Nasdaq – p/p, short interest ↓ 0.04%, Nasdaq composite ↑ 0.9%
On March 1, the Nasdaq composite (5866.77) made a high of 5911.79, which was then superseded on March 21 (5928.06) and on April 5 (5936.39). The 5900 level has proven tough to crack. A breakout probably sets off a squeeze.
That said, shorts are yet to get any traction. On Tuesday, they were able to push the index slightly below the 50-day moving average, which the bulls defended in a hammer session. Range-bound action continues.
NYSE Group – p/p, short interest ↓ 1.5%, NYSE composite ↑ 0.3%
The NYSE composite (11473.62) has been trading along a declining trend line since March 1 when it recorded an intraday high of 11687.07. The good thing, from the bulls’ perspective, is that the 50-day moving average, which they have clung on to for the past three weeks, is providing support, including yesterday.
Down below, there is support at 11100-11200 – a must-save.
XLB (52.46) is flat as a pancake since it broke out on January 24 – caught in a two-point range. The 50-day moving average, which provided support yesterday, is beginning to go flat.
Should it manage an upside brekaout, there is little chance of a meaningful squeeze. Short interest is at multi-year lows.
XLE (70.90) has broken the mid-December ’16 declining channel as well as recaptured the 200-day moving average, which was successfully tested yesterday.
Bulls and bears are toughing it out at the 50-day. Should the former succeed, short interest is high enough to cause a mini-squeeze.
XLF (23.39) peaked on March 2 at 25.21. Short interest bottomed mid-January, rising to a 13-month high by mid-March. These new shorts have done well, and probably will continue to as long as the ETF remains under support-turned-resistance 23.70.
XLI (65.38) has straddled the 50-day moving average since March 21 – give and take. The daily MACD just had a bullish crossover, even as the Bollinger band is tightening. Short interest has risen the past seven months, but nothing major.
XLK (52.76) longs continue to deny shorts of an opening, having defended the 50-day moving average yesterday. The latter aggressively added post-election and are staying put … they might have a chance if a potential MACD cross-under on the weekly chart completes.
Elevated short interest acted as a big tailwind since XLP (54.88) began to rally early December last year. That said, the $55 level continues to be tough to break – even with all the help coming from shorts. Since mid-Dec last year, short interest is down 51 percent.
For the past month and a half, XLU (51.47) trend has been flat to slightly up. Bulls are working hard to deny shorts of a double top. Should a breakout occur, squeeze fuel is decent.
Mid-March, XLV (74.17) bulls forced a breakout – past prior highs of July 2015 and August 2016 – but that proved fleeting, possibly because there was so little fuel for squeeze.
Since they cut back big during the December 15-30 period last year, XLY (87.51) shorts are lying low. And the ETF continues to grind higher, though ever so slightly of late. Near-term, $87 needs to hold.
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