Gap Higher More Divergence

January 3, 2012

Mish's Daily

By Mish Schneider


Financials and Commodities step up on the first day of trading in the New Year. Lots of gaps higher which if this market is any good, should hold. The classic leading sectors/groups at the end of 2011 comparatively struggled -retail and biotechnology for example. And semiconductors, technology and transportation did ok, however, underperformed the indexes. And volume? Yes, an accumulation day in SPY and IWM yet barely one in QQQ, even with AAPL and GOOG strong.

SPY: This was a breakaway gap potentially, provided today's low holds. Still have some resistance at October highs. Good news is we are starting off better than many anticipated and not overbought.

QQQ ChartQQQ: Breakaway gap doji day-how interesting is that? Neutral slope on the 50 DMA which puts this back into an unconfirmed and kind of weak bullish phase.

IWM: Weak link until it clears 76.20.

ETFs:

GLD Impressive gap and hold. Still has room to overhead resistance at the 200 DMA 158.00.

XLF (Financials) Got to 13.48, now want to see that clear or back to 13.20 before we can know what this is made of.

IYT (Transportation) 89.65 the 200 DMA support. Strange day in this sector since it opened on the highs, closed on the lows.

IYR (Real Estate) 58.20 did not clear on a closing price yet the 200 DMA did. Big eyes on this for follow through or failure.

IBB (Biotechnology) Busted through the top of a channel. As it approaches overbought, would like to see some work and digestion before willing to pay up.

SMH (Semiconductors) Could not get through the 200 DMA making this worrisome. Through 31.50 would impress. 30.25 next key area to hold with a break of the last swing low 28.69 trouble.

OIH (Oil Service) Slope on the overhead 50 DMA pointing down even after the gap higher. Great performer, but not convinced this is more than a bear market rally at this time.

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