Short Squeeze Just At Hand: ETF Daily Outlook (SPY, DIA, GLD, USO, VIX)

Daily ETF Commentary from Wall Street Sector Selector

Instratrader Indicators: 

Yellow Flag: We Expect Choppy Prices Ahead 

Daily Technical Sentiment Indicators: Optimism (short term bearish) 

Short Term Market Condition:  Overbought (short term bearish) 

Short Term Trend: Up 

Medium Term Trend: Down

 Long Term Trend: Down 

% of Stocks Above 200 Day Moving Average/Daily Change: 60.6%/+9% 

% of Stocks Above 50 Day Moving Average/Daily Change:    76.7%/+11% 

Market Update:

Market                                   Closing Price                   % Change

Dow Jones Industrials (DIA)        10,525                        +0.97%

S&P 500:                            11115          +1.1%        

Gold:                                                 $1183                             -0.5%

Oil:                                             $78.96                    -0.03%

VIX:                                               22.7                             -3.2%

Shanghai Comp:                          2588                            +0.65% 

Commentary: 

A “short squeeze” is just at hand as markets pushed higher today on the strength of “good” new home sales and FedEx upping their forecast going forward.  I say “good” home sales because while the number came in better than expected it was the 2nd lowest number dating all the way back to 1963 and so, to my mind, didn’t seem to offer too much to cheer about.

Tomorrow we’ll get data more data from the housing market with the Case/Shiller Index due at 9:00 a.m. Eastern time and July Consumer Confidence at 10:00.  Also before the market open we’ll see earnings reports from BP, Dupont and U.S. Steel

Today the S&P 500 closed above its 200 Day Moving Average for the first time since late June where it managed to hold that level until declining approximately 9% into the recent lows in early July.  A few days above this point and marginally higher closes will force out many “shorts” and likely lead to still higher prices.

Short term sentiment is running very positive and the markets are extremely overbought which in “normal” environments would lead one to expect a short term correction.

Disclosure: psq, rwm, sh, skf, spy put

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