Market Analysis for Trading on 6/3/2014

Mish Schneider | June 2, 2014

Let’s examine how the expected “rotation” transpired in the market as this week began using the notes I wrote coming into Monday:

NO-The Russell 2000s have to sit right here and really, go no further south side. (It went further south side and closed under the 50 DMA although held the 200 and 10 DMAs so still hope)

YES-Semiconductors need to clear the 2014 highs once and for all. (They made new highs and closed well, taking a new lead over Energy-which took a rest)

NO-Retail, which made a good comeback, has to stay over the moving averages and clear 84.00.(Although they held the 200 DMA, they have not cleared last week’s high and a significant point of resistance.-yet.)

YES-Financials and particularly the Regional Banks, need to continue to firm. (Nice pop today, even clearing the last week highs in XLF, with the Regional Bank Sector-KRE-clearing the 20 DMA)

SORT OF-And SPY and DIA can take a rest-would do them good! (They both actually made new highs, if you call that a rest)

The Interest Rates also firmed. (Jury still out on rates although many more articles about the case for them going higher appeared on my twitter stream today.)

Homebuilders held the Bullish Phase. (ITB strengthened but has not done much as far as pulling away from recent consolidation above the 50 DMA)

Of course the question remains on whether or not Monday’s “Rotation” is the start of a bigger trend for the sectors that really do translate to a stronger second quarter, or whether the “Rotation” was more of a one day wonder.

S&P 500 (SPY) Day 5 of the breakaway gap and yet another new high Subscribers: Positive Pivots in SPY DIA Negative in IWM QQQ

Russell 2000 (IWM) Confirmed warning phase-which is disappointing but at least held the 10 and 50 DMAs which keeps hope alive

Dow (DIA) Made a new high and closed just beneath it, however, a new high close

Nasdaq (QQQ) 3 days of consolidation near the highs which means a new launch pad or a topping pattern if breaks under 90.00

XLF (Financials) Here is where some of the rotation happened today. 22.00 now major support

SMH (Semiconductors) Cleared and closed on new 2014 highs

IYT (Transportation) New high close again

IBB (Biotechnology) Big eyes here tomorrow after an initial drop then recovery end of day Subscribers: Focus here over R1 and todays’ high

XRT (Retail) Confirmed Accumulation phase but not an impressive close-at some point, we will need this to perform

IYR (Real Estate) New highs

ITB (US Home Construction) More consolidation which I like if holds 23.75 level

XOP (Oil and Gas Exploration) Some money rotating out of this group

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs had a small gap lower and closed weak-have been here before so patiently waiting to see if the reversal from the highs sticks for more than 2 days

KRE (Regional Banks) Cleared the 200 DMA, over 38.82 good confirmation

CORN (Corn) Subscribers: Slingshot bottom and big focus tomorrow against today’s low

JO (Coffee) Subscribers: Don’t be surprised to see a lower stop tomorrow until it shows it will hold around this 33 level

Bye for Now!