April 7, 2013
Mish's Daily
By Mish Schneider
The week ended with a great divide. The S&P 500 and the Dow maintained their bullish phases. In fact, the initial gap lower turned out to be a great buy opportunity in multiple instruments. The Russell 2000 and NASDAQ ended the week in an unconfirmed warning phase. However, both ended with an interesting flirtation of the 50 DMA. The bonds tell another story. Last week began with a warning phase in the short bonds and ended with a distribution phase. Lots of damage in just one week. On the flipside, the TLTs jumped into an accumulation phase. That makes traders like myself wary of the overall strength of the market but does not preclude buying instruments set up on their own velocity. And so, I go back to the beginning of 2013 looking at the sectors we expected to perform well under the same assumption: The US economy remains in better shape than the other world economies. If one understands where to look fundamentally and then uses the charts for entry timing with the lowest risk and trades intelligently, there's lots of money to make (both from the long and short side).
S&P 500 (SPY) Of course there is the possibility of triple tops from 2007, but looking at the daily chart, I see this in a bullish phase with weekly and monthly charts still positive
Russell 2000 (IWM) Push to the 50 DMA after the nasty gap down. We should know fairly quickly whether this continues above the 50 DMA or now and how that bodes for the overall beta of the market
Dow (DIA) We can say the same of this only with one major difference-this held the 50 DMA and is flirting with the fast moving average.
NASDAQ 100 (QQQ) Stay tuned here as well on the status of its location to the 50 DMA
ETFs:
GLD Anybody want to know what a slingshot looks like? Check out this chart from last Thursday and Friday. Now resistance at 154 next
XLF (Financials) This did close back above the 50 DMA-one of my go to signs for checking US economy's temperature
IBB (Biotechnology) A good looking sector still, especially since it broke hard on the gap only to close nearly unchanged
SMH (Semiconductors) In a warning phase, but still a huge opportunity in this group over the coming year and beyond to watch for
XRT (Retail) Inside dayand still thinking those double tops at 70.81 will be history.
IYT (Transportation) Trucked back over the 50 and back to an unconfirmed bullish phase. The range Friday was crazy from S3 to R1. A major favorite for me this year
IYR (Real Estate) New highs again-a reason to question a bearish stance in the overall market.
USO (US Oil Fund) Confirmed distribution phase.
OIH (Oil Services) Like SMH, in a warning phase but with a staggering move off of the lows on Friday and a nice-looking bullish engulfing pattern
XLE (Energy) Not my first choice, but another example of how this ripped higher after the gap lower
TBT (Ultrashort Lehman 20+ Year Treasuries) 3 possibilities: 1. Gravestone Doji 2. A slingshot low 3. An island bottom in the works. Stay tuned.
XOP (Oil and Gas Exploration) Winner of my favorite group to have the best move in the coming year and so forth.
XHB (Homebuilders) Yet another amazing bullish engulfing pattern worth eye balling
UUP (Dollar Bull) Interesting hammer Doji candle
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