I put a lot of weight on the condition of the SPY because the world watches the S&P 500 with a lot of respect. On Friday it closed right on a major inflection point – a bear flag trend line that has been touched 7 times.
BUT.
I always consider all four indexes – SPY, DIA, IWM & QQQ. And when I do that I don’t come to the same conclusion I would with a sole focus on the DIA and SPY.
I’ve included all the charts below. Note the DIA has closed below the flag trend line so follow through would be very bearish. The SPY did not close below the line, but sits right on it so trading below Friday’s low would be very bearish.
The IWM has not broken its trend line, and the Q’s have a very messy flag but have broken their trend line. The Q’s however are the strongest of the 4 and have a very distinct wedge which you’ll see on the chart (the trend line is dashed). Based on its pattern I’d focus more on the wedge than the trend line.
In all 4 I’ve marked the key level below which would indicate a real serious breakdown. This level is the 9/6 low in every index.
The only thing with a positive reading is the fact that the 10-day MA is over the 20-day, and only in the Q’s can we say they are sloped up. So the bulls have the trend line from the lows and the 9/6 low to trade against from the long side.
Long Focus List
The long list is primarily here to have a few stocks to watch on the long side. Should the market surprise us with a big move up.
AAPL
ALXN
AMZN
CDE
CBOE
DG
DLTR
ED
GDX
GLD
GMCR
HANS
JAZZ
MRX
ORLY
SLW
TLT
WFM
BIDU
SINA
Short Focus List
In most cases these stocks are at or below their 8/5 lows.
KSS
APA
FSLR
WHR
ECA
GS
JPM
SWK
NFLX
SLB
DRI