If You Can't Sleep Count Sheep. Don't Count Endangered Animals

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You will run out.. Mitch Hedberg

Lately, I (and quite certainly many, many more of you as well) spend at least six hours a day staring at 8 different computer monitors with such intensity that by the time I drag myself to the gym, either cook or go out for dinner (toss up these days-cooking I love and find relaxing; getting to the supermarket-that’s another story), then sit down on the couch for a TV show or movie, I’m asleep in about 20 minutes.

Of course fatigue plays a part; however, the real culprit for why TV is my best sedative-very little of what the media has to offer comes close to the titillating entertainment factor of the market.

In Wednesday night’s daily I wrote about volume patterns, the small caps, Biotech and their potential significance. I have waited 3 years (since August 2011) to see this type of volume and volatility!

After IWM had more than double the average daily volume, SPY had 3 times the average daily volume on a down day, the long 30-year Bonds or TLTs had over FOUR times the average daily volume, I began Thursday’s session looking for confirmation of a blow off.

I surmised that after the strong reversal patterns in so many other instruments as well, a green inside day would be good for starters. Interestingly enough, SPY DIA and IWM took out Wednesday’s highs so no inside day. IWM closed green while DIA, QQQs and SPY closed red. The QQQs did indeed post an inside day, yet under the 200 DMA (I also wrote that a close over the 200 DMA would be even better).

As we head into Friday, like a delicious miniseries, we await the plot outcome of what the protagonist (IWM) in the market has in store for us. Will the small caps continue to lead the charge for more upside, say to 110? Or, will the antagonist reign (QQQs), rolling over under the 200 DMA hence taking the rest of market to lower lows?

Stay tuned my friends to the next segment of War of the Global Economy (With a Little Ebola Thrown In!)

S&P 500 (SPY) Volume decent with nearly the scenario we expected-practically an inside day. Tomorrow should be decisive as to more upside-taking this back to the 200 DA or, a break of Thursday low, next stop175 area

Russell 2000 (IWM) The winner and current champion, took out the 10 DMA with good volume-also, confirms the reversal candle form the lows. 110 major resistance but first, 108.80

Dow (DIA) So far from the DIA but 3 possible scenarios-1. Gaps up leaving an island bottom 2. Breaks Thursday’s lows and heads south 3. Rallies without leaving an island, but lives for another day leaving bulls hopeful over the weekend

Nasdaq (QQQ) Inside day under the 200 DMA-really clear to watch-either over the 200 or under Thursdays low-follow

XLF (Financials) Here is the classic inside day pattern after big volume closing near the intraday high

KRE (Regional Banks) big reversal off new recent lows and bullish engulfing pattern

SMH (Semiconductors) Got the green day, not an inside day and could not clear the 200 DMA-that is key

IYT (Transportation) All about this holding the 200 DMA

IBB (Biotechnology) 260 pivotal-stays above and consolidates good chance to see the 50 DMA. Breaks, good chance so will the 200 DMA

XRT (Retail) Inside day but red close-has to clear 83.00 or could be more trouble

IYR (Real Estate) Looks like it’s coiling to take out the 50 DMA but has to really hold the 200 DMA as well

GLD Inside day-paused as if waiting like us to see what the market does next
Metals and Mining (XME) Confirmed the reversal pattern

USO (US Oil Fund) 31.00 pivotal as this might have finally stopped going down

OIH (Oil Services) Another reversal pattern confirmed

XLE (Energy) Confirmed the reversal pattern

XOP (Oil and Gas Exploration) Nice run to the resistance at 61.00

FCG (First Trust ISE Reserve NatGas) Over 15.20 gets back over those multi year lows til the one put in this week

TBT (Ultrashort Lehman 20+ Year Treasuries) Classic blow off volume move in TLTs. Let’s call 120 pivotal

FXI (China Large Cap Fund) 38.40 pivotal if this is good on the 200 DMA support