Summer In The Light, And Winter In The Shade

June 22, 2014

Mish's Daily

By Mish Schneider

Charles Dickens

We started last week focused on the small caps and we ended last week equally focused there. Our friend Russell, made quite a splash with lots of overhead to clear should the ignition continue.

I really like when an instrument (IWM) finds steam and ends well. Shakespeare might say, "All’s Well That Ends Well” And so I salute the small caps-almost as exciting as the World Cup!

NASDAQ had an inside day after making new highs, but with a more sobering chart formation. The high momentum stocks live here and a market without their participation-well, it just ain’t as much fun.

Last week’s fun clearly took place in commodities. Gold, Silver, Oil, Sugar, Corn and Coffee awoke from a long hibernation (Coffee did have a spectacular run early on this year to be clear).

Solar energy made our portfolio sing last week!

With all the good news about new highs, etc.-my conservative tendency is to find the troubling spots and ponder their relative weakness.

Are we heading towards inflation? Long Bond prices firmed marginally over the course of the week but Junk Debt hit new highs, meaning junk yields dropped sharply. The US dollar did not clear the 200 DMA, however pulled back to a good support level after its run from the island bottom. Inflation erodes buying power and with the FED still printing money, essentially that will decrease the value of the dollar or YOUR purchasing power. All of the aforementioned definitely relates to the Gold explosion last week!

Keep eyes on the Financial, Retail and Homebuilder sectors. All closed red on Friday with the new highs in the Dow. Keep eyes on the dollar and rates as well. The commodities are one piece of a puzzle, these all have their place in that jigsaw as well.

S&P 500 (SPY) Looks like a healthy rest

Russell 2000 (IWM) Nice close for the week-look forward to see what happens Monday.

Dow (DIA) Very close to new highs again-trouble happens under 168

Nasdaq (QQQ) Inside day

XLF (Financials) 2 Inside days and for us, a technical dream.

KRE (Regional Banks) 40.76 to clear for this to join in and an inside day

SMH (Semiconductors) Sitting on the dock of the bay

IYT (Transportation) Healthy action

IBB (Biotechnology) Got that gap over 250 I told you about-great move on Friday-see 270 in the cards

XRT (Retail) Concerning unless it clears the March highs 87.53

ITB (US Home Construction) Like this over 24.25- on a closing basis

GLD No surprise to see an inside day after Thursday’s move