Mish's Market Minute

A Potential Break in the 50-DMA and Where to Look Next

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Last Friday, we noted how major symbols (QQQ, IWM, JNK, SMH) bounced off the 50-DMA. Now, with the market still undecided, we can build a plan on what to look for if we break under the 50-DMA. 

Let's take a look at the QQQs and the SPYs on a daily chart below.

Here, we can see that while the QQQs have settled down almost perfectly on the 50, the SPY has a little more to go. With a break of the 50, we then would look for a second day to close under the 50-DMA. This is very important because the second day is confirming a caution phase change. Many times, a moving average is broken, but the security closes higher the next day. If both symbols break and confirm, this makes a stronger case for the continuation down. 

You might then think, "Well great! Now we see prices confirming a breakdown, where might the price go next?"

Ahh, I'm glad you asked. If we have convincing closes under the 50 bringing us further away from the 50-DMA, the next point of interest would be 260 for the QQQs and 323 for the SPY. These prices are right at the 17-week Exponential moving average for both symbols. This leaves the QQQs in a prior consolidation area and the SPY in a prior consolidation area, with support from June's highs. 

We can never be 100% sure what the market will do, but looking for past support areas and key indicators can help us prepare immensely!


  • S&P 500 (SPY): 329 support
  • Russell 2000 (IWM): Broke 50-DMA, watching for a continuation
  • Dow (DIA): 271 support
  • Nasdaq (QQQ): Sitting on 269 50-DMA. Watching for break lower.
  • KRE (Regional Banks): Also sitting on 50-DMA
  • SMH (Semiconductors): Next support 159
  • IYT (Transportation): Watching for a break back over the 10-DMA with resistance at 203
  • IBB (Biotechnology): Watching for support at 124
  • XRT (Retail): Next support at 50-DMA 48.00.
  • Volatility Index (VXX): Broke 50- and 200-DMA. Watching for continuation
  • Junk Bonds (JNK): New Sitting on 50-DMA. Watching
  • LQD (iShs iBoxx High-Yield Bonds): 134.56 next support
  • GLD (Gold Trust): Held 180 support. A close over the 10-DMA would be nice.
  • GDX (Gold Miners): Holding onto the 50-DMA - can it get back over?
  • SLV (Silver): 23.00 support and watching
  • USO (US Oil Fund): Large breakdown with news of price cuts.
  • UNG (Natural Gas): Did not clear 14 and broke down.  
  • TLT (iShares 20+ Year Treasuries): Watching to stay above 10-DMA
  • USD (Dollar): 10-DMA resistance. Closed under 50-DMA, watching for confirmation
  • VNM (Vietnam): Held the 10-DMA
  • JO (Coffee): Still looks good
  • CANE (Sugar): Ended the day green. Watching to clear MAs
  • Soybeans (SOYB): Closed higher
  • DBA (Agriculture): Needs to continue higher passing the MAs


Forrest Crist-Ruiz

MarketGauge.com

Assistant Director of Trading Research and Education

Forrest Crist-Ruiz
About the author: is the latest member of the MarketGauge team, working closely with Mish Schneider as Assistant Director of Trading Education and Research. Forrest has experience as a trader, having successfully invested in his own personal account for several years. Currently, Forrest assists Mish with trade selection and management. He also helps with writing the MarketGauge Daily Blog. Learn More
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