July 31, 2014
Mish's Daily
By Mish Schneider
“Shake, Rattle and Roll” Elvis
Wednesday night I wrote, “Watch Retail, the Financial plus Regional Banking sectors to take the lead. Then, follow that money trail. If they don’t cut it-could be the first “real” sign that the market needs a serious correction.”
Real alright, this is the type of correction that spooks the buy and hold models, thrills the bears and rattles the bulls. But think about this-the SPY is now up 4% on the year and down 3%+ from the peak high at 199. If your performance can boast beating that on both ends, how much up for the year and down from the peak-congratulations-you did an honestly solid job this year!
Moreover, compare your performance to the Dow-that wiped out the gains of the whole year in one session! Outperformers up on year, down from peak, feel better???
However, that’s now. It’s what happens next that matters most. NASDAQ held onto the bullish phase-only one. Anyone who still doubts the predicative nature of the Russell 2000-well, you are a perma bull and that’s all there is to it. By the time NASDAQ reaches its 50 DMA, the others should be so well oversold, opportunities for at the very least, short term buying opportunities will emerge.
I would look at 2 opposite ends of the spectrum-the 2014 leaders like Semiconductors or the ones that are totally beat up yet have reversal patterns on good volume and if possible, against major daily, weekly or monthly moving averages.
Volume was double and nearly triple depending upon the index, the average daily volume-blow off should not be ruled out either.
S&P 500 (SPY) Not a great way to end a month and 6 months into the year-peak high, close on the month lows. With that said, the runaway gap comes in at 190.95 now super critical support. Unconfirmed phase change to warning, huge volume and way oversold. Russell 2000 (IWM) Guess we can now call the March 4th and July 1st tops as the double top of 2014.
Dow (DIA) Now exactly on par with the start of 2014-those relationships are so important (DIA and IWM)
Nasdaq (QQQ) 93.70 is the 50 DMA and the place most likely to be somewhat a bottom for the other indices at least temporarily.
XLF (Financials) 22.00 is where this began 2014
KRE (Regional Banks) Didn’t do that badly compared to some other sectors
SMH (Semiconductors) Here is the top place to look since it is resting on the 50 DMA, 48.86
IBB (Biotechnology) Sitting on the 50 DMA
XRT (Retail) In terms of distance from the 200 DMA, this too is close
GLD Gapped under the major moving averages and continued south-big support at 123 level
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs remain above the 50 DMA
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