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Monday, June 18, 2012

Resistance At The 50dma

Friday IBD called a questionable follow through day, but so far today they have been right. There is a potential problem here: the 50dma is now proving to be resistance, and if volume keeps dropping the way it did today, we will not likely get through it. Assuming the 50dma gives way, this market has a potential to rally up to about 1375, which, while not a wild bull market, is a decent gain from here.

The Nasdaq had a very good day today in comparison, although it also had a big drop in volume. The price relative line is weak, and could be hitting resistance at the horizontal line, but it has, for the last two days, started moving up. If that continues, we rally some more.

The good news is the Dow industrial had, by comparison, a pretty lousy day, which is bullish, but the bad news is that is is also hitting resistance at the 50dma. It looks like the buying dries up as the price approached the 50, and won't pick up again unless it is broken through (or goes into another big swoon).

The Russell 2000, unfortunately, did not have a terribly good  day, although the close was better than most of the rest of the day. This also looks like the 50dma is going to put up a fight, and it has chart resistance right about the same place. If this can't get through, kiss this rally goodbye.

I will have the new highs update shortly.

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