El Mercado De Los Arrepentidos $SPY $DIA $QQQ $IWM

September 29, 2013

Mish's Daily

By Mish Schneider


The Market of Regret

Disassociation as it relates to traders and investors means having the ability to cope with the distresses and successes of the stock market by remaining completely open and objective. In other words, to have the ability to keep pre-conceived thoughts and opinions that inhibits flexibility at bay. If one looks at the S&P 500 daily chart, the market clearly put in a peak top on September 19th, or 7 trading days ahead of the closing bell this past Friday when the market tumbled throughout the session in what many saw as the “first” reaction to a possible government shutdown. Here’s my point. If one knew nothing about the world events, remained in a dissociative state from the news and the media and just looked at charts as the predictor, or as some technical analysts would say: “Price tells all,” then one would have traded defensively since September 19th and possibly hedged any long positions at least with some strategy in place for the equation that uncertainty yields volatility. With that said, Friday’s action certainly saw the volatility increase, yet the market is maintaining pockets of brilliant strength and pockets of true deterioration. The small caps or Russell 2000s may not have made new 2013 highs after 3-4 attempts to do so, but it also closed only marginally lower for the week. NASDAQ closed marginally higher along with Biotechnology, or the ETF IBB and Retail (XRT). Real estate, (IYR), and the Financials (XLF), got hit much harder. The Dow went back to an unconfirmed warning phase doing its dance around the 50 DMA. And there you have it-pockets. As we begin this week, keep eyes on the S&P 500 in particular since it landed right on the 50 DMA. A gap below, prepare for more sell off, while a hold and pop suggests the market doesn’t believe that government tomfoolery will have any long lasting impact. And of course watch NASDAQ and the Russell’s as well, for if the strength abates, those signals should be taken seriously.

S&P 500 (SPY) That law of attraction to the 50 DMA was strong enough to become a self-fulfilling prophecy. However, the gap higher on September 10th-that low price-168.26 is holding thus far. That’s where you should look for support or failure.

Russell 2000 (IWM) A long drop to the 50 DMA which would be real ugly for the entire market unless this holds 105.80-then take that as a good sign

Dow (DIA) Weak unconfirmed warning phase

Nasdaq (QQQ) Similar to IWM-long drop to the 50 DMA which I shudder to think about. Over 79.50, very good sign

ETFs:

XLF (Financials) Not looking too pretty right in its warning phase

SMH (Semiconductors) There was a breakaway gap on September 16th-the low was 39.78-where I would watch for support or failure

XRT (Retail) As mentioned closed higher for the week. However, that is after failing during a more roseate market, to clear 2013 highs.

IYT (Transportation) Gap lower after Thursday’s inside day. The 50 DMA is not too far so back to the law of attraction theory-one more warning to heed

IBB (Biotechnology) Didn’t clear the new 2013 high but closed well

IYR (Real Estate) Only a gap higher now would convince me to jump back in

XHB (Homebuilders) Looks like its deteriorating from its topping candle on September 19th.

GLD Now, have to wait to see what happens around the 50 DMA or 130.00

USO (US Oil Fund)Looks heavy

OIH (Oil Services)Looks heavy yet holding some crucial support

XLE (Energy) 50 DMA so very close now

XOP (Oil and Gas Exploration) One of the better looking sectors-Has to clear 66.80 now

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs Held 106-looks like it wants to tackle the weekly moving average at 107.85

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