July 24, 2013
Mish's Daily
By Mish Schneider
Thus far, this earnings season which has yielded some extraordinary surprises-especially in Wednesday’s post market session-Facebook, Trip Advisor and Baidu to name a few. Actually, when it comes to the world of social media, those huge gains really do not come as a surprise. What is a bit hairy right now are the indices and the near drama of a complete meltdown which almost occurred but did not totally occur after all. In other less verbose words, the S&P 500 confirmed a brick wall high pattern but held the fast moving average. The Russell 2000 had a similar scenario yet did not hold the fast moving average while the Dow with a somewhat nasty red candle day, closed nearly unchanged. To complete (or really incomplete) the picture, NASDAQ remains in purgatory stuck between the gap low support from July 11th and the ever-so pivotal 75.00 level just under the fast moving average. Add low volume, bull phases and some real damage in sectors like homebuilders, real estate, oil and gas, semiconductors and you got a big ole whopping pea soup clear as mud scenario! Rising rates and firming US dollar to blame? Well of course the Fed will taper at some point. That news is recirculating and becoming super annoying. Be that as it may, our closed positions increased in our portfolio leaving us profitable, underexposed and ready for anything!
S&P 500 (SPY)A brick wall high does not always necessarily mean the market will go straight down. Just check out the action after the May 22nd candle. The key is if it clears the recent highs and how it acts around moving averages
Russell 2000 (IWM) 104 failed to hold with 101.94 the gap low from 7/11. And unless this clears recent highs, rallies look like sell opportunities
Dow (DIA)155.74 would have to clear now, 155.14 the May 22nd high remains pivotal with 153.71 the gap low from 7/11.
ETFs:
XLF (Financials)Confirmed the reversal pattern from the highs which does not always necessarily mean the it will go straight down. However, until it clears the highs remain defensive
SMH (Semiconductors) Unconfirmed warning phase. I believe I began this week stating that this sector is not critical to an economic recovery, but I personally like when they are at the party
XRT (Retail) Broke a 9 day channel so unless it clears and closes back into it, consider this toppy for now
IYT (Transportation) Transportation gave a clue yesterday but now have the 50 DMA pretty close by
IBB (Biotechnology) Actually, after Tuesdays damage, this is a brighter spot than the others since did not confirm that reversal from new highs
IYR (Real Estate)Landed and held the 200 DMA. If that continues to hold better sign, if not, would not be too enthusiastic about the market going to new highs soon
GLDBack to an unconfirmed bearish phase with an island bottom still intact
USO (US Oil Fund)Topping action for sure
XOP (Oil and Gas Exploration) Made a new 2013 high by one tick and closed lower on Tuesday-looking at today’s action-not a good sign
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