July 7, 2014
Mish's Daily
By Mish Schneider
George Carlin
First, I would like to thank Matthew Mullins for writing the daily and handling my premium subscribers so deftly while we drove across the country!
Secondly, I would like to thank Mr. (Ms.) Market for making my first day back a slow, methodical correction after the Dow closed above 17,000 last week.
For those of you new to my MMMDaily, welcome! I try to mix top down analysis, with specific trading guidelines whilst adding a spoonful of sugar through levity.
July 1st ended the first 6 months of trading activity for 2014 and began the second ½. Looking at July as a sort of reset, we have 2 views. One is the monthly calendar range of the high/low of the indices as of July 2nd. The second view will happen after the first 2 weeks of trading in July are in place.
Based on preliminary observations, we begin with diversion once again. After the Russell’s tested the early March high, Monday’s session watched IWM fail the high and low of the monthly calendar range.
SPY failed the monthly high, but held the monthly low. DIA and QQQs held the monthly high marginally. What this information tells us is that the new highs put in place last week are not yet trustworthy.
I am not saying we are at a top-way too soon to predict any such thing. What I am saying, is either the cream has to rise to the top or, the market will sink to its lowest common denominator. With the official start of the earnings season, the timing is precarious.
We will look at the usual suspects-Semiconductors, Financials and Interest Rates for further clues before taking any heavy stance portfolio-wise. Semiconductors continue to shock and awe-a good sign. Financials need to hold around 22.80 and Interest Rates or in this case, the ultrashort TBTs needs to hold 62.00.
Bullish phases are intact. At this moment, signs point more towards correction after a pre-holiday run. But again, not much skin in that game just yet.
S&P 500 (SPY) 196 good support level to hold and the low of July this far. Otherwise, over 198 looks good.
Russell 2000 (IWM) 117.50 some support and 116 even better. Over 118.40 on a closing basis good.
Dow (DIA) If holds Monday lows, really good, under can see 168.80 area.
Nasdaq (QQQ) Looks more like digestion therefore remaining a leader for now
XLF (Financials) 22.80 key support
SMH (Semiconductors) Possible reversal candle but needs a second day confirmation and has to fail 49.65
IYT (Transportation) Dropped to support if holds today’s low
IBB (Biotechnology) Big correction to support around 258
XRT (Retail) 86.85-87 where it broke out from now has to hold
ITB (US Home Construction) Hard fall into support
GLD Not an easy pattern to read here
FCG (First Trust ISE Reserve NatGas) On the 50 DMA now
TAN (Guggenheim Solar Energy) Broke days of work with 43.00 next support area
TBT (Ultrashort Lehman 20+ Year Treasuries) 62.00 support area although now back into an unconfirmed bearish phase
FXI (China Large Cap Fund) Inside day and over a key weekly moving average
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