Market Analysis for Trading on 7/16/2014

Mish Schneider | July 15, 2014

The big news on Tuesday (which wound up living up to its turnaround status and not in a good way): Janet Yellen and her market commentary specifics about how overvalued Biotechnology Technology and Social Media are.

I’m no savant of everything a Fed Chairperson has ever said, yet it does seem highly unusual if not unprecedented that one would make such specific trade recommendations-well, as good as though she did.

The already vulnerable Russell 2000s stopped on the 116 dime and closed right around the 50 DMA. The Semiconductors closed right around the pivotal point and the 20 Year Treasury Bonds defended the 50 DMA again.

Going back to my 3 recent focus groups: (and since not mentioned by Ms. Yellen, assume she’s cool with them), FXI (China), TAN (Solar) and (KRE) Regional Banks- China closed basically unchanged and in a strong position, Solars fell but now even closer to their underlying moving averages while Regional Banks fared well given initial good earnings results from the big banks with lots of the smaller banking institution’s earnings coming up this week.

The key now (actually always) is to make sure you are on right side of the phase and catch theinflection points on instruments that give the cleanest risk vs reward (both long and short). Otherwise, some have called this year a widow maker. Our model portfolio, in its conservative fashion, remains well up for the year.

S&P 500 (SPY) 197 pivotal area and back over 198 area good Subscribers: Negative Pivots in all except DIA

Russell 2000 (IWM) If there is life left here, Tuesday’s lows have to hold and this must see at least a return over 115.75

Dow (DIA) Quite, doji day near highs-different universe than IWM

Nasdaq (QQQ) 95.00 pivotal

XLF (Financials) Seems poised to continue with more bank earnings coming up

KRE (Regional Banks) Over 40.30 clears the fast moving average

SMH (Semiconductors) Closed right on the pivotal area 50.55 with a good aftermarket boost from Intel

IYT (Transportation) New highs should take this to around 160

XRT (Retail) About as close to support as this can get and if good will hold here

ITB (US Home Construction) This is definitely going the wrong way for a bull market closing under the 200 DMA

GLD Cannot really say much until this breaks the 50 and 200 DMAs

TAN (Guggenheim Solar Energy) Subscribers: like it over 43.13

TBT (Ultrashort Lehman 20+ Year Treasuries) Could be time to look here again if the TLT break 112.37

UUP (Dollar Bull) Unconfirmed recovery phase

Bye for Now!