January 5, 2014
Mish's Daily
By Mish Schneider
After the first 2 trading days of 2014 and with the start of the first full week of trading, earnings season, ending the coming week with a jobs report, I expect Monday’s direction to dictate the bias for the ensuing days. Then, we can look for a possible U-turn if the jobs report is a major surprise (well over or under 7.0%).
In other words, considering we began with a correction from the highs in all indices and 2 days of a negative short term bias, if Monday continues in that direction, follow-through is the most likely scenario.
Conversely, if the market holds its ground into Monday and the Dow in particular, (had an inside day on Friday) takes out 165, then expect attempts at a rally with a lot of sideways ahead of the earnings and unemployment stats.
Regardless, the calendar ranges which identify patterns and price levels that occur very frequently and give you a big edge in finding stocks that are ready to move in a predictable way, officially kicks in this month, which should be the dictating daddy of the direction over the next few months. Stay tuned.
S&P 500 (SPY) Inside day meaning the range of Friday is inside the trading range from Thursday. Note which way the range
Russell 2000 (IWM) Inside day here as well
Dow (DIA) 165 would be good to clear for market health. Otherwise, under 163.70 will expect more downward movement
Nasdaq (QQQ) 86.68 is a pivotal point initially for the open. Then, if this can sustain over 87.00 good, if not, expect to see the 50 DMA
XLF (Financials) The winner on Friday (new multi-year highs) with big movement in many bank stocks. We like when this leads, therefore, look here for a big clue as well
SMH (Semiconductors) Over Friday’s high would be a good recovery for this group. Otherwise, see the 50 DMA here
XRT (Retail) Inside day with a move over 88.00 good and most likely for the whole market
IYT (Transportation) Inside day pause after Thursday’s decline. If holds the low from Friday, also a positive sign
IBB (Biotechnology) Sideways consolidation and still possible to see 230-235 if holds 225
IYR (Real Estate) A messy chart but in its bear phase, vulnerable until it takes out the 50 DMA
XHB (Homebuilders) 33.38 is the high to clear which looks good if can pull it off.
GLD 121 is the next area of resistance-that will test this latest luster
USO (US Oil Fund) 33.45 should provide support near-term but the chart is a bit broken
OIH (Oil Services) Inside day and remains vulnerable to the 200 DMA
XLE (Energy) Testing the 50 DMA-Monday should surely be decisive here
XOP (Oil and Gas Exploration) Weekly and monthly chart ok so needs to clear the 50 DMA on the daily
TBT (Ultrashort Lehman 20+ Year Treasuries) Assume over Friday’s high will bring more firmness with 80.00 the big kahuna to close above
UUP (Dollar Bull) Confirms recovery phase
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