Attacked By A Bearskin Rug, Two Days Before It Was a Rug

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Jarod Kintz: It Occurred To Me

How many times this year have we seen a 100 point drop, the bears begin to growl victory, only to see those same bears whimper back to their den a day or two later?

For 2 weeks, we have been watching the trading range in the indices established on August 25th with those lows to September 4th and those highs. Fairly certain the market would reconcile next direction once that range broke either way, what do you do when the range breaks to the downside intraday only to watch the closing prices defend those original numbers?

For the S&P 500 that is not the case. The low to break was 199.39. It did so and closed beneath. InIWM it was 115.17, nope. In QQQs it was 99.03; that held. And last but not least,DIA it was 170.03, like NASDAQ, it held.

So here find ourselves once again with a mixed bag, scared longs, more confident bears and a market that keeps the public thinking “rigged!”

That is precisely why I always go back to the fundamentals of trading with a system-what are the phases of the indices, sectors and groups, where are there divergences (best and worst performers) and ultimately, what is the optimum and clearest risk/reward?

S&P 500 (SPY) 200 definitely pivotal. 198.75 next support then the 50 DMA at 197.21

Russell 2000 (IWM) 114.85 the 50 DMA and now only over 116 does it go back to a chance for higher

Dow (DIA) 170 pivotal with the 50 DMA 168.80

Nasdaq (QQQ) Held 99.00 support with 100 area pivotal and the 50 DMA way down 96.81

XLF (Financials) 23.16 the bottom of the recent trading range

KRE (Regional Banks) Like to see this hold around 39.00

SMH (Semiconductors) Another brick wall high possible

IYT (Transportation) Confirmed a top but we have been here lots of times already only to see it turn around

IBB (Biotechnology) 265 support

IYR (Real Estate) 74.15 area needs to hold

ITB (US Home Construction) Now this starts to look almost predictive since it never really got moving to the upside

GLD Possible reversal candle (possible means has to confirm)

Metals and Mining (XME) Touched the 200 DMA

USO (US Oil Fund) Did not confirm the reversal from yesterday-have to think negative

TAN (Guggenheim Solar Energy) Nasty reversal which is exactly why you never chase in this market if risk is too far away

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs holding the 50 DMA so far

UUP (Dollar Bull) Could be ready for some correction. FXE possible reversal candle

FXI (China Large Cap Fund) 41.50 support to hold