Market Analysis for Trading on 10/23/2013

Mish Schneider | October 22, 2013

Profit Target in EWG!

Existing Position: Long XRT 82.78

Current Price: 83.61

Stop Loss: 80.44

First Target: 86.49 for 1/2


Existing Position: Long EEM 42.85

Current Price: 43.66

Stop loss: 41.19

First Target: 45.49 for 1/2


Existing Position: Long: FXI 37.31

Current Price: 38.17

Stop Loss: 36.74

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


Existing Position: Long EWG 28.02 Sold 1/3 to ½ 29.33

Current Price: 29.52

New Stop-Breakeven: 28.02

First target: Reached

Next Target: 44.87

Existing Position: X Long 20.68 ¼-1/3 Position Remaining

Current Price: 23.62

**Next Target for Exit Before Earnings October 29th: 26.19

RAISED**Profitable Trailing Stop For Balance: 22.37


Earnings season is so interesting. Even if you are like me, not particularly schooled in P/E Ratios, EPS, and the like, the simple adage of “Don’t hold into earnings” unless you are a sophisticated options strategist, is pretty darn sound. Take NFLX-a darling for a short period of time before it totally tanked. Or CREE, which at the time of writing was down a cool 13%.  I mention this because we have 2 distinct confluences to consider. First, the earnings-still many more to come. Second, is the rotation of the indices and certain sector/groups. The small caps or Russell 2000sclosed marginally up maintaining the runaway gap. NASDAQ closed on new highs but with a doji day. The Dow closed up but nowhere near new highs and S&P 500 accelerated to close on new highs. Homebuilders excelled along with Real Estate. Biotechnology regained some luster andGold tested the overhead moving average for a possible phase change. The dollar was crushed again while rates dropped. We began the week looking at rates firming and the havoc that might cause and at midweek, we look at the rates dropping-and perhaps a closer look at certaincommodities. Note, rates are still firmer than where they were when 2013 began. We also should keep eyes on the VIX as it held up pretty well, all things considered.

S&P 500 (SPY) Subscribers: Positive pivots

Russell 2000 (IWM) 109.83 is last Friday’s low. Although the market remains strong, a break and close below that level-fair warning.

Nasdaq (QQQ) 81.35 the breakaway gap low

XLF (Financials) Big pause near the highs

SMH (Semiconductors) holding the runaway gap

XRT (Retail) Possible reversal candle if confirms tomorrow-not good for this group. Subscribers:If closes under 83.12 will look to exit

IYT (Transportation) New 2013 highs again but if gaps lower, another bad sign for a possible island top

IBB (Biotechnology) Better, but still not over last week’s high

IYR (Real Estate) A gap over the 200 DMA would be interesting. Otherwise, best I can see is run to overhead resistance

XHB (Homebuilders) Cleared the inflection point-looks better. Subscribers: Small position to see if this can move even further from the converging moving averages.

GLD 129.65 is the 200 DMA. Subscribers: SLV Crossed the 50 DMA and crossing the 80 monthly. Therefore, will look for an entry for a swing if today’s gap low holds

USO (US Oil Fund) The 200 DMA –right there.

OIH (Oil Services) Back to looking good

XLE (Energy) After a possible reversal from the highs, did not confirm that on Tuesday.

XOP (Oil and Gas Exploration) The candle on this one is also alarming and one to note after explosion to new highs.

UUP (Dollar Bull) Those 2011 lows looking more likely now

VXX Subscribers: Long for a swing against the recent lows

EWG (Germany) Runaway!

FXI (China) Like 38.00 as support to hold

Bye for Now!