October 26, 2013
Mish's Daily
By Mish Schneider
New high close in the S&P 500! Good work in the Dow although still has some catching up to do or can resume its “thorn in the side of the market” status. Small caps or Russell 2000 seem to be digesting both in time and price with the runaway gap from over a week ago intact and a high weekly relative strength indicator showing overbought conditions to work off. Finally, NASDAQ, which also made new 2013 high, not only the darling of the market after some impressive earnings; but also, the one to watch after AAPL reports its earnings right after the close this Monday. Many folks have asked me how I use volume and whether or not I gauge the strength of a rally on how much daily volume there is. Here’s the short and simple answer. It’s not the actual volume that counts so much-unless there is a double or triple the average volume on extended moves up or down-signaling a possible blow off. Rather, it’s the volume in relation to the instrument itself. In other words, I look for accumulation (when the volume is higher than the volume from the day before and the price is green) or distribution (when the volume is higher than the day before and the price is red). Then, I look for 3 or more of either scenario (accumulation or distribution) over the course of 2 weeks. In the case of the S&P 500, since October 14th, there have been 5 accumulation days. Just how important is that? I welcome you to check out our free indicator on the Marketgauge site called Little Big View. Here is the link:
S&P 500 (SPY) Pie in the sky analysis. If you look at the monthly chart, from the October 2007 peak high, to the March 2009 peak low and the neckline of what looks like a huge inverted head and shoulders bottom which broke out in April 2013, we could be looking at a move to around 220. Unless we break April lows. Then all bets are off
Russell 2000 (IWM) What is really interesting to me is when a moving average and a gap low correspond. That makes 109.77 super important to hold now.
Dow (DIA) Unless this gets above 156.20 and then the top of a channel that goes back from May peak high, this could be merely a move to resistance and not much more. Too soon to say, but definitely worth noting if this begins to rollover
Nasdaq (QQQ) Not much to say here until we see the AAPL results
XLF (Financials) Impressive, but still did not clear 20.88-to negate the topping candle
SMH (Semiconductors) Unless this clears 40.62, this could still be in correction mode
XRT (Retail) Looks good if the market holds up
IYT (Transportation) Tired up here perhaps
IBB (Biotechnology) Digesting its recent move-all without getting to the all-time high
IYR (Real Estate) Cleared the 200 DMA for an unconfirmed phase change to accumulation
GLD Confirmed phase change to recovery
USO (US Oil Fund)Confirmed the reversal candle and unconfirmed phase change to warning.
OIH (Oil Services)Has to clear the brick wall candle 49.78 to keep going
XLE (Energy) This did clear the topping candle
XOP (Oil and Gas Exploration) Listless action but still in the game.
TBT (Ultrashort Lehman 20+ Year Treasuries) Inside day.
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