October 2, 2018
Mish's Daily
By Mish Schneider
From the Collection of Arnold Lieberman
The Hindenburg Omen, prompted by Jim Miekka in 2010 after the market crashed, pops up for us today.
Basically the prediction is that when the daily number of new 52-week highs and 52-week lows are both greater than a percentage threshold, a crash ensues.
“The signal typically occurs during an uptrend when there are still many new highs, but a growing number of new lows suggest that the market is becoming bearish and indecisive.” Investopedia
Although the Omen has not been very accurate in the recent past, like a broken clock, that looks like it could get its chance to finally tell the correct time.
The Dow went on to make a new all-time high today.
NASDAQ, which we speculated could be in the midst of putting in a double top, tried for the highs again, closing near the intraday lows.
NASDAQ and the Dow are the good news.
Can our man continue to keep his balance while juggling a split ladder?
Yesterday, we went through the economic Modern Family.
We also focused on the dollar, interest rates, commodities (especially oil) and the transportation sector.
What we saw was that The Russell 2000 (IWM) declined by over 1%, broke a key moving average, yet remains well above the 50-week MA.
Today IWM declined again by over 1%. All this while the Dow made a new high.
Brick and mortar Retail (XRT) fell by over 3%.
Semiconductors (SMH) went from green to red.
Biotechnology IBB, is working its nasty reversal topping pattern.
Regional Banks (KRE) look pathetic.
The go-to Transportation (IYT) has now entered an unconfirmed warning phase.
In other words, the Modern Family is sick.
Now, looking at commodities, the agricultural index DBA rallied, as did the metals, sugar, and coffee.
The rates softened a bit but not by any substantial levels. And the dollar continued to gain, now heading into resistance as measured by UUP (ETF) at 25.40.
The Omen predicts the man will drop the top half of the ladder and like Humpty Dumpty, all will fall down.
Unless IYT and IWM play some serious catchup, be wary of any fiery airships heading for a crash.
S&P 500 (SPY) 291.00 pivotal. A move under should bring out more selling
Russell 2000 (IWM) 164.07 was the low on July 30th. If stops going down and can get back over 166 area, that would help the bulls
Dow (DIA) 267.60 is pivotal. 265.50 is now support to hold
Nasdaq (QQQ) We won’t know if this is a double top unless this breaks down under 181-so for now, no reason to panic
KRE (Regional Banks) Possibly a blow off bottom-considering the oversold factors - need proof
SMH (Semiconductors) Could not clear 108 and now with the 50 DMA at 106. 50, this could be in a make or break situation
IYT (Transportation) Unconfirmed warning phase-giving it room to 202-but if this cannot find buyers to take it back over 205.35, trouble
IBB (Biotechnology) 120 pivotal
XRT (Retail) Blew below the 50.00 now the resistance
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