January 2, 2014
Mish's Daily
By Mish Schneider
Hello 2014; hello correction. Although the last 10 trading days of December brought all indices and many individual instruments to new highs, many aspects of the market were troublesome in light of that. Furthermore, with Thursday’s session decline, many wonder whether or not last year’s highs were indeed the highs!
One possibility and certainly not a good one is if NASDAQ gaps beneath 86.95 as we end the week and stays beneath. That would be reason to run for cover.
But, we also have to watch for the S&P 500 to hold 182 and perhaps in the best shape and an index of reason could be if the Dow holds above 163.27. Otherwise, the Russell 2000s (continues to be my favorite “tell”) already signaled a top as of December 26th and was first to break the fast moving average intraday. To make life really fun, it closed the session right on the fast moving average. Pivotal for sure.
Most interesting is the incredible divergence among the sectors and groups-see below for more
S&P 500 (SPY) Distribution day in volume and closed right on the fast moving average. 182.00 support to hold.
Russell 2000 (IWM) Will call 114.10 pivotal with 113 underlying support and 115 nearby resistance
Dow (DIA) Could be topping out here but unless it breaks 163.27 could be a one day correction
Nasdaq (QQQ) An open lower and this will look a bit scary. However, over Thursdays high back in business
XLF (Financials) 21.68 is important level to hold
SMH (Semiconductors) Not a pretty beginning but at least not an island top. 41.45 area big support
XRT (Retail) Never made new highs with the market but overall, phase still bullish. Big eyes here for next direction
IYT (Transportation) Big drop from the highs. 128 is the underlying support
IBB (Biotechnology) Better shape with sideways consolidation and still possible to see 230-235 if holds 225
IYR (Real Estate) A messy chart but in its bear phase, vulnerable if breaks 62.00
XHB (Homebuilders) Bullish here for 2014 but needs to hold around 32.70
GLD A reversal candle on December 31st in play. Forget logic; it just is
USO (US Oil Fund) Nasty gap lower and immediate jump to near term oversold-will see if can cross 34.60 and if not, still looks lower
OIH (Oil Services) Never made it over the 50 DMA which makes this a weak group for now
XLE (Energy) New highs and a bit of a retreat but in overall good shape
XOP (Oil and Gas Exploration) Weekly and monthly chart ok so needs to clear the 50 DMA on the daily
TBT (Ultrashort Lehman 20+ Year Treasuries) Inside day over the 10 DMA-if closes above 80, should see higher levels forthcoming
UUP (Dollar Bull) If holds over 21.64 like this on the new phase
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