Another day of digestion with the major indexes in the red. The most interesting move on the day came from the Russell 2000 Small Cap index dropping 1.6%. As you can see below the index is starting a down trending channel or it could be the handle to go with the cup pattern… watching to see how it unfolds. The upside need to clear 1090 on some volume and the downside needs to break 1053 with some volume. Pressure is on the index as this was one of the early leaders of the February reversal.
Russell_2000

Russell_2000Financials (XLF) are another sector in position to help lead the markets higher, but has not been able to find the momentum to push through the next level of resistance. Need to clear the $22.50 level of resistance (as seen on the chart below) and find some volume on the move. The banks (KBE) are not helping on two failed attempts to clear the $31 level. The moving averages have turned positive showing interest short term from the buyers and from my view this is a key sector if we are going to move higher on the major indexes going forward.    

Chart
Chart
Adding to the confusion on the day was crude oil dropping 2% on the day closing at the $36.45 level. The resistance at $38.30 has been tough on the commodity short term. Gold equally struggled today dropping 1% as it continues to flirt with support on the metal. Gasoline (UGA) is testing the $25.50 level of support after breaking higher last week. Natural Gas (UNG) remains in a reversal off the lows in March and looking for a move above $6.75 short term in the commodity.
The ten year treasury yield is still flirting with the 2% threshold, but has not made a clear move higher currently. IEF at support of $108.40 currently… a break of this level would show the yield moving higher a short trade opportunity in the ten-year bond (PST).
Other moves of interest on the day:
  • EMB – Emerging market bonds testing support after a solid run higher.
  • EEM – Emerging markets consolidating near the current highs.
  • FXI – China leading the consolidation for EEM and a move above $33 would be a plus for both.
  • EFA – EAFE index cleared resistance and today tested lower again as the global markets follow the US on the test near term.
  • IYR – REITs the sector has stalled near the December highs. Watching for a move through and continuation on the upside.
  • AMLP – MLPs have attempted to take out the downtrend, but have stalled along with the price of crude and the energy sector… watching for a renewal in the upside near term.
  • AAPL – Apple stock got a boost from an upgrade regarding iPhone sales… cleared resistance at the $102.90 mark. Set up for a trade opportunity if it holds the move higher.
  • IYT – Transports are stalled again at the $137.55 level and closed on a doji candle today… could see a minor reversal in the upside move.
  • IBB – Biotech showing some weakness again and could test the previous low at the $240 mark.
  • Scans show another tick higher for the short ETFs. That is a worth our attention short term as this unfolds the balance of the week.
Two consolidation days to start the week… the buyers are still in control, but don’t count out the sellers. They are not going to shy away until the data proves differently.