Tuesday, July 3, 2012

Morning Market Analysis

After the strong performance on Friday, we need to look and see if there is any follow-through.  On that front, there is good and bad news.  The good news is the Russell 2000 (IWM) rallied beyond resistance.  As this is the higher risk area of the equity market, this move is bullish.  However, we didn't see any follow-through on the other markets, which is not good.  Ideally, we need to see the QQQs and/or the SPYs make a move higher in conjunction with the IWMs.

In addition, we're not seeing any strong breakouts in some of the largest sectors.  The energy ETF (top chart) -- which broke through resistance last week -- hasn't followed through.  The financials (second from top), have printed to hanging man candles in a row -- not a bullish development.  Consumer discretionary (second from bottom) hasn't moved through resistance and the industrial ETF (bottom) fell from its position above resistance. 

All told, the above charts don't bode well for a lot of follow-through in the broader market.