October 7, 2013
Mish's Daily
By Mish Schneider
When I was coaching high school juniors for the English component of the SAT, to master reading comprehension we would talk about the 5 W’s and H-Who, What, Where, Why, When and How. This not only improved comprehension, but critical thinking as well. For fun-after all we can all use some-let’s answer those questions. We will call it Stock Aptitude Test! Who? The US Government. What? The rapidly approaching deadline to raise the debt ceiling or default. Where? Capitol Hill. Why? Because they can. When? October 17th. How? That’s just it-they don’t seem to know how! I jest (sort of), but the real point is the market is rightfully scared of a repeat of 2011 and the downgrade and as well it should be. The S&P 500 is back to an unconfirmed warning phase; the Russell 2000 seems slated to test the underlying 50 DMA, the Dow has been troublesome for a while now, looking like it wants the 200 DMA and NASDAQ, with its AAPL upgrade, might still be best hope since it ended the session with a hammer doji candlestick meaning that neither the bulls nor bears can successfully take over therefore, we continue to look to the phase, which remains bullish.
S&P 500 (SPY) Back to an unconfirmed warning phase, holding last week’s low thus far at 166.84.
Russell 2000 (IWM) 105.24 most recent low to hold or will see the 50 DMA. Only a move back over 106.90 will improve conditions considerably
Dow (DIA) 146.90 is the 20 DMA as underlying support
Nasdaq (QQQ) EYES here for 2 reasons. One, I wrote about above. The other is that it now has 2 inside days! So, if you were waiting to go short, under today’s low should give a good signal. If you are looking for a reason to buy, as scary as it sounds, over today’s high should be equally a good signal.
ETFs:
XLF (Financials) 19.73 last week low, and if can’t hold that, then figure the 200 DMA will look attractive.
SMH (Semiconductors) Still love this group, but not in the face of a meltdown. Have to see market stabilize
XRT (Retail) The 50 DMA is very close now
IYT (Transportation) Under the 50 DMA should fill gap to 115.72
IBB (Biotechnology) Big drop again on the bigger they are the harder they…
IYR (Real Estate) Held up better but not sure I find that too impressive given its current bearish phase
GLD Ok, so it’s back to watching 124 to 130 range and which way it breaks first
OIH (Oil Services)Inside day.
XLE (Energy) Inside day on the 50 DMA
XOP (Oil and Gas Exploration) 66.80 support on daily to watch
TBT (Ultrashort Lehman 20+ Year Treasuries) FOMC minutes released this week
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