Watching The Major Indexes for Confirmation

Monday was like watching paint dry, but only worse. At least watching paint you know it will eventually accomplish the task. The low volume, can’t make up our mind tug-o-war in the markets just keeps going. The economic data isn’t good, Europe is a mess financially and now we are talking about earnings not meeting expectations. The complaining is loud and clear, but the market refuses to break support and sell off. But, it also refuses to find support and rally higher. This has been going on since the March high and here we are again with second quarter earnings starting and still no conviction on direction.

Okay enough of the complaining, on with the show. Today I want to breakdown some of the major index ETFs and what we are watching as this week unfolds…

SPY – The S&P 500 index ETF is attempting to hold above the support at $134 and make a move back above the $135.70 mark. The uptrend off the June 4th low is still in play and all we need is some momentum to push the index back to the March highs. $139.10 is still an achievable short term target

IWM – The Russell 2000 Small Cap index ETF is holding support above $79.10 and a move back above $80.60 would be positive for maintaining the current upside move off the June 4th low.

QQQ – NASDAQ 100 Index ETF is holding above the $63.60 support for now and a move back above $64.60 would be a plus for the uptrend in play off the June 4th low. $67.30 would make a good short term target for the move higher if it follows through.

XLF – SPDRs Financials ETF needs to hold the $14.40 mark with a move above the $14.55 level to keep the trend working. The sector faces earnings on Friday with JP Morgan and Wells Fargo announcing Q2 data. Tough play, but the upside is still promising if the outside news events will die down.

SMH – HOLDRs Semiconductors ETF is struggling to hold any level of support. It has to hold above $30.50 or it could spell trouble for the technology sector overall. Intel reports earnings next week and will provide some key data, but until then the sector needs to hold support. That may be a tall order to accomplish.

XRT – SPDR Retail ETF got a nice bounce last week, but needs to hold $59.30 support short term. The selling on Friday and Monday could be the test, but it needs to hold. A break is a negative short term opening the way to $57.30 support.

OIH – HOLDRs Oil Services – Looking interesting as crude oil pushes higher on speculation of supply disruption. First is Iran threatening, and second we are facing strikes in Norway. Crude has moved back near $86 and the stocks are poised to follow should the speculation turn to reality. Look for a sustainable break above $36.40.

IYR – iShares Real Estate Trust ETF remains one of the leaders short term. The bounce off the June 4th low has eclipsed the May high and remains in a positive uptrend short term. Some dividend chasing in play as investors rotate away from risk.

The leadership is a bit eclectic, but thus far it is holding the markets up and keeping the sellers at bay. How long with this go on? For now it seems indefinitely, but all good things eventually come to an end and we have to be aware of the longer term risks to the markets overall. That said, the short term events such as earnings could be the driver of the short term trends. Be patient and take what the market gives. Discipline is the key in this type of market cycle.