June 20, 2013
By Mish Schneider
"What Happened To You, Yeah, Come Back" Usher
So what happened? The FED said they would not take away the bond buying program until theunemployment numbers drop to 6.5%. They also said the economy is improving and that they could start to taper the easing in 2014. Then, Ben Bernanke is set to retire end of this year, yet no official announcement has been made. After the FED made its statement, the rates and dollarrose, and the market began its free fall. Real Estate was never sucked into the morning strength however, opening unchanged and weakening after the first 30 minutes of the day. In fact, I have been writing under the IYR comments, that that would be the first place to go short. Just look atAvalon Bay, Boston Properties, Lennar for example, to see the prudence in that advice. Now what? If one steps back, the reaction today is a mixed bag. There have been some marked improvements in the overall economy, and eventually a stronger dollar and higher rates might not be the worst thing in the world (I know, armchair economist again). In the meantime, uncertainty remains an enemy. From a technical standpoint, phases are bullish in the indexes, but the reversal day May 22nd also remains. Seems best to look at the strongest areas that hold now-semiconductors, retail, and surprisingly, some of the soft commodities like corn, orange juice, sugar and coffee-all of which did well. Oil and Gas is another area to keep an eye on.
S&P 500 (SPY) Closed under the 10 DMA. 162.90 and the upward sloping 50 are offering support. Still maintain that the next trip to the 50 DMA should it continue south, it will most likely go the way of the real estate ETF-down.
Russell 2000 (IWM) Was the best performer yesterday, and the only index to hold the10 DMA. Small caps are key here
Dow (DIA) Closed under the 10 DMA but above an upward sloping 50 DMA. Like SPY, that could be short-lived. But note, phases still bullish in spite of the FED damage
NASDAQ 100 (QQQ) Closed under the 10 DMA on some support from 5/24 low and a return to a trend line drawn from the 5/22 high. Clearly, those slingshot highs on 5/22 are haunting us.
GLD 130 a very substantial area of support-with sentiment still bearish and looking more so now. With rates rising this can drop, although it is getting oversold.
XLF (Financials) Closed below the 10 DMA on support. As friendly as we were, this too might not hold the 50 DMA-unless it can now clear back over 19.90
IBB (Biotechnology) Closed under the 10 and 50 DMA, bring this into an unconfirmed warning phase. Vulnerable for sure
SMH (Semiconductors) Held the 10 DMA today, which we hope is a good sign for this group. But even the mighty fall with enough external pressure.
XRT (Retail) Held the 10 DMA today. But, with a bearish engulfing pattern so, important sector to watch
IYT (Transportation) Bearish engulfing candle today. Closed under the 10 DMA but, holding the 50 DMA, for now.
IYR (Real Estate) Closed under the 200 DMA today which is no surprise considering that it never got too far above it on the pop. This is the sector to find shorts if the market continues its drop tomorrow. Needs to hold 65.79, the slingshot low
USO (US Oil Fund) Top of a 2 and ½ month base. But, could also be the start of a brick wall high.
OIH (Oil Services) Since middle 2011, been forming a pretty good base, but still very much inside of it
XLE (Energy) Held the 10 DMA. But like everything, peaked in May unless we get some good momentum back
TBT (Ultrashort Lehman 20+ Year Treasuries) Bullish engulfing day. Rose sharply on news from the Federal Reserve. June 11th high is the point to clear. Golden cross formed.
XOP (Oil and Gas Exploration) Maybe one of the better looking groups if no more damage is done at this point
XHB (Homebuilders) Held the 10 and 50 DMA.
UUP (Dollar Bull) Watch the 200 DMA now
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