A few cautious flags were thrown up yesterday in spite of the new all-time highs in NASDAQ:
- The volume was light. After Friday's spike in volume, Monday QQQs saw below average daily volume.
- The momentum indicators that we use that measure tops, bottoms, and big trends show a divergence between momentum and price. The momentum on NASDAQ's last trip to new highs on July 13th had higher momentum than yesterday's, with a new all-time high.
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This type of divergence can often become a leading indicator that precedes a top. - Couple the lower volume with the divergence in momentum and one can conclude that the bulls are growing less enthusiastic.
- The last swing high on July 13th was at 269.79, which became the 6-month calendar range high. That is yet another indicator we use that often becomes the top or bottom or launch pad for trading an instrument over the next 6 months. Monday's high was 270.15 but QQQs closed at 269.21 or under the 6-month calendar range high.
Levels:
S&P 500 (SPY) 323 now pivotal support 332.58 a gap to fill
Russell 2000 (IWM) held the 200-WMA and now has 150 resistance
Dow (DIA) 270 resistance 262.50 support
Nasdaq (QQQ) 262 support and 270 resistance
KRE (Regional Banks) Cannot get out of its own way
SMH (Semiconductors) 165-168 pivotal-170 resistance
IYT (Transportation) 172.55 support 179-180 resistance
IBB (Biotechnology) 142 resistance 136 support
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XRT (Retail) Looks like Granny wants 50.00
Volatility Index (VXX) Watching carefully as holding the 200-DMA at 27.90
Junk Bonds (JNK) Risk appetite waned but held the key support at 105.30
LQD (iShs iBoxx High yield Bonds) 137.50 support