With Your Ear Down To The Ground

November 13, 2014

Mish's Daily

By Mish Schneider

“When the Music’s Over” The Doors

Amazing how fitfully we rest when the market climbs off the lows and marches to new highs versus how worried we become once the market achieves new highs.

Tuesday night, I wrote about 7 theories that could potentially have an impact on what happened as the week progressed and Wednesday night, I wrote about the Advanced/Decline signal which presented a warning in SPY (when the number of stocks above the 10, 50, and 200 Day Moving Averages go from plus 400 to under 400 in both the 10 and 50 DMA.)

But, I also highlighted the possible distinction between the peak in September in the IWM or Russell 2000s as compared to what might occur this time if the IWMs held up over that September high 117.80. Clearly I had company, lots of it, as Thursday’s session unfolded.

Russell and his 2000 friends were quite naughty, scaring the bejeezus out of lots of longs while the overripe Apple moved to another new high!

Apprising the situation, although we see a possible reversal pattern from a new 60-day high in IWM given the weak close, it did hold support around 116.50. How it closes on Friday should be important. A move back over 117.37 good, over 117.80 great, and a failure of 116.50, enough of a reason to tighten stops big time on existing longs and pretty much avoid putting on any new ones, with consideration of some type of hedge-perhaps the volatility index or short a tired sector short-term such as Biotechnology. I frown upon selling weakens in instruments already beat up.

Speaking of which, I sat with leg warmers on in our office today. A good portion of the US readies for freezing temperatures and the first snow of the season. Perception can change on a dime-low demand and an oversupply of oil can quickly become, WHAT DO WE WANT? OIL! WHEN DO WE WANT IT? NOW!

S&P 500 (SPY) 202.50 the fast moving average with an interesting doji day after making new highs Dow (DIA) Doji day after making new highs

Nasdaq (QQQ) New highs again (multi-year)

XLF (Financials) Held on which is encouraging

KRE (Regional Banks) Inside day

SMH (Semiconductors) Semis are not needed at this party, but, still like to see them clear 52.00 on a closing basis

IBB (Biotechnology) Held where it needed to for now but a place to look for shorts if market weakens

XRT (Retail) Made a new high then sold off a little but not catastrophically

IYR (Real Estate) 75.00 support

ITB (US Home Construction) Hovering at recent highs

GLD (Gold Trust) Looking for 113.15 and over

USO (US Oil Fund) 30.00 key point to clear

OIH (Oil Services) Check out the last 30 min bar if you can