Market Analysis for Trading on 2/27/2014

Mish Schneider | February 27, 2014

A fascinating dichotomy between sideways action in the indices (with the exception of the Russell 2000) which made and closed on new highs) and the Volatility index which also firmed.

Typically digestion days will shrink the volatility. That begs the question, “Why not this time?”

Another troublesome indicator is the emerging market weakness. With the US stock market so close to record highs, why are emerging markets weak? Flight to quality? Will the US dollar now begin to firm?

Why are interest rates dropping? So many questions, all intentionally rhetorical. But not really. A look at sectors, the weaker ones from the beginning of this year-Retail, Homebuilders, Real Estate, all performing well. Semiconductors have done exactly as I expected them to do.

The Financial and Regional Bank sectors have underperformed. And what about that Uranium up another 3.88%?

I see MC Escher paintings as I look around-particularly two-Ascending Descending and Relativity. Market imitating Art.

S&P 500 (SPY) Not quite an inside day but certainly a sideways digestion one. Waiting for the big move one way or another. It’s coming. Subscribers: Positive pivots in all but QQQ

Russell 2000 (IWM) New high close here-if this gaps higher, that runaway gap could be explosive

Dow (DIA) Above 162.79, this will be hard to argue with

Nasdaq (QQQ) Sideways

XLF (Financials) Confirmed weak warning phase-trying to make up its mind

SMH (Semiconductors) Strong

IYT (Transportation) Also lagging along with Financials

IBB (Biotechnology) Resting

XRT (Retail) Confirmed bullish phase

IYR (Real Estate) Good consolidation at these levels

XHB (Homebuilders) Fabulous day here and onto new highs

GLD Closer it gets to 126 the better a new entry will be for controlling risk

USO (US Oil Fund) Hasn’t been over 37.50 since October 2013-finding that area resistance but doesn’t look like it for long

OIH (Oil Services) Sideways

XOP (Oil and Gas Exploration) Worked off the overbought condition with good support if today’s lows hold

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs confirmed back over the 200 DMA

PHO (Power Shares Water Resources) Looks great

UUP (Dollar Bull) 21.52 a pivotal area

EEM (Emerging Markets) Subscribers: Still looking heavy

Bye for Now!