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Mish's Daily: Biotechs – Not Good.

September 3, 2015

By Mish Schneider

Note: Tonight’s evening watch was written by Jonathan Griffin Assistant Director of trading education and research.

How will the jobs report effect the market?

Friday before the open the job reports will come out, and many are asking just what to expect from this.

First and foremost this jobs report could be a decisive factor in the Fed’s eyes as to whether or not they will raise interest rates in September. With the last jobs report strong and unemployment down the Fed had wanted to see a bit more growth before pulling the trigger on a rate hike. So the timing of the eventual rate hike in question will be swayed by what the numbers say tomorrow.

Another interesting effect of the jobs report was seen in Biotechnology on Thursday. During the early portion of the session on Thursday we saw the markets rally in part thanks to the ECB extending its Q&E.

However, the Biotech stocks put a damper on the rally today. When IBB turned lower the market indexes followed its lead. The media attributed this to investors moving to the sidelines (cash) in preparation for the jobs report.

This left IBB down -2.20% for the day and also back in an unconfirmed distribution phase. For today I thinks it’s safe to rename IBB the bad brother in our Modern Family.

Are Semiconductors the next big move?

With the overall market consolidating after the volatile moves seen last week, Investors are looking for the next big move. One place to keep a close eye will be semiconductors (SMH).

After the prolonged sell off starting in at the beginning of June, SMH put in a nice bottom on Monday the 24th. Since then it has rallied to over 13% at Thursdays high, reclaiming the 10 DMA before any other member of the Modern Family.

The interesting part here though is the now upward slope on the 10 DMA in SMH. Being the first to reclaim that level, this has had a chance for the slope to shift upward implying that any future weakness may find support at those levels.

For now though we would like to see SMH take out the 23 monthly moving average at 50.17 and then the 50 DMA at 51.67. If this plays out, we could be in for a move back up to around 60.00.

S&P 500 (SPY) Gapped over the 10 DMA and rallied early in the session only to sell off as the momentum shifted to the downside in lue of Fridays jobs report.

Russell 2000 (IWM) Back over the 10 DMA at 113.26. Needs to clear 117.08.

Dow (DIA) Held the 10 DMA after the gap up but until this clears back over 170.26 its all noise.

Nasdaq (QQQ) Last hold out in a distribution phase, monthly support at 98.84.

Volatility Index (VIX) Tested and held over the 10 DMA with more support at the 200 DMA at 24.39.

XLF (Financials) Nice move up after the inside day but still has overhead resistance at 23.20.

KRE (Regional Banks) Really want to see this back over weekly resistance at 40.50 and then the 200 DMA at 41.33.

IYT (Transportation) The 143.00 area is proving to be resistance.

IBB (Biotechnology) Unconfirmed phase change back to distribution.

XRT (Retail) Starting to see the slope on the 10 DMA flatten out. With strong support at 90.79.

IYR (Real Estate) Lots of resistance between 70.76 and 75.25. This might take some time to move up. Also strong support at 68.31.

XHB (US HomeBuilders) Closed just over the 100 DMA. Now needs to hold todays lows and clear 36.92.

GLD (Gold Trust) Broke down under the 50 DMA for a phase change back to bearish.

SLV (Silver) Tested the 50 DMA early in the day but sold off to hold the 14.00 level.

GDX (Gold Miners) Looks like the 10 DMA was too much for this to handle. Yet again!

USO (US Oil Fund) 15.93 is the place this needs to clear to continue to the upside.

OIH (Oil Services) Still consolidating between the 10 and 50 DMA.

UNG (US NatGas Fund) Strong candle today, engulfing almost all of the last 2 weeks’ worth of work.

TAN (Guggenheim Solar Energy) Over 30.94 clears the 200 weekly moving average.

TLT (iShares 20+ Year Treasuries) Closed back over the 100 DMA after testing the 50 DMA again.

UUP (Dollar Bull) Gapped up and tested the 50 DMA but could not clear and then failed the 100 DMA at 25.18.

SGG (Sugar) WOW! Up 6.88% for an unconfirmed phase change to recovery.

JO (Coffee) Inside day after the new low yesterday.