Last night I wrote about the 5 Classic Signs of a Top (please review 03-04-15 Commentary archived on the website) with added remarks that none of those signs had come to fruition on Tuesday in the indices.
That nearly put sheep poo on my face as the session began on Wednesday with the whoosh to new weekly lows, and in the case of the small caps or Russell 2000s (IWM), S&P 500 (SPY) and the Dow (DIA) also breaking the fast moving averages. However, NASDAQsaved the day (and my complexion), proving that when concepts are classic-well, that’s why they’re classics!
Of course, I remain faithful to my hyper focus on the financial sector. The XLF ETFhanging in there is tantamount to a sustained rally in the stock market from these levels.
On the sectors that dropped sharply from their highs, such as Semiconductors (SMH) andRetail (XRT) we look for a second day confirmation. We gauge that confirmation by how the instrument closes. Wednesday, SMH closed red but over the fast moving average and right around the low from Tuesday. XRT not as attractive, and although closed around the prior day low, confirmed a top.
Point is, XRT confirmed a reversal candle (one of those classic signs of a top), but not the Semis.
For consistency sake, a note about the only commodity that has exhibited volume and had an unconfirmed phase change to Recovery-oil or USO. Naturally, we need a second day confirmation there as well with a close over 18.75 Thursday.
The Shepherd’s staff did not really do much to keep the wolves at bay. Might be time for new equipment-perhaps a Tesla that quietly traverses the field (TSLA closed up 1.4%). Or maybe sprinkle some pharmaceuticals outside the pasture for the wolves to consume asBiotechnology (IBB) ran up over 1% today. Our Assistant Jonathan, suggested a Rugerrather than a staff. (RGR closed up 3.68%). Harsh, but keeping an open mind.
S&P 500 (SPY) 208.73 the low form February 20th support with a move back over 211 good Subscribers: Negative Pivots in all
Russell 2000 (IWM) Held 122.25 ultimately, but now, unless it gets back over 122.75 could see more correction.
Dow (DIA) 180 needs to hold now or could see the 50 DMA. Otherwise, over 181.50 much better
Nasdaq (QQQ) Held 108 key support but now, needs to clear 108.75 or 106 not out of the question.
XLF (Financials) Key points are the 50 Daily Moving Average at 24.15, the highs since the 02/02 at 24.60 and finally, 24.90-the 6-month January Calendar Range high.
KRE (Regional Banks) 40.00 pivotal now with 41.06 the January Calendar Range High to clear
SMH (Semiconductors) Over 57.60 better but otherwise, look at 56.00 support
IYT (Transportation) Holding the 50 DMA for now which is a good thing
IBB (Biotechnology) Steroids again
IYR (Real Estate) Once could say this was the first one to have a top in January and was a precursor as a result. But at this late date is like an obnoxious “told you so” that I did not say.
ITB (US Home Construction) Came back some with mixed signals. Over the January high but still on a topping formation
GLD (Gold Trust) Support at 115 looking shakier now
GDX (Gold Miners) 20.00 the major support at this point to hold
TAN (Guggenheim Solar Energy) Second gap high this week and with 23% gains we took some profit.
TBT (Ultrashort Lehman 20+ Year Treasuries) Through 45.75 see 47.25 next resistance
UUP (Dollar Bull) I checked into A European vacation today