Is this move for real? Part 2

I wanted to follow up on that post with updated charts. Since the last charts, some averages have caught up while one in particular has opened up a wide gap - DIA. It is safe to say that for that index, the last week's move looks a little fake as it was not confirmed by volume. Volume on the other hand seems to confirm the IWM move! We'll see how that pans out over the next couple of days!

DIA

SPY

QQQ

IWM

Is this move for real?

Large move with low volume are less meaningful. Today's move is another example. Look at the chart below. I charted SPY with a standard moving average and a volume weighted average. The standard average points up after today, but the volume weighted average stays flat! So not a convincing move...

And the DIA is even worse... The volume weighted average points down!

An update on the weekly index charts

Here are some updated weekly charts to track the progress of our indices. All of them have bounced of the first Fibonacci line and the DIA and IWM are not making new highs for the year. SPY and QQQ are lagging!

DIA

IWM

SPY

QQQ

Bouncing off our levels

Here are some updated charts for the major indices. They show that we successfully bounced off our first Fibonacci line of support following the "Japan" selloff! QQQQ is definitely the laggard here. It is well below the 50 day MA. SPY will have to hit against it today. Something to keep in mind!

DIA

SPY

QQQ

IWM

Did we reach a top....

Following up on some weekly chart that I had drawn earlier, it seems that we have hit a major resistance point both in SPY and IWM. The chart below show Fibonacci extensions using the lows of April 2009 and the retracement of April 2010 as bases. Right now, both IWM and SPY sit right below the 61.8% extension. Many books identify that line as the most important Fibonacci level. Breaking through would be bullish. If not, this might be a temporary top.


DIA is lagging, but not far behind....


SPY

IWM

DIA

Why Can't IWM get over 80 (or 800 on the RUT)?

The Dow is over 12,000, the S&P is over 1300, why does the RUT have so much trouble getting over 800? On a psychological level, 800 seems like the next hurdle, but the if you look at the recent correlation between the Dow and the Russell index, it makes more sense. 

Since the lows of March 2009, IWM has had a much better run than the Dow so while 800 is big round number, it seems that compared to a historical valuation, IWM is overvalued by close to 100 points (or the Dow undervalued - right!). In any case, IWM needed a breather to let the Dow catch up to more historical valuation. Do don't sweat the round numbers. It's in your head only!