Market Analysis for Trading on 6/9/2014

Mish Schneider | June 7, 2014

If you followed the rotation as I pointed out the day before each one happened, you not only had a profitable week-you reduced your stress level and more importantly, sighed relief that a market that has been dubbed as “Rigged” still has some transparency left in it for those who can read the tea leaves.

We began last week, expecting the rotation first to the Financials. Then, the Regional Banks,followed by Biotechnology, Retail ending with Homebuilders and Metal Mining on Friday.

The small caps (also relatively transparent) made its move as well. What illuminated these moves and kept us one step ahead all week? Simple: The breakaway gap that began 9 trading sessions ago in S&P 500. Traders wait a lifetime for technical signals like that. Then, as I firmly believe technical patterns precede fundamentals, Draghi came out waving his magic wand.

What’s up for this week? Ownership of equities (or market participation) has dropped to an over 50-year low indicating a profound mistrust of stocks. What does that mean? Herd mentality.When those absentee investors come in to buy, buy, buy, we shall see the predicted 220 price target in SPY and the blow off. Most likely, just in time for midterm elections.

S&P 500 (SPY) Day 9 and counting of the breakaway gap with yet another gap on FridaySubscribers: Positive Pivots in all

Russell 2000 (IWM) Gapped higher and closed well. Like to see Friday’s low hold and a move to 118 next

Dow (DIA) Breakaway gap here now-my my!

Nasdaq (QQQ) 97.00 target here

XLF (Financials) First rotation here last Monday with a fabulous week thereafter

KRE (Regional Banks) Second Rotation here and also fabulous week with 40.30 next point to clear

SMH (Semiconductors) Guess what? Breakaway gap here in my favorite sector of 2014!

IYT (Transportation) Told you it looked ready for another leg up

IBB (Biotechnology) Inside day and therefore, good place to look on Monday

XRT (Retail) Fourth rotation here happened last week

IYR (Real Estate) Maybe a reversal after a spectacular move-regardless, it did its job!

ITB (US Home Construction) Fifth Rotation call out and a nice breakaway from 2 weeks of consolidation

GLD Not exciting but not going south until rates firm

XME (S&P Metals & Mining) Subscribers: Unconfirmed accumulation phase

OIH (Oil Services) New highs

XLE (Energy) New highs on a breakaway gap.

XOP (Oil and Gas Exploration) Started breaking through 78 and now has to have follow through

FCG (First Trust ISE Reserve NatGas) 22.30 support with another good looking chart if clears 2014 highs

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs That looks like the correction with TBTs back in focus on Monday

PHO (Power Shares Water Resources) Water running upstream

EEM (Emerging Markets) Breakaway gap there too

IFN (India Fund Inc.) Parabolic mode

EWP (Spain) Subscribers: Breakaway gap

FXI (China Large Cap Fund) 37.50 point to clear

CORN (Corn) Subscribers: Potential brick wall bottom if confirms over 31.75

SGG (Sugar) Subscribers: Potential brick wall bottom if confirms-live over 54.60 on a closing basis (3 levels of position-1/4 over 54.60, more over the 50 DMA and mover over the 200 DMA)

Bye for Now!