***Executive Summary***

• Stock Market Stance Remains Neutral
• IWM and SPY Test Triangle Support
• QQQQ Bounces off Channel Support
• UUP Stalls Near Triangle Breakout
• GLD Attracts Money as Safe Haven
• USO Sinks Further
• TLT Gaps Down and Stays Down
• ETF and Stock Setups Video by 8AM (video link)

***Stock Market Stance*** Neutral on 29-January. After a big reversal in the final hour on Thursday, there was absolutely no follow through on Friday. Perhaps the three day weekend kept the bulls in check on Friday. Whatever the reason, the bulls did not have the muscle to follow through on the reversal. One hour of buying pressure is simply not enough. Once again, Thursday's reversal looks like another news-inspired surge that will fail. There has been no shortage of these over the last few weeks. Trading remains treacherous and I remain neutral overall. There are some nice swings to be had, but catching them, and controlling risk, requires intraday adjustments.

The bulk of the medium-term evidence favors the bears. First, there were double negative breadth extremes on 14-Jan, 20-Jan and 10-Feb. A double negative breadth extreme occurs when both AD Net% and AD Volume Net% exceed –90% for the S&P 1500 ETF (ISI). Second, eight of nine sectors were down more than 3% last Tuesday and volume expanded on the downside. Broad selling pressure on expanding volume is not bullish. Moreover, stocks have yet to recovery and triangle breaks looks imminent for SPY and IWM. Third, IWM, SPY and DIA are in downtrends and show relative weakness – especially DIA. QQQQ and techs shows relative strength, but you cannot ride a one legged bull.

Market moving events for the next few trading days:

• Tuesday: Empire State Manufacturing Index
  -Earnings: Agilent, Fossil, Medtronic, Wal-Mart
• Wednesday: Crude Inventories, Housing Starts, FOMC Minutes, Industrial Production
  -Earnings: Dollar Tree, Garmin, Toll Brothers, TJX
• Thursday: Jobless Claims, Producer Price Index (PPI), Leading Indicators
  -Earnings: GM, Hormel, MGM Mirage, Sprint, Tesoro
• Friday: Consumer Price Index (CPI)
  -Earnings: Barrick, JC Penney, Lowe's, Tim Hortons
• Monday: Home Price Index, Consumer Confidence
  -Earnings: Looksmart, Nordstrom, ONEOK, The9 Ltd

***Major-index ETFs***

***Medium-term Trend*** QQQQ stalled on Friday with a doji, but IWM and SPY moved modestly lower. QQQQ remains in a slight uptrend as it trades above the November trendline. "Slight" is the key word here. The thin blue line (30) extends from 8-Dec. The ETF gapped up and first closed above 30 on 8-Dec. Since then, QQQQ has moved above/below 30 over a dozen times. This is not much of an uptrend. Overall, the rising wedge looks like a big bearish consolidation and a break below key resistance at 28.5 would signal a continuation lower. IWM and SPY are much weaker than QQQQ and both look vulnerable to further weakness. After breaking wedge supports and becoming oversold in mid January, IWM and SPY formed triangle consolidations. There were a few news driven bounces within these triangles, but the bounces ultimately failed. Both are testing triangle support. Breakdowns from here would target a test of the November low. I suspect that a breakdown from here would not end until there is a selling climax that breaks the November low.

***Short-term Trend*** Three words sum up Friday's price action: No follow though. Not only did stocks fail to follow through on Thursday's reversal, but they also moved lower in the final hour on Friday. Thursday's reversal occurred with big volume in the final hour of trading. As noted Friday morning, failure to follow through would be quite negative. This was indeed the case on Friday and the futures are pointing to a sharply lower open today. Overall, SPY and IWM remain in trading ranges with support from the February lows and resistance from the late Jan-early Feb highs. QQQQ remains in an uptrend with higher highs and higher lows over the last few weeks. However, Friday's failure to follow through and today's gaps are likely to produce support breaks today. The blue trendlines extending down from last week's highs and thick red lines mark key resistance. A post-gap recovery and break above these levels would be bullish. Barring such a recovery, I am targeting a move towards the November lows.

***Inter-Market Charts***

***Dollar*** The US Dollar Index Bullish ETF (UUP) edged above 26 on Thursday and drifted back below 26 on Friday. Even so, the medium-term trend is up and a triangle breakout is in the works. This breakout targets a move towards the Oct-Nov highs around 27. The breakout also reinforces support at 25.3. On the 30-minute chart, UUP broke triangle resistance and then consolidated. I marked the first support level at 25.8. A move back below this level would negate the triangle breakout. As long as 25.8 holds, the Dollar is expected to strengthen. The Euro Trust ETF (FXE) is under pressure this morning as the Dollar attracts Forex buyers as the safe-haven currency. FXE broke flag support on Thursday morning, but firmed with white candlesticks on Thursday and Friday. Despite this firmness, the overall trend remains down and I expect a move towards the Oct-Nov lows. Only a break above resistance at 131 would change my assessment. Euro-zone banks are in as bad, or even worse, shape than their US counter parts. The Euro-zone is also not immune to the global recession. Despite obvious problems, the European Central Bank (ECB) remains stubborn with its benchmark rate near 2%. Bank problems, economic recession and high interest rates are all putting downward pressure on the Euro.

***Gold*** Gold remains the other safe-haven investment right now. The streetTRACKS Gold ETF (GLD) is in a clear uptrend on the daily chart. The upper channel trendline extends to around 100 by the end of the month for an upside target. This equates to $1000 for gold. The gray lines show a smaller channel within the bigger channel. After surging from 80-90 in mid January, GLD worked its way up with higher highs and higher lows the last few weeks. Buying pressure remained strong even after GLD became overbought. Talk about strength. On the 30-minute chart, I identified a triangle consolidation and GLD broke triangle resistance on Tuesday. After a surge on Wednesday, GLD consolidated around 92-94. Even though there is support around 92, I am leaving first support at 88.5 (broken resistance) and second support at 87 (Jan-Feb lows). The bullion bulls are in excellent shape as long as the triangle breakout holds (88.5).

***Oil*** Oil simply shows no signs of buying pressure. There were a few 1-2 day pops, but there was no follow through and the United States Oil Fund ETF (USO) subsequently moved to new lows in February. On the daily chart, USO broke support with a sharp decline last week and closed below 26 on Friday. While ETF looks short-term oversold, the downtrend continues to exert downward pressure. The late September trendline and early February highs mark the first resistance level around 30. On the 30-minute chart, we can see how the decline accelerated last week and the ETF ended the week with a small pennant consolidation. A pennant break would signal yet another continuation lower. In addition to the technical picture, continued strength in the Dollar and weakness in the stock market favor further weakness in crude.

***Bonds*** The iShares 20+Yr T-Bond ETF (TLT) took a big hit on Friday with a gap down and long black candlestick. The medium-term trend remains down and I can now lower key resistance to 107. A move above this level would break the January trendline and forge a higher high. This would signal a continuation of the Nov-Dec decline. Unfortunately, such a breakout would probably be accompanied by a sharp decline in stocks. On the 30-minute chart, TLT filled Tuesday's gap with Friday's decline. However, this may be an overreaction as bonds are very strong in pre-market trading on Monday. Today's gap must hold to sustain a short-term bullish argument. Failure to hold the gap and a move below Friday's low would be bearish.

Good day and good trading -Arthur Hill

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Disclaimer: Arthur Hill is not a registered investment advisor. The analysis presented is not a solicitation to buy, avoid, sell or sell short any security. Anyone using this analysis does so at his or her own risk. Arthur Hill and TD Trader assume no liability for the use of this analysis. There is no guarantee that the facts are accurate or that the analysis presented will be correct. Past performance does not guarantee future performance. Arthur Hill may have positions in the securities analyzed and these may have been taken before or after the analysis was present.
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About: The Daily Swing is posted every trading day around 6AM ET and focuses on short-term strategies for QQQQ, SPY and IWM. In addition, at two stock setups are featured every day with a detailed trading strategy. As warranted, coverage extends to broad market topics, key sectors and industry groups and inter-market securities (gold, bonds, the Dollar and oil).
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Sources: Data from Bloomberg.com, CBOT.com, Kitco.com and ino.com; Charting from Metastock (equis.com). Closing data from Reuters.com, eSignal.com, MS QuoteCenter and Yahoo! Finance.