December 8, 2014
Mish's Daily
By Mish Schneider
From: Michele Schneider [mailto:[email protected]]
Sent: Monday, December 8, 2014 3:50 PM
To: '[email protected]'
Subject: MMMDaily: Our Trip to the ER $SPY $QQQ $IWM $DIA
Hi all! To begin, my compliments and gratitude to Geoff Bysshe and Jonathan Griffin who both did an outstanding job delivering pertinent and accurate analysis each day in my absence!
Keith and I went to Mexico for our vacation. I eat an extremely restrictive diet (hardly any animal products) due to some health concerns; but, since we were heading to the seafood capital (Cabo San Lucas) where the fish (and the whales) are running abundantly, after successfully digesting a fabulous fish ceviche earlier that week, I decided to eat some freshly caught lobster several nights later (first one I’ve eaten in over 3 years).
Like the market, I got a bit cocky. I’m thinking, hey, I can handle this-let’s (my stomach and I) eat more fish, my system will absorb it. While we were away, the market behaved similarly, absorbing lots of selective buying and running up to new highs.
However, the story does not end there for neither me nor the market. I got sick-really sick and wound up ending our trip in the ER with extreme dehydration (you can guess why). The market had its own little health emergency during Monday’s session dropping over 100 points with some of its body parts looking way worse than just dehydrated. In fact, to stretch the analogy further-oil and especially gas, well let’s just say we both are suffering from an overproduction!
The Russell 2000s or small caps took the hardest punch. However, they remain in a fairly well-sized trading range. The S&P 500 and the Dow could be having another reversal pattern off their highs but require confirmation. NASDAQ broke the fast moving average, first time since early October. Interest rates continue to drop precipitously and I come back once again focused on metals and miners, looking for follow through or at least a confirmed phase change.
After a week, I am starting to feel better. The question for the market is how long a convalescence will it require before it resumes robust health?
S&P 500 (SPY) Like QQQs first close under the 10 DMA since early October. I would expect more correction with support at 205.38 then 204.
Russell 2000 (IWM) 114.30-118.00 is the range for now and wouldn’t pay such close attention until that range breaks one way or another.
Dow (DIA) Actually held the 10 DMA although if gaps below or takes it out tomorrow should seal the near term fate for the whole market
Nasdaq (QQQ) 102 big support-in fact, I remember writing about this level in November. A close under 104.42 is a confirm of the December 1st key reversal from the new highs.
XLF (Financials) A strong sector now as it made news highs although a bit extended here
KRE (Regional Banks) If the market doesn’t fall apart, still like this group longer term.
SMH (Semiconductors) A textbook reversal pattern if confirms
IYT (Transportation) Under 160.41 starts to look real nasty-til then it is correcting mainly
IBB (Biotechnology) Never underestimate this group is the lesson here as it made new highs on the Cubist takeover news
XRT (Retail) Before I left I wrote to take profits on a post Black Friday rally then stay away. Now, let it finish the correction
IYR (Real Estate) Likes 76.00 and loves the interest rate move
ITB (US Home Construction) Like to see what happens at 25.00
GLD (Gold Trust) Unconfirmed phase change back to recovery-second day confirmation needed
GDX (Gold Miners) Over 20.00 looks good
USO (US Oil Fund) Remember when $3.00 per gallon sounded cheap?
XOP (Oil and Gas Exploration) Looks like the weight drop I just had
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs Needs a close above 122.85
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