July 12, 2011
By Mish Schneider
SPY after writing about the island top last night, a rumor driven and erratic market made way for an end of day sharp decline which not only gave SPY its third distribution day in a row, but also a failure of the 50 day moving. The exponential moving average is now underlying support at 131.20. 130 is the area where the rally began from on June 29.
QQQ did have a distribution day in volume, and although the price is still above the 50 day moving average, slope of the 50 DMA is declining. It was NASDAQ that tempered any excitement on the midday rally since it failed to not only take out its opening range high, but also the floor trader pivot. Therefore, either look to see what happens near the 50 day moving average; otherwise if it does manage to get through the FTP, it's possible we will see a rally at the least up to 58.70.
IWM had a DOJI day near the lows of what looks like an interesting hammer candle. It is above the 50 day moving average still at 82. If this can take out today's high, could see a rally up to 84.50.
In all three indexes we are approaching oversold conditions on a short term RSI. A further correction close to any of these support areas mentioned above will look like a buy opportunity especially since the longer-term trend is still bullish.
UUP got long last week at 21.37 through options. Closed around unchanged. Has some resistance at 21.86, with the 200 day moving average overhead 22.15 now sloping upwards for the first time since last October. FXE underlying support at 138.45.
XLE**had a DOJI day near the lows and closed right on the exponential moving average. Although the 50 day moving average is still declining, the price has remained above keeping this in a bullish phase. OIH dropped right down to it is 50 day moving average. Also looking oversold and into key support.
XRT still has an upward sloping day moving average which is considerably far away from the current price. Tried to clear the FTP but fell with the pressure of the overall market. Now, another attempt could see a move to 56.25 area.
SMH broke the 200 day moving average once again and is back in an unconfirmed distribution phase. Has underlying support at the 50 weekly moving average should it continue to decline. However, it is now looking oversold. A move back above the 200 DMA will be a key component to how the rest of the market reacts.
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