Hit the Pause Button: $SPY $QQQ $IWM

February 29, 2012

Mish's Daily

By Mish Schneider


Hard to look at more scary candles or a market that makes new highs then closes on its lows. It’s hard not to view a lower close as the end of days. But, stepping back, there has been incongruity with rising oil and gold prices, low rates and lack of intervention by the FED since Operation Twist and a moderate economic recovery with the market climbing to highs not seen since 2008. Add Mr. Bernanke to the mix and a more sobering picture prevails. But, then there’s AAPL and strong retail, consumer confidence. Every day I mantra-Rotation and Roll-which sector/group rolls over today and which sector takes charge?  For quite some time now, this market requires pristine timing, both for entries and exits.

SPY ChartS&P 500(SPY) Held the fast moving average with a bearish candle and possible reversal (new highs, closing on the lows.) But, once again, need confirmation of this being the start of a big selloff.

NASDAQ (QQQ) Recommended my subscribers exit many longs today. Whether that is correct remains to be seen. But, one can never see a top until the top is in place and although the bull trend was not violated, the overbought internals and skittishness of the market gave us at least pause.

Russells2000 (IWM) After the market closed, this traded under 81.00, which has been the wall of support. And, unlike SPY and QQQ, this has not made any dazzling new highs of late, rather, more sideways action.  Been writing this was either the buy point or kiss of death. Now, 78.50 is the 50 DMA to watch for if this index cannot power back over 82.40 level.

ETFs:

GLD Great stop today on our swing long at 171.65, especially in retrospect. Begs the case for trailing stops and sticking to the discipline.

XLF (Financials) Key now to watch since back under the 200 week moving average. But, week not over yet so big eyes on this group.

XRT (Retail) Out on a chandelier exit. Long from 56.60, exited at 58.97. However, still holding the fast moving average.  

IBB (Biotechnology) Biotech was the first one to show strength. If this can go sideways and not fall apart, will look to this group to lead again.

SMH (Semiconductors) Now the second time this turned out to be a one day wonder (February 17 the first time). Third time’s a charm meaning if this does another run and fails that would be ominous.

IYT (Transportation) has not participated in the rally to the same extent and gave a warning on February 7th when it broke the fast moving average.  Back to looking at 90.85, last week’s low and a failure, more reason to be cautious on the long side.

IYR (Real Estate) 59.80 last week’s low and not completely lost if takes out today’s high.

USO (United States Oil Fund) After Monday exit, now 3 days under the FTP holding the 10 DMA.

MOO (Market Vectors-Agribusiness) Out of the long position.

TBT (Ultrashort 20+ Year Treasuries) Like to see a second close over the 50 DMA and over the 10 DMA would be nice too.

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