In keeping with the theory that the trading range beginning August 25th through the high established last week, is the range to break before we can see next direction clearly, Monday’s session was another notch in the belt of staying within those boundaries while confusing many active traders.
Furthermore, we came into this week with 3 possible scenarios in mind- gap higher-close your eyes and follow, Around unchanged, look for support at the floor trader pivots and gaps lower, consider that equally decisive and watch for short hedges.
Clearly scenario 2 played out as IWM, QQQs and DIA touched their floor trader midpoints (SPY broke it and came back through), and all closed above those pivots.
TLTs remain weak and are getting extremely close to failing the 50 DMA after putting in an island top. As I have written time and time again, rising rates will have positive and negative results depending upon where you look. For example, good for banks, certain retail, not so good for commodities and perhaps real estate.
Our Market Tone indicator signaled short term slightly positive, intermediate term or 10-20 days out bullish.
S&P 500 (SPY) 199.39 a solid low now clear support level. 200 pivotal and 201.58 the magic number to clear. Subscribers: Positive Pivots in all
Russell 2000 (IWM) Over 166.95 a great start. Otherwise, the 50 DMA at 114.95 an important level to hold
Dow (DIA) Needs to clear over the recent highs 171.56
Nasdaq (QQQ) 99.00 super important support to hold with 100.34 a great area to clear
XLF (Financials) Like that this closed green-23.58 the high to clear
KRE (Regional Banks) Once more push gets this through the 200 DMA
SMH (Semiconductors) Resolved to the upside
IYT (Transportation) A rest near the highs
IBB (Biotechnology) Looks poised to clear 274.25, a good sign
XRT (Retail) Looks better over 89.35
IYR (Real Estate) 76.21 is the 2013 high
ITB (US Home Construction) Not my first choice but sure would be nice if this plays along
GLD I would feel even more comfortable selling rallies
USO (US Oil Fund) Gapped close to the low area of 2014 but turned around and closed with a possible reversal
TBT (Ultrashort Lehman 20+ Year Treasuries) 58.44 is where the overhead moving average is
EWP (Spain) Subscribers: Watch to see if holds today’s lows
FXI (China Large Cap Fund) Inside day near the highs
BAL (Cotton) Subscribers: Another possible slingshot with the 50DMA on close watch
