June 11, 2014
By Mish Schneider
for more than a decade. Craig Bruce
Back on January 21st, the Dow made its first new high for the year and reversed causing a pretty significant correction in the overall market. At the same time IBM, a huge component of the Dow, rallied up to major resistance-the 200 DMA.
Many analysts believed that a blue chip stock such as IBM under pressure did not bode well for the overall market, and up until mid-March, they were right.
IBM began its ascent clearing all the moving averages, peaking out on April 10th, a few days after the peak high in the S&P 500 on April 4th. Since then, the Dow and the SPY ran to new highs while IBM cannot get arrested, sitting well under not only the 200 DMA, but also looking like it wants to break the 200 weekly moving average, a place it has not been since its brief visit under it back on December 13th 2013.
Why am I sharing this tonight? One, to watch the DIA up here. Was this correction a mild one with IBM merely a former powerhouse now in deep trouble OR is this a sign that DIA can break much harder from here taking lots of instruments including NASDAQ with it as well?
My advice is watch NASDAQ which made a new high Wednesday and closed red (looking for a second day confirmation). If Wednesday marked topping action there, perhaps IBM is a precursor after all. As I have been writing over and over so far: never a husband nor a widower be (totally made that up-poetic license) in the 2014 markets. Trade actively, be ready for anything, lock in profits and mind your risk/reward in a systemized approach.
S&P 500 (SPY) Day 12 of what might be the end of the breakaway gap-last one lasted 14 trading sessions. This time, the steam has dissipated since it filled the gap from the second gap higher on June 6th. 194 key area of support.
Russell 2000 (IWM) After an inside day, broke the range to the downside. With support at 114.30not too concerning unless that breaks next
Dow (DIA) Closed the Friday breakaway gap-hence my thoughts on this index and IBM
Nasdaq (QQQ) More sideways than topping at this point. Watch 92.45 as key support to hold
XLF (Financials) Broke the range under the inside day setup so now watching 22.50 level as support
KRE (Regional Banks) Broke the range under the inside day setup so now watching 39.40 level as support
SMH (Semiconductors) Emerald City
IYT (Transportation) Needs to hold today’s low
IBB (Biotechnology) Over 250 next stop around 270
XRT (Retail) I like the comeback on the close so eyes here!
IYR (Real Estate) Fairly significant correction unless it clears back over 71.90
ITB (US Home Construction) Teetering here so has to hold
GLD Sharply unchanged-tough read last few weeks
USO (US Oil Fund) Like the inside day here
OIH (Oil Services) Broke the range under the inside day setup so now 53.80 level as support
XLE (Energy) Still has more it seems
XOP (Oil and Gas Exploration) Very close to new highs and definitely a new highs close
FCG (First Trust ISE Reserve NatGas) 22.30 support with another good looking chart if clears 2014 highs
TAN (Guggenheim Solar Energy) 7 days of compression and worth watching
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs Confirmed warning phase so maybe rates rising now for real
PHO (Power Shares Water Resources) 27.23 2014 high
UUP (Dollar Bull) Closed over the 200 DMA and now 21.60 key
Every day you'll be prepared to trade with: