January 7, 2015
Mish's Daily
By Mish Schneider
Clichés: Expressions, ideas, or elements of an artistic work which have become overused to the point of losing its original meaning or effect, even to the point of being trite or irritating.
I’m going with The Glass Half Full/Half Empty today for the sake of a rare usage of clichés generally speaking and of course, for comic effect concerning the market.
Related to the market, to begin with, I did research on the meaning of that expression and found this: The standard 'glass half-full or half-empty' saying is commonly used to emphasize the difference between positive and negative thinking, or optimism or pessimism - or a cynic might say, the difference between irresponsible hopefulness and practical realism.
The S&P 500 makes a classic case for this. Holding support from December’s lows and the 100 daily moving average, one can assess a positive scenario or at the very least, a reason for more upside. Furthermore, the slope of the overhead 50 DMA has an increasingly positive slope making the warning phase weak. New highs? Doubtful, but a glass half full nonetheless.
The irresponsibly hopeless can say that the resistance is palpable, the overhead fast moving average is declining and if crosses under the 50 DMA, look out below. Plus, the reversal patterns at the new highs in 2014 are more than just noteworthy. Add to that, the now stinging statistic of the 5 day down drop to begin this year after that hadn’t happen in over a year prior and you get a half empty crew waiting to short this rally.
The interest rates have yet to show any correction (or firming) especially since the FED states contentment with the low rate status quo. With that said, I never ignore glaring volume patterns therefore, watching carefully. The Small Caps are now closest to the 50 DMA and remain a “tell” or perhaps the “Mittyesque” index to watch. And oil hangs near the lows which one day is scary and deflationary and the next great news for the consumer.
If you are standing on tiptoes on the rim of the proverbial glass like a gymnast does on a balance beam, here’s a technical pattern that might help-The IWM SPY QQQs all had inside days. That is when the trading day of the current day is inside the trading day of the day prior. Typically, one should follow the way the range breaks the following day up or down.
S&P 500 (SPY) Inside day with the 200 level now support and pivotal with a move over today’s high reason to think 50 DMA at 204.30 next stop
Russell 2000 (IWM) 116.88 the 50 DMA and after the inside day, looking at 117.77 next. Support to hold now 115
Dow (DIA) 175 pivotal and the 50 DMA 176.14
Nasdaq (QQQ) Inside day and 103.20 huge point as it is the place where the fast and the 50 DMA meet. Support now 100.
XLF (Financials) Inside day
KRE (Regional Banks) As much as I loved this group last year, I am now seeing weakness if it breaks down under 38.00
SMH (Semiconductors) Inside day here too
IYT (Transportation) Inside day
IBB (Biotechnology) Broke out over 310 and now has to hold that level and clear 313.25
XRT (Retail) A strong group and one that could stay in a leadership role if clears 96.00
IYR (Real Estate) New highs not surprising
ITB (US Home Construction) A close over 26.00 is a another feather in the cap of this group for leadership
GLD (Gold Trust) Inside day just under 118 which if clears is positive
GDX (Gold Miners) Inside day
USO (US Oil Fund) Another day of unbelievable volume and no real price change to note that means bottom yet-keep watching
XLE (Energy) Holding December lows
TBT (Ultrashort Lehman 20+ Year Treasuries)Closed red (TLTs) with nearly an inside day with big volume-still very much a blow off top contender
UUP (Dollar Bull) Runaway gap confirmed unless it breaks 24.00
FXI (China Large Cap Fund) CLOSE over 42.00 and reason to think much higher in store this year
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