May 27, 2014
By Mish Schneider
Last breakaway gap in the S&P 500 was back in April 2013, which was good for a rally that lasted the following 14 trading days until a textbook reversal candle ended the fun.
Tuesday, we saw another potential breakaway gap in the SPY which will need another day to confirm but if does, should be good for that price goal of 220 l that I wrote about earlier this year. This index is mildly overbought and has caught a lot of incredulous investors off guard.
Since active investors like to buy ahead of the pack and sell into “irrational exuberance”, there is little to doubt that we are in for more upside from here. Of course, a gap lower can start a new conversation about island tops, but let’s not put that possibility “out there.”
With the screen as green as Brooklyn, USA (in the Botanical not Environmental sense), and now that Retail, Biotechnology and Finance, the not too far in the distant past dogs, are back to Bullish phases. Only head scratcher remains….wait for it…
Rates. I read everything I see come across on the twitter stream as to why rates are low, getting lower and why some see them going to 2012 lows. (Currently TLTs are outperforming the SPY). So, that leaves me wondering where the disconnect lies and ultimately, whether low rates are the good or bad witch in the SPY’s present trip to Oz!
S&P 500 (SPY) Possible breakaway gap if confirms-which means has to hold above 190.50
Russell 2000 (IWM) This will need to close a second day above the 50 DMA or over 113.25
Dow (DIA) Close to the highs at 167.29, but has to get there-good one to watch for clues-
Nasdaq (QQQ) 91.00 resistance for now and expect digestion from here-would be healthy
XLF (Financials) confirmed phase change to bullish and still lots of overhead resistance-has to hold the 50 DMA
SMH (Semiconductors) Close to a new high closing
IYT (Transportation) Breakaway gap if holds
IBB (Biotechnology) Great follow through-also close to resistance at 242
XRT (Retail) Unconfirmed bullish phase if holds Tuesday’s lows
IYR (Real Estate) New high close for 2014
GLD Ok-got our attention and not in a good way-big gap down under 2 months of work-looks vulnerable
XLE (Energy) Tight compression last 3 days
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs The energizer bunny that one day will die
PHO (Power Shares Water Resources) Unconfirmed bullish Phase
FXI (China Large Cap Fund) Interesting spot right under the 200 DMA
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