September 22, 2014
Mish's Daily
By Mish Schneider
James Whitcomb Riley
Except for a few dots of green, this week began precisely how many traders feared it might considering the recent decline of commodity prices.
Glaring divergences coupled with diminishing consumer demand of goods does not equal the new highs the market enjoyed briefly last week. It seems reality has set in just as US households are the most invested in the market since 2000.
I assume most of you who read this daily are either subscribers of Marketgauge or active investors that use systematic entries and exits or at the very least, safe risk parameters. I write this because I wish the public had a better understanding of why they are so often last ones in-or fodder for the traders in the know.
With that said, we have been here before in 2014. The weak longs run for the doors, the market looks like excrement, the bears begin to growl and then, whammo-2 days of 100 point rallies ensue.
I tend to think that won’t happen say, Tuesday or even Wednesday, given certain fundamental shifts such as the increasing number of put option buyers, a “death cross” in the small caps and the deterioration of most big momentum stocks. However, NASDAQ, S&P 500 and the Dow are in bullish phases even after Monday’s damage. In this year of the Horse of a Different Color, I dismiss no possibility.
S&P 500 Super close to a serious brick wall high. Not so easy though with the 50 DMA just below at 197.75
Russell 2000 (IWM) Unconfirmed phase change to bearish. Held though, support from August 12th.
Dow (DIA) Best shape and first place to look for a long-had a brick wall high but held the fast moving average
Nasdaq (QQQ) Like SPY not a clean reversal and does have a strong underlying upward slope on the 50 DMA at 97.65
XLF (Financials) Held 23.45, which for now is to its credit
KRE (Regional Banks) September lows 38.81 and now back to an unconfirmed recovery phase (worsened)
SMH (Semiconductors) Looks awful but looked worse September 12 and 13th. Pockets of strength for this year are typically where to look first on rallies
IYT (Transportation) 152 big support are or this will decline further
IBB (Biotechnology) Although this failed to make new highs on the last rally, it is holding up relatively well if can hang out over 272
XRT (Retail) Here’s where my concern lies based on the information we have to support a deflationary period. 86.60 is the 50 DMA
IYR (Real Estate) Another major pocket of concern re: consumer activity.
ITB (US Home Construction) Express to bearish phase although not confirmed
GLD First major clue this year that inflation was clearly not an issue-which the FED has been saying
Metals and Mining (XME) Very oversold
XLE (Energy) Dropped to the 200 DMA and registering oversold-daytrade to miniswing bounce possible
TBT (Ultrashort Lehman 20+ Year Treasuries) Fed really cannot afford to let rates rise
UUP (Dollar Bull) 22.75 is resistance
FXI (China Large Cap Fund) That island top I wrote about in early September haunting this chart. However, I like where it held versus July low
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