And I, All I Really Want Is You; You To Stick Around

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Gavin Degraw-Follow Through

Remember the comment from Tuesday night and the possible sacrificial lamb theory on the small caps-or how they were where the whole correction lived?

I looked up sacrificial lamb in Wikipedia. Here’s a direct quote, “A sacrificial lamb is a metaphorical reference to a person or animal sacrificed (killed or discounted in some way) for the common good.”

If that is true-we can thank the small caps for taking the brunt and giving us some great buy opportunities on this turnaround Wednesday. I also find the lamb metaphor somewhat auspicious on the evening of the Jewish New Year, Rosh Hashanah! Happy New Year!

Now of course, we look for follow through. Can NASDAQ take out the recent highs? Will IWM muscle up to 114 and hold 110? Can SPY clear the 10 DMA? Those are the questions one must consider as we head into Thursday and Friday. If yes, good chance we see another round of new highs. Otherwise, this becomes a one day wonder once again leaving both bulls and bears frustrated.

Those noteworthy sectors that tested the 50 DMA were some bright spots such as Semiconductors-no surprise. There are also several beat up ETFs that had possible reversal candles, making for some low risk setups if we do indeed see follow through from the overall indices.

S&P 500 (SPY) Tested early on the 50 DMA then turned around and closed well. But was that well enough?

Russell 2000 (IWM) Likes 110 since it tested there in August. Now in its current bear phase, we have to think more of a short covering rally today. Seems 114 area resistance should stick

Dow (DIA) Held 170 and recaptured the 10 DMA-until this clears recent highs, this could be just another test of its range high

Nasdaq (QQQ) Best hope delivered with a strong move over 99.50-now, that goes back to pivotal with 100.56 the elusive high to clear

XLF (Financials) Although certain bank stocks did great, the ETF held but did not wow

KRE (Regional Banks) Needs to do way more to be impressive

SMH (Semiconductors) Good day separating itself from the 50 DMA-again, the recent highs have to clear

IYT (Transportation) Bounce off the 50 DMA-needs to hold

IBB (Biotechnology) The winner with the low early on at 272 and a big move up from there to new highs.

XRT (Retail) Unconfirmed bull phase-the big concern unless it confirms the better phase

IYR (Real Estate) Still scared of rates, it closed red and on the 200 DMA

ITB (US Home Construction) Very similar to how KRE looks. Needs to do more to impress but has possibilities

GLD Had one brief rally then sold off back to looking weak and vulnerable

Metals and Mining (XME) Knew that was a weak bounce on Tuesday-now even weaker still

USO (US Oil Fund) Under 34.00 more downside expected

OIH (Oil Services) Good comeback with resistance now at 35.40

XLE (Energy) Weird looking doji on the 200 DMA

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs broke down from the 50 DMA-maybe that was it for them on this bounce

UUP (Dollar Bull) 22.75 is resistance

EEM (Emerging Markets) Possible reversal bottom if confirms

IFN (India Fund Inc.) Yup, held up this week and looks good to new highs

FXI (China Large Cap Fund) Really nice move off the July lows into some resistance