The SPDR Diamond Trust (DIA) has continued to lag the SPY as the rally has just reached the 50% retracement resistance at $130.48 and appears to have stalled well below the 61.8% Fibonacci resistance at $131.90.
The Dow Industrial A/D line (not shown) has moved back above its WMA, but is still well below the resistance that was formed during the July-October period.
There is first good support for DIA at $128.20-$129 and then in the $127 area.
The PowerShares QQQ Trust (QQQ), which had been the weakest market sector going into the November lows, has had an impressive rebound as it has made it all the way back to the strong chart resistance at $66.20, line a. The 61.8% Fibonacci retracement resistance is at $67.05 along with the former uptrend, line b.
The sharp rally in Apple (AAPL) has played a key role as it has rallied from a low of $505 to a high last Thursday of $594.25. Those diehard apple bulls who established long positions in the stock by selling the December 520 put at $15 or better as recommended on November 12 are in a good position. I will be watching the correction in AAPL for another entry point.
The Nasdaq 100 A/D line has bounced nicely as it has broken through short-term resistance (dashed line) but is still below more important resistance at line c.
QQQ will find initial support now at $64.50-$65 with a more important low in the $63.30 area, which is the 50% retracement support.
The iShares Russell 2000 Index (IWM) has rallied over 8% from its recent lows but appears to have stalled in the $82 area. The former uptrend is at $82.50 with the 61.8% retracement resistance at $82.83.
The Russell 200 A/D line has just bounced back to its former support ,now resistance, at line f. It still needs to move through the downtrend from the highs early in the year, line e, to signal a strong new market uptrend.
The daily chart shows initial support in the $80.80- $81 area and the 20-day EMA with stronger support now at $79.20-$79.50.
The iShares Dow Jones Transportation (IYT) has rebounded nicely from its lows, but the longer term divergence with the Dow Industrials has still not been resolved. As I pointed out in last Friday’s column this needs to be resolved for the market to sustain a major new uptrend.
Though the Spyder Trust (SPY) looks ready to close the month unchanged there are a few standout sectors based on preliminary closing data. The Select Sector SPDR Consumer Discretionary (XLY) looks to gain almost 2.7% for the month followed by 1.6% gains in both the Select Sector SPDR Materials (XLB), Select Sector SPDR Industrials (XLI). The big losers were the Select Sector SPDR Utilities (XLU), which dropped almost 5% andthe Select Sector SPDR Energy (XLE), which was down 1.5%.
NEXT PAGE: The Week Ahead