Market Analysis for Trading on 7/31/2014

Mish Schneider | July 30, 2014

Typical to see a market bull run (like the one we have had since 2013) in anticipation of an improving economy, only to see the market sell off or run out of steam once the evidence emerges to support that economic improvement.

Back on June 7th, I wrote about the leadership of the Russell 2000s and how the Dow lagged up to 10 days once before this year before it sold off. June 16th, while IWM was tanking, DIA made new highs-nearly 10 days later. Then, the rest is history with DIA testing but closing marginally above the 50 DMA during Wednesday’s session.

Is this the top you might be wondering? Right now, the market internals suggest neutral with no real advantage for swing traders here long or short. Will wait for that indicator to tell us otherwise.

In the meantime, the market seems to tell a story of trendless, sideways action, the kind that makes trading difficult-be wary of so called “smart” traders right now-only seek smart systems that protect you during the rougher times.

One last tidbit-also something I have written about over and over-if the market is to hold, watch Retail, the Financial plus Regional Banking sectors to take the lead. Then, follow that money trail. If they don’t cut it-could be the first “real” sign that the market needs a serious correction.

S&P 500 (SPY) Tested and held the trendline from the runaway gap on May 27th. Over 198 see another run to highs under 196.50 may be move to 50 DMA Subscribers: Positive Pivots in IWM QQQ Negative SPY DIA

Russell 2000 (IWM) Unconfirmed phase change to warning-that’s an improvement-need a second day to confirm

Dow (DIA) Held the 50 DMA with some end of day buying-so interested to see what happens Thursday!

Nasdaq (QQQ) 96.60 the new pivotal area. Closed green with over the average daily volume-that’s not bad

XLF (Financials) 22.99 and above good news

KRE (Regional Banks) Over 39.35 time to go in

SMH (Semiconductors) Great reversal here-Does have upside resistance now though

IYT (Transportation) Inside day

IBB (Biotechnology) This went right back to the 260 resistance-if anything that has to clear or might just consider this a run to the top of the new range

XRT (Retail) Unconfirmed improved phase change to warning-questions are will that stick and will it clear the 50 DMA next? Strong dollar, higher rates-makes sense that it can

IYR (Real Estate) 73.00 pivotal and can also be seen now as resistance

ITB (US Home Construction) Made a new 2014 low but closed above the old one at 22.58

GLD 124.05 support and could be in trouble again

XLE (Energy) Looks like it will move over as leader with the new paradigm given the strong dollar

TBT (Ultrashort Lehman 20+ Year Treasuries) If this is not just a one day comeback, then look here against 58.75 for support

SGG (Sugar) Subscribers: I would at least watch to see what happens as futures matched the 2014 low today

Bye for Now!