Blazing Saddles

January 25, 2014

Mish's Daily

By Mish Schneider


As we head into the Year of the Horse, thinking market only here (I was born in a Year of the Horse), is this what we call beating a dead one?

Startling move in Russell 2000 as it went from new highs on Wednesday, to a heart palpitating drop to the 50 day moving average on Friday! Of course, the bigger they are, the harder they fall.

What’s next? I’ve been down this block before-the one when the rush to the exits happens, then the phase change to an unconfirmed weak warning (SPY DIA), oversold on those two on a daily relative strength indicator, more selling, then-a climax bottom.

What does a bottom look like? New lows, typically a 60 day or more new low, a reversal from the lows intraday, with double or more average the volume, followed by confirmation the next day.

Til then, hold back the reins!

S&P 500 (SPY) On 12/18 the SPY dropped to 177.32. Friday low, 178.83. Not a bad spot to watch as we have to think more selling is still around the corner

Russell 2000 (IWM) Not even close to that 12/18 low and held the 50 DMA. Not cheering, mind you-more noting how much this might have to bounce on Monday-and if cannot, a good place to see support

Dow (DIA) 158.11 the 12/18 low here Friday low 158.48.

Nasdaq (QQQ) The 50 DMA at 85.99 is first place to look-either for a hold or a precipitous drop from there

XLF (Financials) 21.00 support

SMH (Semiconductors) 41.50 some support if it breaks the 50 DMA then returns through it on Monday

IYT (Transportation) Wait-new highs Thursday followed by a huge dump Friday? And you thought trading was easy?

IBB (Biotechnology) Actually, holding the fast moving average

XRT (Retail) On the 200 DMA and oversold on the weekly relative strength indicator

IYR (Real Estate) This fell with the market, but into some support at Friday’s lows

XHB (Homebuilders) The power of inside days-once it broke Thursday’s low, it was south with support around the 200 DMA

GLD Even though this outperformed, somehow, I thought it should have done better-but, for now, any dip to around 120.45 considered a buy opportunity

USO (US Oil Fund) Dropped to the 50 DMA making this a fave for Monday if holds Friday’s lows

XLE (Energy) One major concern, is the possible double top from November highs and late December highs. Although 84.00 some interim support, would look to sell a rally closer to 85.00

XOP (Oil and Gas Exploration) Maybe a shot to hold Friday’s low with a group that I am still friendly to

TBT (Ultrashort Lehman 20+ Year Treasuries) 70.15 is a very important support level

UUP (Dollar Bull) Confirmed bearish phase

KRE (Regional Banks) One that held the 50 DMA

BAL (Cotton) Spent the week consolidating a range. 55.55 high 54.59 low-good one to follow the way the range breaks

For more detailed analysis join me, along with hundreds of other subscribers, at Mish's Market Minute and get my daily trade picks, trade alerts, training videos, and exclusive analysis tools. Sign up for Mish's Market Minute now and get a free 2 week trial!

Improve Your Returns With 'Mish's Daily'

Michele 'Mish' Schneider

Every day you'll be prepared to trade with:

  • Unique insight into the health and future trends in markets
  • Key trading levels for major ETFs
  • The 'Modern Family' advantage
  • Actionable trading ideas in stocks and ETFs across all asset classes
Subscribe Now!