October 22, 2014
Mish's Daily
By Mish Schneider
Marmion: Canto VI.-The Battle by Sir Walter Scott
Oh, what a tangled web we weave when we go long cause we believe! (Believe that the market will go straight up that is.)
After hoots and hollers on Tuesday, reality set in on Wednesday. Not harsh reality mind you; rather, just enough to remind everyone that 2013 was so last year. The phases, although improved in the S&P 500 and NASDAQ, in the Dow, returned to Distribution after a brief respite over the 200 DMA. The Russell 2000s failed 110, and at the end of the session, failed Tuesday’s lows)
I did warn that Wednesday, if first going long, could mean that the party, which started long before you got there, was devoid of goodies with only the crudité left (Keith always tells me when I shop for a dinner party, nobody eats the crudité.)
However, the Biotechnology and Retail sectors managed to hold onto the Bullish phases, while Transportation could not, even after a projection of an 8.8% increase in shipments from Black Friday to Christmas Eve in Federal Express.
I asked you all to share with me your thoughts on what has fundamentally changed to even entertain the notion of new highs in the indices. I received a couple of replies stating hopes of more stimulus from Draghi and the US Federal Reserve, to the recant of Ebola wiping out the human race. Sorry, not impressed.
If Wednesday’s session was digestion, then we should see Tuesday’s lows hold in the rest of the indices (did not in IWM with a nasty bearish engulfing pattern to boot). There could be some better setups after we now worked off near term overbought conditions. But, if digestion turns to indigestion, which in turn becomes an ulcer, then under Tuesday’s lows, check out the safety plays like the volatility index (VXX) and the Long 30 year Bonds (TLTs). Or, keep cash as your main holding, if that’s more your style.
S&P 500 (SPY) 190.81 is the 200 DMA and no longer that far away.
Russell 2000 (IWM) Wrote that if this broke under 110 expect to see 108.80. The low is 108.86. Now 108.80 is key and 107.00 next level to watch. If clears back over 110, that would be a great sign
Dow (DIA) Closed weak under the 200 DMA but over the 10 DMA at 164.22. Under that looking at 163.00
Nasdaq (QQQ) Best shape if holds 96.00. If not, looking at 94.40 next. The 50 DMA is 97.93
XLF (Financials) 22.36 the 200 DMA to defend
KRE (Regional Banks) 37.14 pivotal
SMH (Semiconductors) 46.85 the 200 DMA
IYT (Transportation) Under the 50 DMA but far away from the 200 DMA making this a good place to go if market is strong
IBB (Biotechnology) Impressive hold of Tuesdays gap higher with 280.71 the recent highs and under 270, trouble
XRT (Retail) Back to a distribution phase under the 200 DMA 84.71 pivotal
ITB (US Home Construction) Tested but failed to clear the 200 DMA
GLD Got the pullback after failing the 50 DMA. 120 puts it back above and support lives at 118.65
USO (US Oil Fund) Cannot find a bottom which is most certainly a concern
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs 120 pivotal area held with a move over 120.82 clearing the 10 DMA
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