O Imitators, You Slavish Herd!

---

Horace, leading Roman lyric poet during the time of Octavian

As annoying as my constant harping on the Sheep imagery related to market tone may be-I must say-it has kept me patient throughout the correction-or at the very least, given me perspective.

For example, let’s take our friends, the so-called “experts” on CNBC-not naming names mind you. Tuesday, all you heard was MARKET WILL MELTDOWN 10-15%! Batten down the hatches; drop your *#@*& and grab your socks!

I grabbed my imaginary sheep. (Insert the obvious joke). Whilst cuddling, I have thought about the implications of a strong US Dollar and its effects for the economy-something I have written about in the past.

First off, the small caps, Russell 2000s, separated from the herd and rallied back over the January 6-month calendar range high.

Secondly, the Transportation Sector (IYT) gained the most percentagewise on Wednesday. Its top holdings are FedEx, Union Pacific and Kansas City Southern, all green with KSU, although under the major moving averages, gaining after a strong reversal candle on Tuesday.

Repercussions are felt though, as both the S&P 500 and the Dow confirmed the warning phases. NASDAQ had another weak day, it’s now closer to the 50 DMA.

Of course, we definitely prefer to see SPY and DIA recapture their 50 DMAs and until they do, hesitant to load up long. In the meantime, keep eyes on the stronger sectors like Biotechnology (IBB), Retail (XRT) and Semiconductors (SMH). Potentially favorable is if the Regional Bank Sector (KRE) can clear 41.06 and hold.

If not, as good Shepherds, prepare for the possibility that as the market internals all sit in the negative zone, even at oversold, we could get even more oversold if the NASDAQ dreary performance is any indication

S&P 500 (SPY) Good we added the 100 DMA which came in at 204.28 now since it held there. Resistance at 206.01 the 50 DMA

Russell 2000 (IWM) Held the 50 DMA, closed green and over the January Calendar Range high-can it lead the others?

Dow (DIA)176 is the 100 DMA and 177.72 the 50 DMA-declining in slope

Nasdaq (QQQ)104.48 the 50 DMA and 106.00 the point to clear

XLF (Financials) Inside day and unless it moves well tomorrow, see the 200 DMA next at 23.47

KRE (Regional Banks) Much stronger than XLF-could actually fly if can clear over 41.06

SMH (Semiconductors) The 50 DMA is 55.05 which has to hold now-corresponds with January Calendar Range high

IYT (Transportation) Marginally cleared 160. Positive sign if this can get going over the 50 DMA or around 161.55

IBB (Biotechnology) Inside day with 340 pivotal

XRT (Retail) Has to clear 98.45 to negate the topping candle. Otherwise, under 96.15 breaks the 50 DMA

IYR (Real Estate) Another narrow range day sort of in the middle of nowhere-under 76.70 in trouble

ITB (US Home Construction) Wouldn’t discount this group concerning strong US economy and dollar

GLD (Gold Trust) 110 is the 2014 low area and under that see 100 possible

GDX (Gold Miners) Possible reversal pattern if confirms

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs if hold now over 126.35 could see a move up to 130 area the 50 DMA

UUP (Dollar Bull) Just about par with the Euro on this parabolic move

EWG (Germany) Could be done selling off if holds Wednesday’s lows

FXI (China Large Cap Fund) Only like if gaps over 41.06