The Days Are Numbered

February 10, 2015

Mish's Daily

By Mish Schneider

28 Days Later tagline

Is Day 27 the charm? After all, numerically 27 has strong elements to it. It’s a perfect cube, being 33 = 3 × 3 × 3. In base 10, it is the first composite number not evenly divisible by any of its digits. 27 is the only positive integer that is 3 times the sum of its digits. 27 contains the decimal digits 2 and 7, and is the result of adding together the integers from 2 to 7 (2+3+4+5+6+7=27).

27 is the number of bones in the human hand, the hand you might have used to hold your mouse to buy with on Tuesday. And, “The 27 Club” is a term used to refer to popular musicians who have died at the age of 27. Ok, not so good.

In my world, 27 will be remembered as the number of days it took to finally clear the January 6-monthy Calendar Range high in NASDAQ! S&P 500 touched the January high at 206.88 yet could not close above that level.

The Dow and Russell 2000s are still a bit far so we not only need to see two of the four indices close above that range; ideally, all of the Fab Four need to come to the party.

Most importantly, with the volatility index dropping on Tuesday, I will equally focus on the converging moving averages at 31.50 in VXX to see whether that turns out to be critical support that stops the market in its tracks.

Interest rates firmed, but we hope they find some level of consolidation and do not rise too rapidly. Oil dropped as well, which could be a relief for some and a bane in the side of others. The Financials cooperated adeptly with XLF clearing 24.18 and Regional Banks tested and held the support mentioned at 39.00.

Now, we need follow through. That means some of the sectors that typically lead need to lead now. Semiconductors, Retail, Biotechnology-all three remain below the January Calendar Range high. With Tuesday’s action in the indices, it does stand to reason they all should.

Since Wednesday is 28 Days Later, here’s to nothing resembling post-apocalyptic!

S&P 500 (SPY) Bullish Phase Tested 206.88 the Calendar Range high but could not close there. Wednesday key!

Russell 2000 (IWM) Bullish Phase 120.56 January Calendar Range high with 118.20 now the important support to hold

Dow (DIA) Bullish Phase 179.23 the January Calendar Range high with 176.46 the support to hold

Nasdaq (QQQ) Unconfirmed Bullish Phase Now want to see 104 area hold with 103.08 the 50 DMA. Then, we can talk about 105 and higher

XLF (Financials) Unconfirmed Bullish Phase 24.17 pivotal

KRE (Regional Banks) Now, if clears 40.00 good to go

SMH (Semiconductors) Unconfirmed Bullish Phase With some volume too so has to stick over the 50 DMA

IYT (Transportation) A holdout on clearing the 50 DMA

IBB (Biotechnology) Like now over 319.25

XRT (Retail) Good group and nearly to the Calendar Range high or 96.85

ITB (US Home Construction) Practically making new multi-year highs