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TAM's Morning Cup of Jo: June 29, 2011

|Includes: IWM, QQQ, SPDR S&P 500 Trust ETF (SPY)

“Power requires legitimacy, or else it is despotism.”
– Jack Behrman
Another day in paradise, I guess. It was kinda like gazing at a beautiful diamond only to realize it’s merely quartz. A 1.2% move on the SPX & DJIA and a 1.5% on NDX & RUS looks great on the surface, until we realize it was the 3rd lowest volume day of the year. Does this make an ole’ market technician somewhat skeptical? Hell Yeah it does! Especially as the markets climb the backside of prior trends. I believe Hans Christian Andersen exemplifies it best, “The Emperor Wears No Cloths.”

SPX Daily

Clothes or not the SPX could actually make it to the top end of Andrew’s Pitchfork if 1,300 gives way, mainly due to quarter-end gyrations and institutional maneuvering. This level corresponds to the 50-DMA around 1,320. If this happens the next question arises; “Could the Market actually breakout and go from Bearish to Bullish?” Pondering further we digress. Yesterday we looked at a secondary index for the NDX, hence we though it apropos to keep the trend (no pun intended).   Today we gander at the Transports on a weekly basis to gain any sort of direction verification.
DJTA Weekly

The Transports are flirting with the top end of a massive secular channel around 5,500 and has yet to break the intermediate-term trend around (5,000). If the SPX enters the south end of Andrew’s Pitchfork we’d expect to see 5,000 to be broken on the DJTA. If the SPX breaks topside of the top tine in Andrew’s Fork then we’d expect the DJTA to bust through 5,500. If the latter occurs, which at this juncture is highly unlikely, all short bets should come off the table.
Stay tuned and once again… Buckle-up!
Until Next Time