October 22, 2013
Mish's Daily
By Mish Schneider
Earnings season is so interesting. Even if you are like me, not particularly schooled in P/E Ratios, EPS, and the like, the simple adage of “Don’t hold into earnings” unless you are a sophisticated options strategist, is pretty darn sound. Take NFLX-a darling for a short period of time before it totally tanked. Or CREE, which at the time of writing was down a cool 13%. I mention this because we have 2 distinct confluences to consider. First, the earnings-still many more to come. Second, is the rotation of the indices and certain sector/groups. The small caps or Russell 2000s closed marginally up maintaining the runaway gap. NASDAQ closed on new highs but with a doji day. The Dow closed up but nowhere near new highs and S&P 500 accelerated to close on new highs. Homebuilders excelled along with Real Estate. Biotechnology regained some luster and Gold tested the overhead moving average for a possible phase change. The dollar was crushed again while rates dropped. We began the week looking at rates firming and the havoc that might cause and at midweek, we look at the rates dropping-and perhaps a closer look at certain commodities. Note, rates are still firmer than where they were when 2013 began. We also should keep eyes on the VIX as it held up pretty well, all things considered.
Russell 2000 (IWM) 109.83 is last Friday’s low. Although the market remains strong, a break and close below that level-fair warning.
Nasdaq (QQQ) 81.35 the breakaway gap low
XLF (Financials) Big pause near the highs
SMH (Semiconductors) holding the runaway gap
XRT (Retail) Possible reversal candle if confirms tomorrow-not good for this group.
IYT (Transportation) New 2013 highs again but if gaps lower, another bad sign for a possible island top
IBB (Biotechnology) Better, but still not over last week’s high
IYR (Real Estate) A gap over the 200 DMA would be interesting. Otherwise, best I can see is run to overhead resistance
XHB (Homebuilders) Cleared the inflection point-looks better. Subscribers: Small position to see if this can move even further from the converging moving averages.
GLD 129.65 is the 200 DMA.
USO (US Oil Fund)The 200 DMA –right there.
OIH (Oil Services)Back to looking good
XLE (Energy) After a possible reversal from the highs, did not confirm that on Tuesday.
XOP (Oil and Gas Exploration) The candle on this one is also alarming and one to note after explosion to new highs.
UUP (Dollar Bull) Those 2011 lows looking more likely now
FXI (China) Like 38.00 as support to hold
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