July 19, 2014
Mish's Daily
By Mish Schneider
If I had to come up with a specific diagnose for Wall Street using some of the categories setup by the Department of Education for classifying “special needs” children, it would be Other Health Impaired or Attention Deficit Disorder.
I mean come on market-how else do you describe the high volume down day with so many sectors disintegrating into negative phases one day, followed by a decent volume rally with most (not all) of those same instruments improving in phases the next day?
Let’s go to my favorite indicators. The small caps (Russell 2000s). Last Wednesday and Thursday they went from bullish, to warning to distribution (price under the 200 DMA.) Friday, they returned to the warning phase (price back over the 200 DMA but still under the 50 DMA). Therefore, a really good place to look come Monday morning.
Semiconductors. Last Wednesday they made new multiyear highs. Then on Thursday they put in a powerful reversal pattern with high volume. Friday, however, they whimpered with an inside day-indecisive but better.
20 Year Treasury Bonds. After last Thursday’s gap up (although not to new highs), Friday ended with an inside day. Seems 115 and above could spell trouble for the market while a break of 113.82 might be perceived as a sign of relief for the market (Ritalin if you will!)
The Dow definitely wanted to prove it could close above 17,000 and it did. DIA had an inside day. NASDAQ did better and actually is the brightest spot since the move back up last Friday happened with substantial volume. The S&P 500 also had an inside day and remains well positioned for Monday.
To me, QQQ and IWM are most interesting-who leads, who follows. Interest Rates a close second with Semiconductors coming up on the rear.
On a separate note, here’s to the plethora of world crises calming down.
S&P 500 (SPY) 197 once again a pivotal area.
Russell 2000 (IWM) Unconfirmed Warning Phase. Watch this for a breakout over the 50 DMA or another breakdown under the 200 DMA.
Dow (DIA) Inside day
Nasdaq (QQQ) 96.30 high from last Wednesday
XLF (Financials) Inside day
KRE (Regional Banks) Sign of weakness with this remaining under the 200 DMA with an inside day
SMH (Semiconductors) Inside day under the fast moving average
IYT (Transportation) Inside day
IBB (Biotechnology) Right back over the 50 DMA but with lots of overhead resistance making this a good place to look for shorts if market weakens
XRT (Retail) Unconfirmed bullish phase-impressive
IYR (Real Estate) Our ETF sector model took a profit here Friday up 25%!
ITB (US Home Construction) Also a concern with an inside day under the 200 DMA
GLD I will note the island top that has not been negated. I will also note that this sector is very hard to trade if looking for follow through
USO (US Oil Fund) Inside day under the 50 DMA
OIH (Oil Services) Not that impressive as some of the other strong groups considering
XLE (Energy) Not that impressive as some of the other strong groups considering this has been a leader
TAN (Guggenheim Solar Energy) Unconfirmed return to bullish looking for a confirm to enter
UUP (Dollar Bull) 21.52 the 2090 DMA to clear
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