August 21, 2014
Mish's Daily
By Mish Schneider
Tonight’s daily was prepared by Geoff Bysshe, President, MarketGauge.
All Financials led the way today with BAC surging over 4% after confirming that has reached a final settlement with the Department of Justice. The excitement there seemed to spill over into other banking names pushing virtually the whole sector higher.
The other area of interest today was the IWM which dropped like a rock in water right after the open. Interestingly however, the larger cap stocks found in the QQQ and S&P didn’t understand why the IWM was so bearish and they just stood pat as the IWM dropped. In fact, the SPY never even traded down on the day!
As soon and the IWM hit its 200-day DMA and 10 DMA which are intersecting around the 113.90 level, it completely reversed and spent the rest of the day climbing back up toward the highs of yesterday. But even with IWM climbing back, the QQQ’s show equally as little interest in moving higher.
The SPY’s did move modestly higher, but with a very small range, and probably due to its exposure to the strong move in the financials. The QQQ closed slightly, but for the most part it spent the day within the range it set in the first 30 minutes.
This is all consistent with the major market themes I’ve been following over the last week and I expect to hold true going into next week.
After today’s little flush in the IWM which was unable to attract any real sellers, it may be ready to move higher. I’d follow it, but I won’t try to predict it a day in advance.
S&P 500 (SPY) - New highs on a closing and intra-day basis. 198.50 area should be good support now.
Russell 2000 (IWM) - Just noise until it breaks 113.50 or 115.70
Dow (DIA) - Nothing noteworthy here.
Nasdaq (QQQ) - Has not broken its prior day low in 7 sessions. That's the only level I care about tomorrow.
XLF (Financials) - Exploded higher to new highs. Should hold the 23 level if it retraces.
KRE (Regional Banks) Finally. A big up day. Maybe things have changed but it's still in a bear phase. I'd fell more confident if it pulls back and tests 38.50.
SMH (Semiconductors) - Edged higher and just pennies from the 52.17 high.
IYT (Transportation) - Closed down but not under the prior day's low 150.50 is key level to hold.
IBB (Biotechnology) - After 2 dojis it closed below both. If it breaks 263.65 look for support at 260.
XRT (Retail) - Inside day. A few more days of consolidation would make it more interesting.
IYR (Real Estate) - Moved higher but closed lower and at the low of the day. Maybe it will pull back to 73.30 for us.
ITB (US Home Construction) -consolidating on the 200 DMA
GLD (Gold) - Pretty big gap down but I still see it stuck in a range between 128 and 122. May get interesting because its closer to 122 now.
XME (Metals and Mining) - Big down day today but held support. Still one to watch if it moves higher.
USO (US Oil Fund) - Popped off the inside day pattern and closed over the 35 area I've been focused on.
XOP (Oil and Gas Exploration) - Tested the prior day's lows and then rallied hard to break the 76.60 level and move higher. 77-78 is going to be challenging but the base is in place to make a move through it possible.
FCG (First Trust ISE Reserve NatGas) - Finally! Make that 3 closes over the 10 DMA. Premium subs know I couldn't help but buy some today against the 22 level I've been talking about.
TAN (Guggenheim Solar Energy) - More consolidation today, which is good.
TBT (Ultrashort Lehman 20+ Year Treasuries) - TLT - Nice bounce off the 116 level and over prior day high. Key level to watch is 116.70 then 117.30
UUP (Dollar Bull) - consolidation after yesterday's big move.
EEM (Emerging Markets) -Flagging as long as it holds 44.60
IFN (India Fund Inc.) - More consolidation. Over 26 this has a nice trade with stop under 25.60. Keep an eye on it.
EWW (Mexico) - Nice move out of healthy consolidation. Could run.
FXI (China Large Cap Fund) - My fears were realized as yesterday I wrote... "Bullish consolidation, but now 5 days since making its new high, bulls need to push it higher or it could get heavy". Today looks like the bulls gave up. Looking for support at 40.35.
CORN (Corn) - More consolidation.
JO (Coffee) Stuck in the middle of the range is 34.46 to 36.80.
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