said, if Monday's dip buyers were correct, Tuesday should bring continued strength.

One way we can tell if buying is strong is by watching intra-day volume compared to the average amount.

To do this try watching volume on a 5-minute chart compared to past trading days.

What we are looking for is higher volume as the market moves up.

If tomorrow's price action holds or rises on weak volume stay cautious as the indices could be weakening and looking for another downturn.


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ETF Summary

S&P 500 (SPY) 441 support.

Russell 2000 (IWM) Closed over the 50-DMA at 221.58.

Dow (DIA) Back over support of 347.31.

Nasdaq (QQQ) 374.22 low to hold.

KRE (Regional Banks) Like this to stay over the 50-DMA and clear the 10-DMA at 64.85.

SMH (Semiconductors) Doji day. Also holding over the 10-DMA at 271.72.

IYT (Transportation) Flirting with the 200-DMA.

IBB (Biotechnology) 168.15 support from the 50-DMA.

XRT (Retail) 91.49 support.

Junk Bonds (JNK) Watching to hold the 50-DMA at 109.51. Resistance 110.10.

IYR (Real Estate) Sitting in support area.

XLP (Consumer Staples) 71.29 support.

GLD (Gold Trust) 166.74 support area. Needs to clear the 50-DMA at 168.17.

SLV (Silver) Key support 21.20.

XME (S&P Metals and Mining) Trading sideways.

USO (US Oil Fund) Needs to hold over 49.00.

TLT (iShares 20+ Year Treasuries) 146.66 support. 150.06 to clear.

USD (Dollar) 91.95 support. 92.89 resistance.

DBA (Agriculture) Doji day. Needs to hold current price level.

VBK (Small Cap Growth ETF) 285 next support area.

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    Mike Gray


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