Don't Play What's There, Play What's Not There

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Miles Davis

Bum, bum, Bailey O! -buy the reversal off the low! Sounds so easy, a child can do it. A child named Russell perhaps, as it comes as no surprise that the weakest one runs up first.

But where did IWM run to? Did it clear 109.75-110? No. How about the NASDAQ even with the upgrade in Tesla and Twitter today? Did QQQs clear 98.00? No. Okay, how about the S&P 500; surely that made it over the resistance at 196.05? No? That leaves you Dow Industrials. Big blue, what do you have to say for yourself? Did you clear 170? Not even close you say?

What does it all mean? No phase changes, just confirmation of the warning phases we witnessed on Wednesday. Yes, relief from the oversold conditions, feasible optimism ahead of Friday’s jobs report, but, that’s really all for now.

QQQs, DIA and SPY did not clear pivots. First off after the open, the mid pivots must clear. Secondly, the resistance levels aforementioned must clear. Finally, those levels must hold. Then, we can possibly sing “10 Bears in the Bed and the little one said, I’m crowded roll over. So, they all rolled over and 9 fell out. There was one in the bed and the little one said, I’m lonely.”

S&P 500 (SPY) Although there is support all the way down to the 200 DMA, 197 now massive resistance and a place to consider selling into

Russell 2000 (IWM) New 60 day low and reversal. However, besides the resistance at 110, there is the weekly moving average breakdown at 111.70. For now, this rally seems more of a sell opportunity. Why? Volume was much greater on the selloff.

Dow (DIA) 169.00 resistance and not nearly as impressive a rally as the one in IWM

Nasdaq (QQQ) 98.00 resistance with support all the way to 94.00, the August low. Confirmed warning phase

XLF (Financials) Confirmed warning phase with the overhead 50 DMA 23.04 well within its reach

KRE (Regional Banks) News 60 day low and reverse which makes this interesting if confirms.

SMH (Semiconductors) Weak close and could not clear 50 DMA

IBB (Biotechnology) 265.90 is the 50 DMA which held. 2 thoughts: this is where to go for strength. Under today’s low watch out.

XRT (Retail) Rallied well back over the 200 DMA for a now unconfirmed phase change improvement if holds

IYR (Real Estate) Has not given a buy-until it clears the 200 DMA

ITB (US Home Construction) One of the first to sink and now had a decent rally. Maybe double bottom

GLD Unless you are short from higher levels, do not see much

Metals and Mining (XME) Possible reversal near 2013 lows. GDX as well

USO (US Oil Fund) Possible reversal candle here too

TBT (Ultrashort Lehman 20+ Year Treasuries) TBTs no more island bottom but

TLTs still have an island top

FXI (China Large Cap Fund) Like this reversal if clears 37.82