May 22, 2013
Mish's Daily
By Mish Schneider
Our tell, the Small Caps or Russell 2000, had a historical day (the whole market really, but let’s focus on that one). After an inside day, it opened unchanged, took out Tuesday’s high; then after what is nearly laughable contradictory information from the FED was released, (laughable only if you weren’t first getting long the market), Bernanke stated he would defend QE3, the market rallied. Soon later, the FED minutes were released indicating that the morphine injections could end soon. Another tell was the short bonds or TBTs. They went down during Bernanke’s statements, but not by very much. The US dollar began to rally. And that was that; the market began to sell off with the last kibosh after the minutes were released, causing the US dollar to rise and the interest rates to fall. What does it all mean? Yes, there is the temptation to cite the old “Sell in May” deal-but-what has changed really? A nasty reversal candle on huge volume? Yes. But like your dear Ms. Prudence always reminds you about-everything needs confirmation-EVERYTHING!
S&P 500 (SPY) Landed on the fast moving average and did indeed have a fall from new highs. 165.35 is the number to watch.
Russell 2000 (IWM) I look at a few technical indicators typically. First, weekly Bollinger Bands-after clearing it Tuesday, a close below by the end of the week would clearly point to a correction. Secondly, volume patterns-in all indexes they were double the daily average which is why today was one to respect. Third, overall trend-which right now remains strongly bullish. At this moment we can wrap it up by stating, possible top in place, but more likely, a good correction which has been overdue.
Dow (DIA) Also tested and closed above the fast moving average.
NASDAQ 100 (QQQ) Tested and closed near the fast moving average and remains thus far, above the weekly Bollinger Band.
ETFs:
GLD Realized today that 130 is exactly 50% retracement from the 2008 low to the 2012 high. That means, if it breaks, a move to 115 or so not out of the question.
XLF (Financials) Like the indexes, huge volume reversal candle in a bull phase that has to confirm.
IBB (Biotechnology) Held the fast moving. If 179 level holds never count this one out completely
SMH (Semiconductors) If this holds around these levels, the first place to jump back in after clearing over a decade’s worth of price action.
XRT (Retail) Negated the bearish candle from last week yesterday, then made a new one today. But holding the fast moving average.
IYT (Transportation) “Under 116 expect some more correction here.” Words from Tuesday. 113 next area of support and probably a good buy.
IYR (Real Estate) Ok, so today was more like a coma than a rest!
USO (US Oil Fund) Been wild in this ETF. Now, back under the 200 DMA and right on the 50 DMA
OIH (Oil Services) a monthly close over 43.80 would be good. A close over 46.00 even better-let’s see just how damaging today’s action was.
TBT (Ultrashort Lehman 20+ Year Treasuries) I’m sure today’s action was way more significant than what we know for right now. But, note that rates rose after FED speak. Notice, what longer term trends emerge from this.
XOP (Oil and Gas Exploration) Even with today’s move, still very friendly to this sector longer term.
UUP (Dollar Bull) Through 22.95 see more upside.
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