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The weekly charts

December 7th, 2009 · No Comments

What do they say?

Commentary: To say there was some fireworks on Wall Street this week would be an understatement. The week started with a wide range day on Monday as traders returned from the holiday weekend, which held the prior week’s lows successfully. The following day there was a sharp gap higher which took the indexes towards their recent highs. The following three days had the markets probing new highs with each test getting rejected thoroughly. By the end of the week, the markets still showed a small gain, although certain market leaders such as Apple Inc. (Nasdaq:AAPL) finished much lower. Also, the commodities markets, and gold in particular had a spectacular reversal this week. The overall trend remains higher, but this drop could put a scare in many speculators.

In stepping back and looking at the chart for the S&P500 as represented by the S&P 500 SPDRS (NYSE:SPY) ETF, you can see that despite the commotion the past few days, the index remains near the middle of its trading range, not unlike where it finished last week. The recent highs will now become even more important, as the rally attempt brought in high volume selling. This type of selling is usually attributed to institutions, so caution is certainly warranted.

The Diamonds Trust, Series 1 (NYSE:DIA) ETF is in much the same position as SPY. The breakout attempt failed right away, but DIA also finished the week higher. It also respected the rising 20-day moving average as support and the late week pullback really only filled in the open gap. It will be interesting to see if the markets will be ready to attempt another breakout or first test support near the last week’s gap down lows.

While it appeared that the iShares Russell 2000 Index (NYSE:IWM) ETF was finally beginning to re-emerge as a leader, in the end, the breakout attempt failed here as well. IWM was able to clear it’s November high early on Friday morning, but it quickly reversed and closed back in the recent trading range. This new high now takes on increased importance as well, and should be watched as a potential selling area moving forward. The lows near $56 continue to be critical for IWM, as a break below would cement a topping pattern and project to a move near the $50-$51 area.

The Powershares QQQ ETF (Nasdaq:QQQQ) also ended the week on a similar note, with a breakout failure, but still a higher close on the week. Much like the other market ETF’s, the recent highs now take on more importance with multiple failures from this area. This group has been a leader throughout the recent months, and remains an important one to track in order to try and gain clues as to where the market is headed.

Bottom Line
It was certainly an interesting week, as the breakout failures were disappointing for the bulls, but in all reality, by the end of the week the net result was still positive. The bears have really been unable to push the markets lower, and the recent lows across each of the market ETF’s remain out of reach. Will next week be the week where the bears make some headway?

At the time of writing, Joey Fundora did not own shares in any of the companies mentioned in this article.

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Tags: Technical Analysis