September 30, 2014
Mish's Daily
By Mish Schneider
B.J. Sander Green Bay Packers Punter
If there are two indicators I call my reliable best friends, they are the50 and 200 DMA's-or what I prefer to say-Determining the Phaseof any instrument.
Why? Because they tell me mostly everything I need to know-long or short, how big a position based on the strength or weakness of the phase, when the cycle of phases are improving or deteriorating and how much skin we should have in the game all together, when phases depict incredible diversion.
With that said, consistent words in this daily blog relate to giving you information on phase changes, diversions, etc. And that brings us to today. The S&P 500 confirmed the warning phase. The small caps have been in the bearish phase and closed near the low support area of 109.72. More importantly, first time IWM closed under 110 since May 21st-not pretty.
NASDAQ and the Dow continue to keep hope alive along with the sectors that have life over the 50 DMA such as Semiconductors, Transportation, Financials and Biotechnology.
Gold, oil and natural gas continue to show signs of deflation, although the 30 year bond rate firmed today, so for this amateur economist, hard to say if its deflation fears or firming rates and US Dollar. Whatever, the weak got weaker.
To come back around to phases-my advice is consistent-keep your longs in the instruments with positive phases, your shorts in the negative phases, keep cash as your main position and get ready to punt.
S&P 500 (SPY) Confirmed warning phase. If takes the path of IWM, looks like August lows next support
Russell 2000 (IWM) Last week this closed under a major weekly moving average-first time since 2012.
Dow (DIA) Unless this clears 171, it seems to me its stalling from the inevitable drop under the 50 DMA
Nasdaq (QQQ) If this breaks 98.00 that should seal the fate. To keep hope alive, it has to clear 99.20
XLF (Financials) Also held the 50 DMA-like QQQ DIA, if breaks the 50 DMA not good
KRE (Regional Banks) Best I can say is that this is holding August lows with an inside day
SMH (Semiconductors) Also held the 50 DMA-like QQQ DIA XLF, if breaks the 50 DMA not good with an inside day
IYT (Transportation) Also held the 50 DMA-like QQQ DIA XLF SMH, if breaks the 50 DMA not good
IBB (Biotechnology) 272 is the sweet spot to hold or break-especially on a closing basis
XRT (Retail) A case for deflation fears
USO (US Oil Fund) And another fine example of phases-ran to the 50 DMA on Monday, and Tuesday failed from there in its bear phase
UUP (Dollar Bull) New multi-year highs
Every day you'll be prepared to trade with:
