Technical Picture - Diverging Markets

Futures sold off overnight on disappointing data out of Europe. Initial claims weren't good enough to turn things around so we gapped down on the open. Tech buyers immediately stepped in, but the broader markets needed a bit of a nudge in the form of better than expected existing home sales and leading indicators.

As you can see from the 15 minute charts of the Q's and SPY below, we have diverging markets. Tech is still holding support above the 5 day MA and the SPY barely tasted it on the gap fill. The Q's took out the PDH and tested Tuesday's post FOMC highs, but the SPY just managed to fill the gap, edging into the lower range of yesterday's action.

The two markets don't have to trade in lock step, but at some point, they have to confirm each other. This is an intraday tell and non confirmation leads to reversals in the price action. So, it was no surprise when the markets swooned into the close.

One of the reasons we've diverged so much is quarter-end window dressing. Institutions are busy loading up on sexy tech names like BIDU, AMZN and AAPL to make it look like they got it right, and at the same time, they're unloading the weaker sector names like GS.

After three consecutive lower closes, I would expect some stabilization in the S&P. Hopefully, we can manage to hold the 200 SMA on a closing basis.

GS has broken through several support areas and we have two bearish gaps to deal with. If it can't stabilize here, watch out below.

Trade of the day - AAPL - Break of ORH after NRIB. Place fibs over previous day's range to set Fib. targets. AAPL is trading blue sky (all time highs) so it can run. When the Q's tested Tuesday's high, it was time to fold.

GOOG is flagging nicely.