October 14, 2013
By Mish Schneider
Small caps or Russell 2000s and NASDAQ close on new 2013 highs. Both were leaders from last Friday and held fast to that job even after a shaky open early Monday. The Dow confirmed the bullish phase and began to clear a bit from the 50 DMA. And S&P 500 cleared an important level (170.58) closing above. On the rotation of sectors, rising rates dampened the Real Estate, Homebuilders (closed red), Retail and Transportation groups. Although I never try to pawn myself off as an economist, as a trader, I find some discomfort in the salient groups that measure economic health underperforming the major US indices. Perhaps it’s a more incredulous reaction (or under reaction) to any debt ceiling resolution. Perhaps, it’s more a reflection of a deeper systemic issue. The outperformers-Financials and Semiconductors in particular, are not sloppy seconds by any means, with some very important earnings coming up in those groups-Citigroup and Intel to name a couple. Therefore, with the deadline approaching, cautious optimism prevails. Oh, and Oil and Gas Exploration really is the new Biotechnology, which managed to outperform, but with as much pizazz as the former.
SMH (Semiconductors) New highs, which means that those highs have to hold and price has to accelerate away from there.
XRT (Retail) Bullish engulfing day so although it underperformed, could be ready for catch up time
IYT (Transportation) Not as an impressive candle as in Retail, but likewise, good place to watch for catch up.
IBB (Biotechnology) Unconfirmed bullish phase.
IYR (Real Estate) Like to see 65.40 clear
XHB (Homebuilders) Held 2 of the 3 moving averages. Subscribers: Over R1 clears the last moving average or the 10 DMA.
GLD Subscribers: Under S1 could still be a good short
OIH (Oil Services)New 2013 highs
TBT (Ultrashort Lehman 20+ Year Treasuries) TLT went into an unconfirmed warning phase
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