The daily chart of the Spyder Trust (SPY) shows that the 50% Fibonacci retracement support at $137.64 was hit last Friday as the low was $137.55 .The break of the uptrend (line a) in the middle of the week was a negative development.
There is band of support between Friday’s lows and the 61.8% retracement support at $135.16. The SPY is currently testing its daily Starc- band, with the weekly band this week at $136.04. The last time the weekly Starc- band was tested was last May.
The daily OBV did not form any divergences at the recent highs, just breaking support and the uptrend (line b) this week. The WMA is declining, which is consistent with a further decline.
The first resistance is now at $140 to $140.50, with stronger levels at $141.84 and the declining 20-day EMA. There is major resistance at $144 to $146 where the former uptrend and the daily downtrend intersect.
The SPDR Diamond Trust (DIA) has been much weaker than the SPY, as the 50% Fibonacci support at $128.31 has been decisively violated with the close on the weekly uptrend (line d). The 61.8% support is at $126.38, with weekly chart support in the $124 to $125 area.
The higher-yielding Dow stocks have been hit especially hard, and my review last week of the Dow's Most Oversold Stocks indicated that the majority could still go lower.
The relative performance or RS analysis shows that Dow stocks have been weaker than the S&P 500 since the middle of July, when the RS line dropped below its WMA
The on-balance volume (OBV) has dropped sharply in the past three weeks, as the WMA and the uptrend (line f) have both been broken. The OBV is now approaching support from the June lows.
There is quite strong resistance in the $130 to $132 area, which is likely to stall any rally attempt.
The PowerShares QQQ Trust (QQQ) has continued to face heavy selling pressure, as it dropped below the 61.8% support at $64.05 this week. Tech giant Apple (AAPL) was not able to hold support in the $570 area from late July, as $530 has been reached.
The Nasdaq-100 A/D line has also reached more important support, from where it is trying to turn up. It needs to start a new uptrend before there are any signs that the tech sector has regained its footing.
There is first resistance now at $64.50 to $66, with the declining 20-day EMA at $65.63. The rebound over a week ago failed to overcome the 20-day EMA or the former uptrend (line b), which was a sign of weakness.
The iShares Russell 2000 Index (IWM) dropped below the 50% retracement support at $79.85 last week, and the uptrend (line d) was also broken. The 61.8% support stands at $78.17, with more important chart support in the $76 area.
The Russell 2000 A/D line failed to move above its WMA on the latest bounce, and now shows a clear pattern of lower lows. The longer-term uptrend (line f) has also been broken. The A/D line has long-term resistance at the downtrend (line e), which was tested but not overcome in September.
There is resistance for IWM now in the $80 area, and the 20-day EMA is at $80.79. There is more important resistance in the $82 to $83 area.
NEXT: Sector Focus, Commodities, and Tom's Outlook