With The Power Of Conviction, There Is No Sacrifice

October 24, 2014

Mish's Daily

By Mish Schneider


Pat Benatar Invincible

Monday morning I awoke with vivid recall of a dream. In the dream, I met a safecracker who specialized in cracking those antique safes made of steel or iron with vault doors and frames. (Incidentally, they sell on EBay for anything from $50.00 to over $2,000 if circa 1860 and a large bank safe.) When I inquired as to the particulars of his profession and why he chose it, he told me that he scoured old abandoned buildings in search of such safes, and after finding them, often scored large sums of cash which he assumed was his for the taking, a finder’s keepers so to speak. (The rest, I gather, he’s selling on EBay!

I wondered what the dream meant-and since the market tends to rule my world, where the metaphor was. Honestly, I’m not certain about the answer, but this much I know. Finding a good trade is like searching for ancient treasure in a locked up safe. If you find a good one you score profits. If not, you try to sell your trash to the highest bidder!

Besides the stunning ephemeral recovery of NASDAQ over the 50 DMA, it then preceded to tuck its tail between its legs and retreat back beneath it; the Dow returned over the 200 DMA for an unconfirmed warning phase, now looking for a second day to confirm-been so hard to get these second day confirmations lately. The S&P 500 tested what could be substantial overhead resistance-the tell will be if it breaks 194 on Friday and the Russell 2000s recaptured 110.

For my mind, a story of one possible Ebola case, which logically could prove true given it’s concerning a Doctor who has returned to NY after working with the infirmed in Africa, should not be a catalyst to wipe out over 100 points (or about 100 Billion Dollars) in the Dow in a matter of minutes. To me, it’s systemic of a much larger issue with the market. I have seen this market ignore much worse news because the conviction for higher prices is unshakable. Not lately. Currently, the market lacks conviction-plain and simple.

Until Phases other than in sectors such as Biotechnology (which made a new high), Transportation (Unconfirmed) and Real Estate point green or back to bullish in the indices, keep your seatbelts fastened!

S&P 500 (SPY) The overhead resistance 196.79 at the 50 DMA is palpable. If it breaks 194 then I would imagine we could see Tuesday’s low or worse.

Russell 2000 (IWM) 110 Pivotal, 108.80 support then 107 and overhead resistance at 112.25 the 50 DMA

Dow (DIA) Cleared the 200 DMA at 165.64 which has to hold for this to continue since having its island bottom-which is a bullish sign

Nasdaq (QQQ) Teased the 50 DMA closed below now, above 97.96 again on Friday, maybe we can see more

XLF (Financials) 22.36 the 200 DMA to defend and the 50 DMA is 23.08-like to see this for real health

KRE (Regional Banks) 37.14 pivotal

SMH (Semiconductors) 46.89 the 200 DMA with an inside day and overhead at 50.20

IYT (Transportation) Cleared the 50 DMA-like to see 150.09 hold

IBB (Biotechnology) New highs not surprising

XRT (Retail) Back to a unconfirmed warning phase over the 200 DMA 84.71 pivotal with 86.68 the 50 DMA to clear

ITB (US Home Construction) Closed just over the 200 DMA now looking for confirmation

GLD Back over 118.96 and this was a good healthy pullback

Metals and Mining (XME) Inside day

USO (US Oil Fund) Inside day and still needs to prove itself as bottoming

OIH (Oil Services) Inside day

XLE (Energy) Like OIH, these energy, oil related instruments could be bottoming

XOP (Oil and Gas Exploration) Inside day

FCG (First Trust ISE Reserve NatGas) Inside day

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs broke 120 which remains pivotal unless this begins to break further below 118.70

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