Market Analysis for Trading on 10/14/2013

Mish Schneider | October 12, 2013

Existing Position: Long: FXI 37.31

Current Price: 38.25

**Stop Loss: 36.49 (lowered again)

First Target: 38.97 take off 1/3 to 1/2


Existing Position: Long EWG 28.02

Current Price: 28.28

Stop Loss: 27.39

First target 29.15 raised

Existing Position: X Long 20.68 ½-2/3 position

Current Price: 21.95

**Break Even Stop: 20.68

** First Target: REACHED with instructions sent to go to market order filled at 21.55 1/3-1/2 position

Next Target: 23.75


From the peak high September 19th to the blow off low October 9th, the S&P 500 closed pretty much in the middle of that range. It’s kind of how a lot of traders feel-sort of middling as the politicos work it out (or not.) It’s as if the S&P 500 is saying, “Don’t want to be short; but don’t want to be too long either.” However, we are back to seeing a very different looking scenario in the small caps, or Russell 2000s, that closed just in reach of the recent 2013 highs. NASDAQ is also close enough to the highs to make it interesting and the Dow managed to end the week in an unconfirmed bullish phase. If last Tuesday and Wednesday never happened and one looked strictly at the Dow, Russell 2000s and S&P 500, one would see that they all closed higher week to week! For NASDAQ, it was a marginally lower. The Koch Brothers had an impact for sure with their pleas to Congress to get it together-essentially saying that the Government was messing with their portfolio. The buy opportunities that set up last Thursday after a lot of longs got shellacked, seemed almost surreal. So, we go into this week lightly long and ready in case the other shoe drops. Many of the weaker sectors and groups played catch up-the Financials, Real Estate, Homebuilders, while the former shining star-Biotechnology closed in the red.Rotations that will be worth looking at for follow through this week for sure.

S&P 500 (SPY) The low of the nagging confirmed topping candle is 170.58-that will be an important area to clear. The 50 DMA is the crucial area to hold. Subscribers: Positive pivots in all indices

Russell 2000 (IWM) 107.93 is the 2013 high

Dow (DIA) Unconfirmed bullish phase which means it breaks the 50 DMA, a huge warning to the longs.

Nasdaq (QQQ) As we get closer to earnings in GOOG, AAPL, etc, this index will be worth keeping eyes on

XLF (Financials) Confirmed bullish phase, so that means the 50 DMA has to hold and the price accelerate away from it

SMH (Semiconductors) 2103 high 40.71

XRT (Retail) Confirmed the bullish phase but has a lot of overhead to contend with

IYT (Transportation) Confirmed the bullish phase and should hold around d 117.60

IBB (Biotechnology) Unconfirmed warning phase. Subscribers: Got short JAZZ on Friday-starter position since this area is acting “toppy”

IYR (Real Estate) Although this confirmed the recovery phase, there is still a lot of resistance to tear through

XHB (Homebuilders) Crossed 3 moving averages in one shot-good sign

GLD No more island bottom from last June/July. See much lower prices in the months ahead

OIH (Oil Services) 48.52 the 2013 high

XOP (Oil and Gas Exploration) Oil and Gas Exploration is the new Biotechnology-no comment on the implications-it’s just is what it is

EWG (Germany) Subscribers: New highs

Bye for Now!