April 10, 2014
Mish's Daily
By Mish Schneider
One nagging thought that just won’t go away is about the relationship between interest rates, the initial purpose of quantitative easing and where the market sits today.
The Federal Reserve switched to a policy of tapering last fall, which seemed so right. However, the clarity that they had when they first announced Operation Twist in 2011, then the QEs, followed by the taper appeared spot on to me. Now, not that I have any real right to criticize other than exercising my freedom of speech, I believe the FED has lost its way.
Thursday was the biggest drawdown in NASDAQ since 2011. Rates dropped again. Everything in me now says these low rates are the bubble ready to burst. Timing is everything of course-
S&P 500 (SPY) And to add insult to injury, volume was strong. Unconfirmed warning phase
Russell 2000 (IWM) After failing to take out the 50 DMA Wednesday on a day when the Dow flew, here was the writing on the wall. Now, rallies should be meeker but what one should wait for end of week before another week filled with religious holidays
Dow (DIA) Unconfirmed warning phase
Nasdaq (QQQ) Sort of held Monday’s low so won’t be surprised to see Friday put in an inside day.
XLF (Financials) Under the 50 DMA again-now oversold
SMH (Semiconductors) Always the place to look should there be any buying left
IYT (Transportation) Barely holding that 50 DMA now
IBB (Biotechnology) tested and held the 200 DMA-another strong candidate for an inside day-but that doesn’t mean strength
XRT (Retail) Under the 200 DMA now
IYR (Real Estate) Still above the 50 DMA-another one to watch for any strength
GLD Unconfirmed bull phase but with lots of overhead resistance
USO (US Oil Fund) Inside day-good sign
EEM (Emerging Markets) Inside day
FCG (First Trust ISE Reserve NatGas) Held up better but wouldn’t rush in
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