When we look across the three major US stock market indices, the best we can say is, So far, it’s been a pretty weak rally.
Last Monday (June 9), all three markets made new highs. As the week progressed, the Nasdaq (as represented by the QQQ ETF) tried to hold onto the newly gotten gains, but the Dow (DIA) and the S&Ps (SPY) gave them up. You can see this at the area marked A. The Qs had relative strength.
On Thursday (June 12), all three markets saw selling come in. The Naz remained relatively strong, however, as the S&Ps and Dow had larger moves down. Bigger cap stocks got hit.
Now we see — thus far — a pretty weak rally. Notice the Naz. It is now weaker than the other two markets, closing under Monday’s high. Both the S&P and Dow managed to close above yesterday’s high. Although the markets may suddenly gain life and rally higher, usually when a relative strength leader turns weak it isn’t a good sign.
Tomorrow, for the S&P futures (ES), watch the 1935-40 area to present weakness. Inability to hold today’s high (1935.75 — N.B.: this isn’t quite in as the futures haven’t shifted to the next day yet, but this should be close) tomorrow will indicate a down morning (US morning session). In other words, watch for an upthrust of yesterday’s high tomorrow. Support is likely to manifest around 1927-30, which could be a good buy area, with stronger support a little lower down around 1920-15.
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