IWM HITS RESISTANCE AND STALLS ... . Despite leading the market lower the last few months, small-caps led the market higher over the last two weeks. However, chart 1 shows the Russell 2000 ETF (IWM) running into resistance around 64 over the last few days. Resistance in this area stems from broken support and the April trendline. There is also a gap down the second week of August. After a surge from 59 to 64 in eight days (8.4%), the ETF was short-term overbought last week and ripe for a pullback or a consolidation. Technically, the bigger trend remains down as prices move from the upper left to the lower right on the chart. A little follow through above this first resistance level is needed to keep this upswing alive and challenge bigger resistance around 67. The indicator window shows IWM underperforming SPY since May. However, the price relative did turn up over the last two weeks. Again, a little follow through is needed to break the May trendline and show some serious relative strength.
SETTING FIRST SUPPORT LEVELS FOR DIA AND QQQQ... The charts for the Dow SPDR (DIA) and the Nasdaq 100 ETF (QQQQ) are quite different over the last few months, but both share the same support zones to watch in the coming days. Chart 2 shows DIA with a move above its June high in early August and a substantially higher low in late August. DIA broke above channel resistance last week and the broken resistance zone around 101 turns into the first support zone to watch. A strong breakout should hold. Like many indices, DIA became short-term overbought after a 4% surge last week. Some sort of pullback or consolidation can be expected after such a big move. A shallow pullback would be more bullish than a deep pullback. A pullback that extends past the breakout at 101 would question bullish resolve.
Chart 3 shows QQQQ with a triangle taking shape over the last few months. QQQQ formed a lower high in early August and a higher low in late August. The swing within this triangle is up with last week’s breakout surge. Broken resistance around 44 becomes the first resistance level to watch. A strong breakout should hold and a move below 44 would question this breakout.
SEMIS BATTLE NEW RESISTANCE ZONE... A basic tenet of technical analysis is that broken support turns into resistance. Chart 4 shows the Semiconductors HOLDRS (SMH) breaking support in August and this support zone turning into a resistance zone. Notice how support around 25.5-26 turned into resistance this week. We can now mark key resistance with last week’s high. A move above this level is needed to reverse the seven week slide. With a pullback from broken support over the last two days, semis continue to show relative weakness. The indicator window shows the price relative, which compares SMH performance to the S&P 500 ETF (SPY). This indicator peaked in mid July and declined steadily over the last 7-8 weeks. Relative weakness in this key groupd a negative for the technology, Nasdaq and market overall.
INTC AND AMAT SHOW RELATIVE WEAKNESS ... Intel (INTC) is the single largest component in the Semiconductors HOLDRS. Chart 5 shows the stock falling over 1% after a downgrade today. Falling on bad news is not a good sign. INTC broke support in August with a series of gaps. After this week’s decline, the stock established resistance with last week’s high. Chart 6 shows Applied Materials (AMAT) plunging over 2% on Wednesday. As with INTC, the stock established resistance with last week’s high. At the rate these two are falling, they will soon be in the S&P Value Index.
ATML AND CY SHOWS RELATIVE STRENGTH... While the titans Intel and Applied Materials move south, a couple of smaller semiconductor stocks are moving higher and showing relative strength. Chart 7 shows Cypress Semiconductor (CY)with a double bottom taking shape over the last few months. Notice how the stock surged from support to resistance with big volume the last two weeks. Chart 8 shows Atmel (ATML) surging above its August high this week. In fact, the stock hit a new 52-week high this week. While it looks short-term overbought after the two week surge, there is no denying relative strength.
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发表于 2010-9-8 20:22
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