Bad Moon Rising

June 12, 2014

Mish's Daily

By Mish Schneider

Wednesday night, I wrote about IBM the Dow and how while IBM was breaking a key moving average, the Dow climbed to new highs yet looked somewhat precarious as of the close. The advice, in case there was something to that, was to watch NASDAQ going into Thursday. I even further suggested that the breakaway gap ended in SPY on Wednesday as well.

Now, let’s examine another rarity and possible polarizing relationship-Friday the 13^th and the full moon occurring simultaneously. Last time that happened was October 13^th, 2000. If you look at the monthly chart, there was a long tail on the monthly candle as the price began with a hard fall, then rallied back to close higher than September 2000. But, thereafter, after a couple of fits and starts, the market did indeed rollover, dropping nearly 25% until a climactic low occurred during October 2003.

Scary? Not one iota of information substantiates the relationship as fact. However, market dynamics dictated by human psychology-another story. Who needs facts when you have people “behaving” out of fear or anxiety?

One thing is for certain, low volume selloffs just as low volume rallies may not be the most reliable indicator to follow. Markets generally need volume/power to sustain a move. However, the market can surely go south because of a lack of buying as well once whatever meager buying has dried up.

With market uncertainty, the last 2 trading days have definitely put a bullet hole in the bull.

Next date for the full moon and Friday the 13^th to occur is August 13^th 2049. We get through whatever is in store for us now, then we can all howl at the moon for the next 35 years.

S&P 500 (SPY) Although the gap from May 27^th is still there, today a lot of damage officially stops the count of days over the breakaway gap and now, we look at 193.50 as a 50% retracement to hold or not

Russell 2000 (IWM) Actually held up the bet so a move over 115.91 will look better and under 114.30 not so much

Dow (DIA) No more gaps here and a reason to support more correction here

Nasdaq (QQQ) Marginally holding the 10 DMA if can stay here-otherwise, damage done

XLF (Financials) Tested that level of support at 22.50-let’s see if it holds

KRE (Regional Banks) gradual correction which is encouraging

SMH (Semiconductors) Emerald City still with no wicked witch in sight

IYT (Transportation) That’s a breakdown and suggests selling into rallies

IBB (Biotechnology) Over 250 next stop around 270

XRT (Retail) Hasn’t had the same muster as some of the other groups so could be a drag if cannot hold around 84

IYR (Real Estate) Fairly significant correction unless it clears back over 71.90

ITB (US Home Construction) Not pretty

GLD 123.07 resistance which if clears looks like it will follow SLV which took out the 50 DMA