July 23, 2014
By Mish Schneider
Navjot Singh Sidhu
Happily, the Russell 2000s closed above the 50 DMA for an unconfirmed bullish phase. Marginally. We are also now looking to see if the interest rates might get a bit of a pullback-will the TLTs break 114.60 area?
We did see Semiconductors fall hard today. Seems possible that money will begin to rotate more into the financial sector (XLF) especially since they have been consolidating since early June. 23.07 is the 2014 high to clear.
NASDAQ made it to new 14 year highs again while S&P 500 made it to new highs. The Dow held near-term support at 170.45 so no damage done there.
Very satisfying to see the Retail sector hold up while the Homebuilders confirmed the bull phase. Of course, in the rotation game, Solars fell hard and Regional Banks can’t seem to get arrested.
All in all, a digestion day with the aforementioned rotations notable. A few months ago, I wrote about some positive impacts that could occur if the China ETF firmed along with a bottoming US dollar which confirmed an improved accumulation phase.
Companies using foreign goods such as Wal-Mart might benefit as they buy goods in China and sell them in the US. Also, we can begin to look for a narrowing trade-deficit if Chinese exports get cheaper for American consumers. All of this could mean stronger financials, higher dollar, firmer rates, and better retail results for the second half of the year.
S&P 500 (SPY) 197.85 important support
Russell 2000 (IWM) Crossed the 50 DMA and needs to do it again to confirm. Likewise, over 115.25 much better
Dow (DIA) 170.00 good place to hold
Nasdaq (QQQ) Strong and getting into overbought territory
XLF (Financials) Cleared 22.95 and looks poised
SMH (Semiconductors) A rough day here
IYT (Transportation) A move one would expect after 2 Inside days
IBB (Biotechnology) 260 resistance to clear
XRT (Retail) Over 85.15 will look a lot better
IYR (Real Estate) 73.00 pivotal
ITB (US Home Construction) Much better
GLD If world events remain status quo, still see this as negative longer term
USO (US Oil Fund) Unconfirmed bullish phase again which would like to see confirm this time
TBT (Ultrashort Lehman 20+ Year Treasuries) 58.11 recent lows twice this week
UUP (Dollar Bull) confirmed accumulation phase
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