February 19, 2014
By Mish Schneider
Quote: Benjamin Franklin
Goodness, be careful what you wish for right? I wished for drama. Thanks, I think!
Earlier this week we talked about tops. We mentioned that tops are as dramatic as bottoms. They need volume for starters. Then, they have to have some other technical pattern. Most importantly is that they confirm with a second day pattern.
SPY could have put in a double top with 2013 high 184.94, Wednesday’s session high 184.95. The Dow (DIA) went back into an unconfirmed warning phase (as did the Financial sector XLF).
NASDAQ possibly posted a reversal candle. All of the aforementioned instruments had distribution days in volume (when the volume is greater than the day prior and the closing price is negative). However, the volume was decent, not dizzying.
Henceforth, we need to see confirmation Thursday and with increasing volatility. The price pattern right here is sort of in no man’s land-would not necessarily go gang busters short and yet, if the market continues to correct, buy opportunities are premature.
S&P 500 (SPY) If this was a double top, confirmation will look like a trip below 181. Otherwise, we can say that all it did was work off overbought conditions.
Russell 2000 (IWM) Never got to the top of the February calendar range and now, its 50 DMA is 113.27 to hold
Dow (DIA) Could be just a correction to 159 or could be the start of a bigger correction. Unless it clears back over the 50 DMA and closes there.
Nasdaq (QQQ) Maybe brick wall high-maybe
XLF (Financials) Unconfirmed warning phase.
SMH (Semiconductors) In its own world, more paused at this point near the highs
IYT (Transportation) Confirmed warning phase, first to sell off on Tuesday and looking heavy again
IBB (Biotechnology) Possible reversal pattern if continues south from here
XRT (Retail) Confirmed phase change to warning-improvement
XHB (Homebuilders) Inside day and a good one to watch to defend the 50 DMA possibly
GLD Needed to see overbought conditions alleviated which is far as we are willing to say for now unless it really fails from these levels
USO (US Oil Fund) Overbought
OIH (Oil Services) 48.00 resistance
XOP (Oil and Gas Exploration) Inside day-good place to look
TBT (Ultrashort Lehman 20+ Year Treasuries) Through 72.05 wouldn’t fight it
PHO (Power Shares Water Resources) New highs then reversed
UUP (Dollar Bull) 21.60 an area to watch
FXI (China Large Cap Fund) 36.40 point to clear
TAN (Guggenheim Solar Energy) Possible topping candle
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