May 5, 2014
Mish's Daily
By Mish Schneider
With our temporary New York apartment setup, we see the mouth of all the waterways that converge in lower Manhattan before the water continues its journey to the west side up the Hudson River.
The currents change directions and run in several ways simultaneously. Basically, our view is the perfect metaphor for the current market situation.
For consistency sake, let’s begin with an examination of interest rates. Over the weekend, I wrote that we would begin to look for signs that the double the average volume on the move to new several month highs in the TLTs might be the beginning of the end of extremely low rates.
It would be premature to say that rates bottomed Monday. But it would be fine to say that following the path of volume signals, the possibility is strong.
Secondly, we have been writing a lot about the diversion in the phases of the indices. The S&P 500 and the Dow are in bullish phases, protecting that 50 DMA like a lioness early on in the session. NASDAQ is in a warning phase although impressively closer now to the 50 DMA than I would have ever imagined as of 9:30 Monday morning! The Russell 2000s have been skidding along the 200 DMA, a beacon of warning, and even after they rose from the depths on Monday, still remain very much a concern.
If we investors are the sailboat in the mouth of the NY Waterways, we have had fits of rails in the water and smooth seas. But, we are afloat!
What we need now is cooperation from sectors and groups. All (excluding commodities) are in warning phases with the exception of Transportation and Real Estate. If the salient ones (Financials, Semiconductors, Retail, Biotechnology and Homebuilders) can get moving, the old “Sell in May” hackneyed phrase will go the way of the Basilosaurus for the second year in a row.
S&P 500 (SPY) 186.43 bottom line low to hold with a move over 189.14 promising.
Russell 2000 (IWM) We really need to see this clear 113 now once and for all or the 200 DMA is right there
Dow (DIA) 163.30 support with 165.85 point to clear
Nasdaq (QQQ) Clearest place to watch is the 50 DMA which it has not cleared yet. Is it muscling up to take it out, or was that the test? My question on Friday-Its beginning to look a whole lot better!
XLF (Financials) 22.00 and over the Promised Land or another thorn
SMH (Semiconductors) 45.00 the point to clear and important that it does
IYT (Transportation) 137.25 was defended on Monday-as a start-now over 138 better
IBB (Biotechnology) Actually a nice move away from the 200 DMA
XRT (Retail) Held the 200 DMA but under the 50 DMA-another one for the list to see which moving average it clears or breaks first
IYR (Real Estate) A bit late if new to this group, but still comforting to see
XHB (Homebuilders) Held the 200 DMA
GLD Between the 200 and 50 DMAs but still no major feel here
USO (US Oil Fund) When I look at the weekly chart it looks good, provided it holds 35.98
OIH (Oil Services) Sideways near the highs
XLE (Energy) Sideways near the highs
XOP (Oil and Gas Exploration) Certainly holding near the highs
TBT (Ultrashort Lehman 20+ Year Treasuries) Inside day and potential reversal pattern
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