October 9, 2013
Mish's Daily
By Mish Schneider
In the film, The Matrix, the Oracle is a grandmotherly woman-gentle, kind and omniscient. In the novel, The Stand, Mother Abigail Freemantle is a grandmotherly woman- gentle, kind and omniscient as well. The newly nominated Federal Reserve Chief, Janet Yellen, is a grandmotherly woman, who looks gentle and kind, but the question remains, like with the other iconic women mentioned, on whether she will be able to tackle the forces around her and actually be omniscient. Did I mention the other women are fictional? Anyway, with the usual rhetoric from the FOMC minutes-keeping QE going, planning to taper in 2014, expecting growth in the GDP to 3%, etc., etc., will Ms. Yellen be able to manage an exit strategy for the bond buyback program without creating even more havoc in the market? The session on Wednesday brought some relief to the Dow, which bounced off the 200 daily moving average, but could not close strong enough to merit a reversal candle. The interest rates rose today in spite of the minutes and nomination. NASDAQ and the Russell 2000s confirmed the warning phases unable to clear back above the 50 DMA. Although the damage in the S&P 500 was marginal compared to the last many trading sessions, the bias remains more negative unless these last 2 days of higher than average volume means liquidation is nearly over with and/or, the NASDAQ or the Russell’s can rally back and close over the 50 DMA. That would most likely bring in new buyers and short covering ahead of the weekend. We are, if nothing else, hopeful -No Country for Old, Disgruntled Men!
S&P 500 (SPY) Second day of unusual volume and close to support levels from the August correction. Does seem like the selling is drying up for now. But the deadline is approaching.
Russell 2000 (IWM) Confirmed weak warning phase. 103 is a good support area based on historical daily chart patterns from early summer. If it can clear 104.30 the 50 DMA, then good sign. If breaks 103, then 100 is next major area of support.
Dow (DIA) Touched and bounced off of the 200 DMA but not convincingly enough. Therefore, unless it resumes a rally tomorrow, take this more as temporary decline of selling with more to come.
Nasdaq (QQQ) 77.33 is the 50 DMA to clear with 76.00 some interim support and a break of, signal of more weakness to come
ETFs:
XLF (Financials) Like this better if clears 19.75
SMH (Semiconductors) Wednesday’s high super attractive to follow for a long against the low of the session as the gap from September 10th is intact.
XRT (Retail) Now oversold.
IYT (Transportation) Another one attractive to follow over the 50 DMA
IBB (Biotechnology) Oversold so expect a bounce, but question is whether this group has had its day and any rally should be shorted
GLD Gapped lower then made its way back in to the middle of the last 2 weeks trading range.
USO (US Oil Fund)Since it resumed the weaker phase, seeing its inevitable move to the 200 DMA
OIH (Oil Services)Getting close to the 50 DMA
XOP (Oil and Gas Exploration) 64.40 area is a good place for this to find support
TBT (Ultrashort Lehman 20+ Year Treasuries) A gap above 76.35 will be compelling and not good for rates.
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