February 3, 2014
By Mish Schneider
Lyric: Autumn Leaves
My colorful gauges to signal phase changes are brightly lit orange and yellow. Not only the colors of fall, but the colors of the market freefall.
The drop was orderly all things considered in that the indices took out Friday’s lows and headed south with no real discernable bounce throughout the session. Of course that will eventually provide great buy opportunities. We are, after all, an optimistic and hopeful people.
The amusing “green” in the sea of “red” per closing prices is AAPL. $500 seems pinned as the next great pivotal number to watch.
Considering we now have five significant distribution days in volume in the indices, no thinking we see a complete bottom anytime soon. But, for a discernable bounce-here is what we can watch for:
What does a bottom look like? New lows, typically a 60 day or more new low, a reversal from the lows intraday, with double or more average the volume, followed by confirmation the following day.
Where would I start looking? Probably (besides individual instruments) the Dow (DIA), especially if it can clear back over the 200 daily moving average.
S&P 500 (SPY) Now oversold on the weekly relative strength indicator. The high from September 19th was 173.60-some minor support to watch for now
Russell 2000 (IWM) We put our money where our mouth was and sold this index under 111.09-Now, 107.43 the September 19th highs support with a move over last week’s lows-maybe reason to think worst over for now
Dow (DIA) Watching the 200 DMA now for a return visit
Nasdaq (QQQ) My eyes did not beseech me-failed the 50 DMA, although in the best shape of the four
XLF (Financials) 20.39 the 200 DMA
SMH (Semiconductors) Watching 40.00
IBB (Biotechnology) One could see that the peak high is in from last week, but this is the only bullish phase in the major sectors left
XRT (Retail) I gotta think we are near a temporary bottom making this best candidate for a bounce
GLD Just like the last rally, it seems to my eyes, this should have done better as the “safe” haven
USO (US Oil Fund) Subscribers: 34.50 now a big pivotal area to watch tomorrow
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs confirmed phase change to accumulation
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