I haven’t written about life in a technical bubble in quite some time. I thought I had good reasons of course; let’s face it, the news around the globe on pretty much all accountsmade the bubble seem more ostrich-like than usual.
However, as I surfed the offerings on NFLX over the weekend, I came across a documentary called, Tiny, A Story About Living Small (a new trend in downsizing one’s domicile); hence, my thought about the tiniest place a trader can live-inside the bubble!
The Tech bubble would have gotten us short the Dow on September 23rd after the reversal candles. On October 15th we would have covered the short, then on October 20th, it would have gotten us long.
Looking at the present, the Dow (DIA) made new highs early on, sold off from those highs, had a narrow trading range with less volume than it had last Friday (scant volume compared to its average as well). Clearly warrants a head’s up, perhaps a strong warning to new longs, but not a sell signal at this point.
The Russell 2000s could not match the September 3rd peak high; yet, corresponded with a 60-day high and close near the intraday lows as this week begins. The weak link of 2014,IWM merits close eyes as we head into midterm elections and a week chock filled withearning reports, economic data, concluding with the jobs report.
Then there are the QQQs or NASDAQ. That not only confirmed the runaway gap, but also left itself open to a reversal after making new highs.
What’s a resident of the tech bubble to do? DO vote, because as a US Citizen it is your right and your duty to do so, but DON’T watch the pundit’s remarks on the results and their implications. DO exit positions ahead of their earnings report but DON’T pay any attention to the economic data. As an alternative, DO look for confirmation on aforementioned possible warning signals inside the bubble, and whether or not confirmation materializes, trade accordingly.
S&P 500 (SPY) Possible double shooting stars. Love this candlestick formation as it can really tell us whether a trend is about to go ballistic or go the way of the dinosaur Subscribers: Positive Pivots in all
Russell 2000 (IWM) Held Friday low which tells me Monday session more of a digestion-if it continues to hold 115.70 that is
Dow (DIA) 173 important to hold but really, looks ok even up here
Nasdaq (QQQ) Tech bubble-don’t argue with a runaway gap, unless this gaps under Friday’s low
XLF (Financials) Overbought and on new highs
KRE (Regional Banks) 39.70 should hold as this worked off some near-term overbought conditions
SMH (Semiconductors) Semis back with room to recent swing high
IYT (Transportation) If holds 155.90 still see new highs coming
IBB (Biotechnology) Rest more than a call for a top
XRT (Retail) 88.00 a swing level of support to hold or not
IYR (Real Estate) I did tell you all this would go to new highs-hope you made money
ITB (US Home Construction) I really like where this held so if market continues, with an inside day, like this again over 24.26
GLD (Gold Trust) Blow off volume Friday, inside day light volume Monday-the makings of a bottom to watch for
Metals and Mining (XME) Could be a bottom forming
USO (US Oil Fund) Classic 3 times the average daily volume blow off bottom in the making-tech bubble- remember that!
XOP (Oil and Gas Exploration) 59.20 key support if this is going to bottom out
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs 120 pivotal unless this begins to break further below 117.68
UUP (Dollar Bull) New multi-year highs
