Based on Geoff Bysshe’s weekend notes “Look to follow the direction on Wednesday that takes place relative to what happens Tuesday, especially if that range extends outside the range of last week,” NASDAQ is our best example with the Russell 2000s a close second. Both extended the range from Tuesday’s session on Wednesday by taking out the lows and closing lower.
Apple was a huge component in the NASDAQ, but why IWM? Logically, that has lagged behind in spite of its run over the moving averages. Although underlying support remains at the moving averages, the fact that it hasn’t come close to the 2014 highs is a fact to reckon with.
The other part of Geoff’s comments relates to Friday and the jobs report. He suggests, “Take note of whether Friday’s data reverse or extends the week’s trend.” Therefore, if you add those two points together, one can surmise that Wednesday’s session suggests further weakness testing lower level support, but not necessarily a game changer unless Friday’s session extends those losses.
My comment on rates: TLTs did indeed confirm an island top. However, there is support all the way down to 115. Perhaps today’s bounce will provide a better opportunity to short against 117.50 level. I would wait now until Friday guessing that the aforementioned advice will elucidate the next direction that rates will move in as well.
S&P 500 (SPY) 199.39 last week’s low is support level. 200 could hold up as well. Otherwise, it is possible, Wednesday was a key reversal-but as always, need confirmation. Subscribers: Negative Pivots in QQQ IWM Positive in SPY DIA
Russell 2000 (IWM) 115.51 last week’s low. Interim at 116 and back over 117 much better
Dow (DIA) Reverse from new highs but with support at 170
Nasdaq (QQQ) The leader gave us the best indication for a possible reversal. Bearish engulfing, decent volume (not blow off though) and new highs close on the lows. Again, will look for confirmation with last week’s low 99.08
XLF (Financials) Closed red with the pressure in the market but overall, not a bad looking chart
KRE (Regional Banks) Needs to do more work-if holds the 50 DMA much better and still needs to clear the 200 DMA
SMH (Semiconductors) Good day although there is the possible 2 shooting stars scenario-I say possible
IYT (Transportation) Correction but not looking like a reversal here
IBB (Biotechnology) Consolidating near highs
XRT (Retail) Another day down and this could have been a reversal from the highs
IYR (Real Estate) Looks good but has to clear the mid-August highs to look better
ITB (US Home Construction) Not a good day here and ominous for an important domestic sector Subscribers:
GLD Possible brick wall bottom if confirms over today’s high. Still like in the yellow metal it seems
Metals and Mining (XME) Another down move after the bearish engulfing day but no real harm done yet on the daily chart with major support at 42.45
USO (US Oil Fund) It’s all about two areas-34.50 and 36.20-in between noise
OIH (Oil Services) Inside day with major support from early August to defend
XLE (Energy) Inside day here under the 50 DMA
XOP (Oil and Gas Exploration) Inside day pretty much on the 50 DMA and looking like potential over 78.90
TAN (Guggenheim Solar Energy) Subscribers: Had an ORR which looked good, now has to hold 43.50
EEM (Emerging Markets) Subscribers: Would have preferred to see a runaway gap but this gap definitely helps clearing a 3 year base if holds
IFN (India Fund Inc.) New highs
EWP (Spain) Subscribers: Over 41.20 gives you a little more than 2 ATRs of risk down to the 200 DMA
EWW (Mexico) Subscribers: New 2014 highs
FXI (China Large Cap Fund) Gapped over lots of work and clearing that 3 year base handily
BAL (Cotton) Subscribers: Once it clears the 50 DMA we might have something to sink our teeth into
