Market Analysis for 4/3

Mish Schneider | April 3, 2013

New Trade Alert

Trade FXI Buy Stop 37.02 Limit 37.12

Instrument Name: iShares FTSE China 25

Position: Long

Stop: 36.29

Target: 39.00

Trade Description: If this continues to hold around the 200 DMA and can get back above last 3 days range and if confirms phase change to warning, then good to hold for swing. Will adjust stops/targets along the way

Open Trade Update

Existing Position: XLF 17.96 Long

New Stop: 17.96

First Target: 18.75 (take off 1/3 or so)


Existing Position: QQQ 69.02 Long

New Stop: 67.79 (Tested and held the 10 DMA today. After making new highs, then closed on the lows, a slingshot possibility now exists. That means the original stop is still good, but also giving you the option to raise your stop to 68.49 or under S2)

First Target: 2012 high was 70.58. Good place to take some profit, but if clears, looking for 3 ATRs or around 71.00-71.20


Market Analysis for 4/3/2013

Lots of traders, myself included, have spent the last 1-2 years using the small caps (IWM) as the major barometer of health/weakness of the overall market. Twitter has had a plethora of warning tweets about the concern in this index as the main reason to be cautious on any longs. Tweets of WARNING light up my screen daily. However, like with all cycles of nature, perhaps the warning is simply to not be into small cap stocks period. Perhaps, they have little to do right now with what also seems obvious-the move into big industrial companies.  And what about public perception? Is John Q. Public sophisticated enough to understand the discrepancies or is he merely happy to know one thing as he calls his broker to buy: The Dow is on new highs!

S&P 500 (SPY) Gapped higher this morning and closed on new all-time highs!  Not overbought.  Regardless of weakness in some sectors and groups, the breath of the market is behind this.   Subs: Pivots Positive

Russell 2000 (IWM) As a major barometer for quite some time now, the small caps have passed the baton to SPY and the DOW (the biggest industrial companies). After big gains in March with the trend still positive, I wouldn't say this is a trend reversal. But most likely a correction to the 50 DMA. Subs: Approaching oversold conditions in the daily.   

Dow (DIA)  Gapped high this morning and closed on all time highs.  No bad news here!  Subs: Pivots Positive

NASDAQ 100 (QQQ) With a close over the 69.00 resistance level, we have a new high close for 2013!  However, it needs to break free from this herky-jerky movement to really give me confidence in this index.   


GLD  Yikes. This gapped lower and closed on the lows. 151.40 some support.  Not surprising with positive, confident action in indexes.

XLF (Financials)   Inside day, back over the 10 DMA.  Needs to clear 18.30 to get moving.

IBB (Biotechnology) Closed at new all-time highs but, is beginning to get extended. 

SMH (Semiconductors) Confirmed a weak warning phase.  34.50 level is support.  Subs: 35.00 area pivotal

XRT (Retail) Inside day.  Still clinging to the 10 DMA, but needs to clear the double top at 70.81.

IYT (Transportation) 108.69 did not hold.  Gap still in place from March 5.  Subs: At this point, with bull trend intact, I see this as a gift for a lower priced entry.  

IYR (Real Estate)  New 2013 high, but approaching a hurdle around 70.00.  Which lines up from highs made in early 2008.

USO (US Oil Fund)  Consolidating in its new bullish phase.  Holding the 50 DMA.

OIH (Oil Services) Inside day. Back to weak warning phase Subs: Did not close over the 80 monthly in March.

XLE (Energy)  May be correcting down to key support at the 50 DMA. 

TBT (Ultrashort Lehman 20+ Year Treasuries) Inside day.  Could be finding some support.  Subs: R1 and today's high line up.  Although, ultimately want to see this over 66.00. 

XOP (Oil and Gas Exploration) Unconfirmed weak warning phase. Subs: Possible buy opportunity over the 50 DMA.

XHB (Homebuilders) Brick wall high.  Most likely headed to the 50 DMA at 29.00.

UUP (Dollar Bull) Golden Cross forming.  Needs to get through 200 weekly MA. 

FXI (China) Subs: Watch to see if this returns over the 200 DMA with 36.00 a great point of support.  Looking for swing entry over today's high and the 10 DMA.

Bye for Now!