Yesterday, the markets got off to a strong start, then consolidated lower in a very orderly way. As a result, it was basically a consolidation day that happened to also touch new highs in several markets.
If I was looking to pick the top for the week then maybe I’d say yesterday was the top for a while in the SPDR® Dow Jones Industrial Average ETF Trust (NYSE:DIA). I could justify that idea by describing yesterday's action as a bearish attempt at a new high that failed.
However, that’s a dangerous way to look at the market. It will get you in trouble by reading too much into one day’s action. There’s a better way.
You’ll see in my comments below about the individual ETFs that I look for ranges to watch and put more weight on them than single days. I let the markets consolidate for at least 2 days, and preferably 3-5 days before I start thinking about a trend change that’s worth changing my bias.
For example, right now…
The SPDR S&P 500 (NYSE:SPY) broke out of a 3-day range on Monday and yesterday moved higher. There isn’t a clear range yet. The same can be said for the Invesco QQQ Trust (NASDAQ:QQQ). Be patient.
On the other hand, the DIA has a pretty clear 5-day range from yesterday’s high down to 290. Picking yesterday as a high day is just saying that it won’t get through the resistance that we can already see. That’s one reason I used it as my example above.
I also know that our Real Motion indicator is set up in such a way that if the DIA starts to head lower today, (under yesterday’s low and under a 30-min. O.R.), there’s a good chance it will have a trend down day.
Finally, the iShares Russell 2000 ETF (NYSE:IWM) is stuck in a 5-day range. If it breaks the low of its range it will also be breaking its 50-day MA. That would be bearish, and a reason to anticipate more downside.
Until these ranges start breaking, I’d give the major trend the benefit of the doubt, and not try to pick the top day.
Be patient.
S&P 500 (SPDR S&P 500 (NYSE:SPY) Closed at new all-time highs. 330 is pivotal with support at 327.87
Russell 2000 (IWM) Range to watch the 50-DMA at 164.68 to 168.
Dow (DIA) Hit all time high, then faded. 289 is the underlying support to watch.
Nasdaq (QQQ) Another move to new high, then faded. Must hold 228.
SPDR® S&P Regional Banking ETF (NYSE:KRE) Range to watch is 10-DMA, 55.36 to 57.36.
VanEck Vectors Semiconductor ETF (NYSE:SMH) Strong move that closed well. New highs are at 150.74.
iShares Transportation Average ETF (NYSE:IYT) Compressing. 193.48-197.30 is the range to watch.
iShares Nasdaq Biotechnology ETF (NASDAQ:IBB) Consolidation right under new high range. One of the better-looking sectors right now.
SPDR® S&P Retail ETF (NYSE:XRT) Watch that low 42.90 to hold and if it can get back over 44.05 and hold, even better.