May 12, 2014
Mish's Daily
By Mish Schneider
Paraphrasing Nietzsche
“Markets are not stable at all-time closing highs. Assumption-something big is coming. No sell in May, go away kind of event either.” From this weekend.
“Rising interest rates means the cost of money and credit is going up, and if the cost of money and credit is going up — so then must the cost of just about everything else.” Larry Edelson wrote in September 2013.
I quote myself and Mr. Edelson since both statements are now coming to fruition. I have not exactly been shy about why I believed rates had had a second peak last week when the TLTs had a blow off volume top and why I thought that would be good for the market.
Mr. Edelson’s point is that if this is just the beginning of a firming dollar and rising rates, an inflation expectation will begin to emerge.
And remember, perception is everything, usually about 3-6 months in advance of the news that supports or contradicts it.
S&P 500 (SPY) New highs on low volume with now 189.70 the old high area to defend Subscribers: Positive Pivots in all
Russell 2000 (IWM) Cleared the 200 DMA unconfirmed phase change to warning
Dow (DIA) Gap to new highs that sustained-the “markets are not stable at new highs” comment
Nasdaq (QQQ) Cleared the 50 DMA for an unconfirmed phase change to bullish which now has to hold for a second day
XLF (Financials) The 50 DMA is at 22.01 which cleared putting this back to an unconfirmed phase change to bullish
SMH (Semiconductors) After that inside day, cleared the 50 DMA foran unconfirmed phase change to bullish. That too has to hold with 45.37 level to clear
IYT (Transportation) Opened stronger and kept going to new highs
IBB (Biotechnology) 230 pivotal area and 235 next hurdle
XRT (Retail) An unconfirmed phase change to bullish with the 50 DMA at 84.25
IYR (Real Estate) Still looks great
ITB (US Home Construction) Cleared the 200 DMA
GLD Wedged between the fast and the 200 DMAs-Figure the way this breaks is a good sign for follow through
USO (US Oil Fund) Inside day above the 50 DMA
XLE (Energy) Like the overall market action but not leading at this time
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs now down for 4 days so might see a bit of a short covering correction-but overall, that is a rally to sell into
PHO (Power Shares Water Resources) Marginally cleared the 50 DMA which now has to hold
UUP (Dollar Bull) Subscribers: If FXE gaps lower and does not fill the gap-we will buy US Dollar through this ETF
KRE (Regional Banks) Cleared the 200 DMA
TAN (Guggenheim Solar Energy) Gapped over the 200 DMA which makes today’s low good point to hold
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