ETF Prophet

Internals are looking weak, but the S&P 500 has found initial support at the top of its pre-break out range. That makes the mid-$135 SPY range key to watch.

All indicators are relatively bullish. Small caps may just be ‘resting’, waiting for the rest of the market to catch up, but nevertheless are showing relative weakness today. My 2 cents would be it’s the dollar weakness trade.

Equity markets put in another strong performance for the week, leaving the S&P 500 (SPY) higher by +1.5%. With price now back near 2011 highs, Dow theorists may not have liked the Transport (IYT) sector lagging.  However, perhaps that was hardly surprising given the outsized advance by Liquid Fuels (DBE) — Enjoy your long weekend! [...]

The am gap closed, but held — just having a difficult time making much more progress.

I had a positive bias on the board for today, but economic reports and euro news are really making this a mirror image reversal from yesterday’s action. Wow! That said, I’ll be surprised if short sellers don’t test prior day high as a resistance level.

However, Tick is putting in the most negative bars of the day just now, so that support looks to be challenged.

However, internals are quite negative so for now I expect some p.m. continuation to the downside. NEVER INDIVIDUAL INVESTMENT ADVICE

Price was rebuffed at Thursday highs, but otherwise appears to be holding the Gap as these large recoveries tend to do.

The NASDAQ 100 (QQQ) and Technology (XLK) sector continued to show relative strength (see Ranked 10-Month Averages) even in light of the market’s broader pause last week (SPY -0.1%). Speaking of which, while the Small Cap-focused Russell 2000 (IWM) showed early oversold scores by Friday’s end, most of the majors still have a good deal [...]

However, I want to be watchful for the oft p.m. continuation and potential resistance at SPY $134.50-70.

I can’t quite explain the Large/Small cap disparity here in my usual US Dollar terms… Perhaps there is a spread trade there.  Also note that Up and Down volume remain evenly matched in spite of the S&P 500 advance.  

The VIX is elevated relative to the open, but appears to be stabilizing at the mid-day.

With the Small-caps finding support at their VWAP, perhaps the SPY can break out above its R1.  Meanwhile, internals are running sideways and volume is suggestive of an overall range day.

Price is moving towards filling the opening gap lower, but really internals aren’t suggesting much. This sideways action is definitely needed to ‘burn-off’ last week’s overbought readings.

The bond complex took it on the chin as equities screamed higher into broad short-term overbought territory.  Inspired by the Jobs report, the S&P 500 (SPY) finished a full +2.1% higher, while Twenty-Year U.S. Treasuries (TLT) were conversely taken down by roughly -1.0%.  The small-cap focused Russell 2000 (IWM) performed even better, putting in a [...]

A little head and shoulders is breaking to the downside. Internals remain positive, but are lessening in strength at the mid-day.