September 18, 2011
Mish's Daily
By Mish Schneider
Last week I wrote about "Operation Twist" a Fed tool used in 1961. Friday, Reuters did an article about that and other FED options. I am no economist, but that option resonated with me. Here's a direct quote from a poll by Reuters: "For markets, it's a fait accompli: the Federal Reserve, which meets on Tuesday and Wednesday, is expected to push for some variation on a 1961 policy, known as Operation Twist because it aims to push down long-term borrowing costs while nudging short-term rates higher. Primary dealer banks polled by Reuters two weeks ago, just after the Labor Department reported the U.S. job market had stagnated in August, saw an 80 percent chance that some of sort of twist-like measure would be put into place." Pedro da Costa author and true economist.
SPY 5% gain, 5 days up in a row and still uninspiring volume. But, did get the close above pre downgrade week as all eyes on FED meeting coming up. Still not in positive territory for the year. 125 next major weekly overhead resistance with the 50 DMA at 123, sharply sloping down. Following a huge wedge which appears to be halfway through. Obviously should be flexible and prepared for anything.
DIA Here's another example-slope of the 50 DMA declining. About 2.00 away from top of range. 112.30 key support.
QQQ Not only kissed the 200 DMA, but also gave it a giant bull hug and closed above giving Nasdaq an express track last week from bear to recovery to an accumulation phase (unconfirmed until second day close above 200 DMA.) Volume was good, 3rd Accumulation. Hasn't crossed S1 since August 9th. If does, 54.00, next major support level.
IWM 74.00 the top of the range. 69.50 now support
ETFs:
GLD Bought GLD on Friday once it took out Thursday's high. Took some profit but kept a bit with a cushion to see if it can trade above the adaptive moving.
SLV Bought this too but got out since the 50 DMA is close to the adaptive and the price needs to clear this level convincingly one way or another. I wrote about the slope of the 50 DMA as positive making Thursday's close beneath a sign of a weak warning phase-I talk about slope a lot and am happy to answer any questions on how it pertains to gauging phases.
SMH Led this rally up and important to track for sign of whether or not this rally continues. Still long. Overbought which means a close under 30.50 not a bad place for a stop on balance.
XRT** Had a death cross Thursday right at the moving averages. Tested the highs from last swing at 50.50. Still consider a short against Friday's highs if fails 50.00. Rare to see price at the moving averages when they intersect.
XLF Filled gap closed beneath. As always, has to come to the party or trouble for the other guests.
IYT 2 DOJI days in a row which means major indecision at these levels. 85.00 weekly resistance. Since transportation tends to be a great overall gauge, was the first to collapse from the highs in May and like XLF, has to stay at the party to keep the rally going.
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