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Post Market Analysis, Tuesday November 3: Consolidation

|Includes: DIA, iShares Russell 2000 ETF (IWM), SPY, XLF

Choppy day in the markets today. The S&P (NYSEARCA:SPY) finished up about 0.25%. The Dow Jones Industrial Average (NYSEARCA:DIA) finished down by about 0.2%. The Nasdaq (QQQQ) finished up 0.4%. The Russel 2000 (NYSEARCA:IWM) lead the markets big time, finishing up 1.5%. Finally, the Financials (NYSEARCA:XLF) closed up 0.25%. Interesting divergence among the broader indexes. The market is apparently indecisive on which direction to go next. Expect the next major areas of support and resistance on SPY to be 102 and 108. I will also be watching to see how SPY reacts to the resistance at the 50 day moving average.


The SPY had an inside trading day today (did not make a higher high or lower low). Everything about the neutral sideways action screams consolidation at this level, which can be expected after the recent moves. Consolidation is not a bad thing. In fact, it is healthy and welcomed by most traders as it provides confirmations of certain moves as well as set ups for other moves. The current consolidation on SPY could be a swing low, or a bearish pennant. Of course we will have to play it as we see it. Do not be early though. It is crucial to wait for confirmation of the formation you are trading. Always trade with a stop loss and manage your risk appropriately.

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Talk to you tomorrow,