Market Analysis for Trading on 6/4/2014

Mish Schneider | June 3, 2014

If you are thinking the word “resiliency” then you are on the same page as the market. TheRussell 2000s held the 200 DMA after beginning the session with convincing weakness; however, they have stayed firmly in a warning phase. NASDAQ, SPY and the Dow, all had inside days(when the trading range of the day is inside the trading day of the day prior) near the highs-the “rest”.

If you are thinking the words, “Rates Firming” then you might be on the same page as the market, although I was pretty convinced the low was in when TBTs were trading 63.00 a couple of weeks ago. At this point, the rates firmed into a channel on the charts and now have to stick around here consolidating for real confirmation that logic has returned.

What do firmer rates lead to? Exactly what we have seen the last couple of days-better moves in the banks, financial sectors, retail-although still has resistance to clear, and US Manufacturing. Semiconductors started this ball rolling 2 weeks ago.

Next rotation then to watch for is exactly those-Retail and Manufacturing with Homebuildersstill a contender.

Finally, Biotech should also firm again as the consolidation pattern on the charts remain noteworthy.

And there we have it-the small caps are spooking the market but if they firm once and for all-220 in SPY!

S&P 500 (SPY) Day 6 of the breakaway gap with the prescribed rest. Subscribers: Positive Pivots in SPY QQQ Negative in IWM DIA

Russell 2000 (IWM) Another day of holding the 200 DMA but now, unless this clears 112.65 area, the 50 DMA, market will remain tentative

Dow (DIA) Took a rest

Nasdaq (QQQ) 4 days of consolidation with an inside day near the highs

XLF (Financials) Looking good

SMH (Semiconductors) Rocket job!

IYT (Transportation) Looking a bit toppy now-but did what it needed to do to help get the market here

IBB (Biotechnology) Looks ready after a lot of consolidation. Subscribers: Focus here over R1 and todays’ high

XRT (Retail) Incredible compression around converging moving averages.

IYR (Real Estate) Rest day

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

GLD Possible reversal from the lows

XLE (Energy) Look here too

XOP (Oil and Gas Exploration) Good correction now if holds Tuesday lows Subscribers: Over R1 makes this a category 1 type trade

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs down a lot now so perhaps some bounce here tomorrow with the 50 DMA so close

UUP (Dollar Bull) Still basing out

KRE (Regional Banks) Now have to watch the 50 DMA

EWP (Spain) Subscribers: Still watching

JO (Coffee) Subscribers: Clearly not ready to go back up

Bye for Now!