October 5, 2014
By Mish Schneider
The Producers 1968
I remember the period of time a couple of years ago when the market rising or falling 100 points in any given day made big headlines. Now, quoting Max Bialystock, “Too Deep? This is nothing!”
I’ll see your 100 points and raise you another 100-150 points! Up or down 200 points plus, is the new up or down 100 points.
Coming into last Friday, here were my comments: “First off after the open, the mid pivots (of the indices) must clear. (With the gap higher that’s a yes.) Secondly, the resistance levels aforementioned (IWM 110 QQQ 98 SPY 197 DIA 169) must clear. (IWM no, QQQ yes, DIA yes, SPY no). Finally, those levels must hold.” (QQQs and DIAs yes, SPY and IWM no.)
See a pattern here? When the market is strong go to NASDAQ and the Dow (back in an unconfirmed bullish phase). When weak, go to the small caps and the S&P 500. Count on more diversion as the major theme of 2014, not to mention contrarian moves and fragile oil, gas and metal prices.
I do believe I gave enough head’s up on the power of the Biotechnology sector? Friday’s gain of over 2.7% and hold of 272 in IBB was key!
It’s in that spirit we begin this week. Watch those key levels as the market opens. The first 30 minutes of Monday’s session can pretty easily set the tone for the first part of the week. An unchanged or higher open that sustains, with little trouble we could see SPY over the 50 DMA, QQQs over 99.00, DIA over 170 and IWM over 110.50. IWM has lots of overhead resistance, but should continue to let us know if it plans to run up to the 50 DMA or stall long before it gets there.
In that case, if the market opens lower and cannot reverse back up in the first 30 minutes of the session, quoting JK Rowling in Harry Potter,
“For those who take, but do not earn,
Must pay most dearly in their turn.
So if you seek beneath our floors
A treasure that was never yours..”
S&P 500 (SPY) 197.85 the 50 DMA or bust
Russell 2000 (IWM) Not only couldn’t clear 110, but couldn’t clear the fast moving average
Dow (DIA) 169.00 now has to hold up by days end
Nasdaq (QQQ) 97.75-98.00 key support to hold for multiple reasons not the least of which is the 50 DMA
XLF (Financials) Unconfirmed bullish phase with 23.05 pivots
SMH (Semiconductors) Gotta do more than this and hold 50.00 to be convincing
IYT (Transportation) Nice gap over the 50 DMA and worth watching this week
IBB (Biotechnology) Where it’s at provided it holds 272
XRT (Retail) A move or open over 86.15 will be strong. Otherwise, just a rally to the 50 DMA resistance
IYR (Real Estate) Marginally made it over the 200 DMA which now, has to hold
ITB (US Home Construction) Maybe double bottom-like to see more evidence
GLD Took out the 2013 and 2014 lows
USO (US Oil Fund) Inside day on the lows for the year
TAN (Guggenheim Solar Energy) Could be triple bottom, could be double top-I hope for the former
TBT (Ultrashort Lehman 20+ Year Treasuries) Relentless drop of rates and commodities still weak-I find that worrisome
UUP (Dollar Bull) That’s it, planning a trip to Europe to spend my strong US money!
FXI (China Large Cap Fund) Want to see one more day over 37.80 for confidence
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