Whit's Fur Ye'll No Go By Ye!

September 18, 2014

Mish's Daily

By Mish Schneider

(Old Scottish Dialect)-What’s meant to happen will happen.

A sleepy rally in the indices with pockets of excitement mainly in the financial sector. Semiconductors kicked into gear along with Transportation and certain Healthcare equities; yet overall, the day turned out better defined by glaring divergences.

Perhaps the major culprit of these divergences points to the small caps, which wins the distinction of failing to unnerve the blue chips, while arresting much follow through in so many other sectors and groups.

NASDAQ came so close to the 2014 highs and couldn’t find the juice to punch to or through it. IWM took out Wednesday’s highs by a few ticks and had it continued up we might have seen a 200-300 dollar move. Instead, it retreated then tried to catch up into the close holding its bullish phase and keeping hope alive.

SPY and the Dow though-where the fun lives for now. And of course, nothing parallels the buzz over the Alibaba IPO, at least not since the cache the Twitter IPO had in late 2013.

Rates eased a tad a day after the FOMC talk which could mean that certain oversold commodities can have some bounce. That easing may also underscore the vote in Scotland, which other than a lot of jokes about kilts, plaid and Scotch, appeared muted in terms of US Equity impact.

Otherwise, look for the end of this week welcoming lots of weary active traders with perhaps some healthy digestion (maybe I am projecting) so when we start the following week, these highs won’t feel so, well, high.

S&P 500 (SPY) New high close

Russell 2000 (IWM) Needs to move away from 115.50 now or the thorn in the bull”s side

Dow (DIA) Another new high and now a bit overbought on the 2-day Relative Strength Indicator-makes the case for the digestion call

Nasdaq (QQQ) Inches from the 2014 highs

XLF (Financials) Overbought and oh so pretty!

KRE (Regional Banks) Confusion over as it cleared the 200 DMA. Now, 39.46 key support to hold for trend up to continue

SMH (Semiconductors) Semis did not disappoint with their new 2014 highs

IYT (Transportation) Inside day near the highs

IBB (Biotechnology) Still has a battle to the highs which means if the market turns down, good place to look for weakness

XRT (Retail) Looks good up here but not as tidy a chart as some of the other sectors

IYR (Real Estate) Reacting to the higher rates, slump in housing starts, but holding the week lows so far going into Friday

ITB (US Home Construction) Inside day right on the 200 DMA