IWM, XHB Technical Update (11/9/2009) Under 50dma + MACD Zero Line. Will SPY, QQQQ, DIA Provide Support?

Continued from my previous post on DIA, which has been the strongest index ETF out of the majors, IWM (Russell 2000 Small Cap ETF) and XHB (Homebuilders ETF) are still under their 50 day moving average with MACD levels under the zero line.  The question is will SPY, QQQQ and DIA (large caps,tech) carry IWM (small caps) and XHB (housing) going forward, or will someone roll over and start the wave down.  Since the March lows QQQQ (tech) was the leader and supported DIA and SPY along the way.

IWM is trading right below the 50 day moving average with relative strength (RSI) at 51 and the MACD under the zero line.  When the MACD breaks below the zero line it means the 12 day moving average crossed below the 26 day moving average (faster moved below slower) and sometimes confirms downside momentum.  Of course there are head fakes.  In July there was a brief moment when 12 crossed below 26 but it quickly reversed when the market rallied hard.  Now it looks like the MACD made a new low from July (we'll see if it means anything).  Also, volume was higher on down days and lower on up days.  Watch the $59.50-$60.00 level because if it breaks above the 50dma there is probably further upside and/or failed double top or triple top test.  We shall see people.

XHB looks similar.  It is making lower highs from September, price is just below the 50 day moving average, RSI is making lower highs from August and the MACD is under the zero line with a recent MACD/9dma cross to the upside.  That's the only major difference it looks like, look at the histogram.  Also there was a huge up move on strong volume at the end of October.  So we'll see how it ends up.  Charts of IWM and XHB w/ tech's are below plus recent news articles, blog posts and option activity.

IWM (Courtesy of Stockcharts.com)

XHB (Courtesy of Stockcharts.com)

Recent IWM/XHB News, Blogs, Option Activity:

Small Cap Stocks Are Recently Underperforming (SeekingAlpha)
Tale of Two Indices (Motley Fool)
Coming off a high: ETF assets dip slightly, to $689B (InvestmentNews)
Monday’s Trading – 11/9/09 (Matt Trivisonno's Blog)
Will Homebuilders ETF See Bearish Pressure? (XHB, Benzinga)
Bears Not Cowed by Buffett (Barron's 11/4)
Getting Bullish On Builders (OptionsFlash/AndrewWilkinson of IB)
Trade positions for small-cap downside (optionMONSTER - 10/30)

*Keep an eye on Japan: It is Japan we should be worrying about, not America (Telegraph.co.uk) and the Nikkei Index is well under the 50dma with China moving in the other direction.