Market Analysis for Trading on 7/9/2014

Mish Schneider | July 8, 2014

Here is my question and I suspect one that is on the mind of most active investors-does one go short in a bull market only to find out this is a 2-3 day correction that turns right around to make another stab at the highs or new highs OR does one go long and risk that this correction is really the start of something much more severe with way more downside risk?

With that said, let’s examine my “go to’s”. Beginning with the Russell’s-they clearly have returned to the status of “weak” sister with the largest percentage drop. However, the phase remains bullish and the 116 support area intact.

Semiconductors-50.53 was the number to clear to negate confirmation of a topping formation (new high then failure over 2 days). Therefore, today confirmed the “brick wall” high. 49.65 is the July low, however that held so far.

Interest Rates-The flight to protection is alive and well considering the 20 Year Treasury Bonds move back above the 50 DMA. However, it does need a second day to confirm the improved phase change to Bullish.

Add those 3 together and one sides more with a case for healthy correction than end of days, but with the notion of a major cash holding until that proves itself out further.

S&P 500 (SPY) Held the July calendar range low at 196.13. Over 197.07 could see new lifeSubscribers: Negative Pivots in all

Russell 2000 (IWM) 116 held with 117.50 a pivotal area to clear

Dow (DIA) 168 good support for now with 169.50 a good point to clear

Nasdaq (QQQ) Closed above the July 1st low (calendar range) at 94.20.

XLF (Financials) Although it broke 22.80, it did so marginally and so, back over there, wouldn’t rule this out yet

KRE (Regional Banks) Really, has to break over 41.30. Like to see a move over 40.33 early Wednesday.

SMH (Semiconductors) 49.65 low to hold and a move over 50.59 much better

IYT (Transportation) Has not confirmed a topping pattern and actually held up a lot better than most

IBB (Biotechnology) If this can clear back over 259 back in biz-otherwise, the 250 level is substantial support

XRT (Retail) If 86.85-87 where it broke out from clears again, good sign here too

IYR (Real Estate) 71.70 pivotal

GLD Not an easy pattern to read here although phase is bullish

OIH (Oil Services) Would not rule out if clears 57.07

FCG (First Trust ISE Reserve NatGas) On the 50 DMA

TAN (Guggenheim Solar Energy) Big drop-very interested in seeing what happens around the major moving averages.

TBT (Ultrashort Lehman 20+ Year Treasuries) TLT 112.20 is the 50 DMA to hold or not

EEM (Emerging Markets) Looks better with today’s correction a good point to hold

EWG (Germany) Will the win over Brazil help this country fund? The 200 DMA sits real close at 30.58

FXI (China Large Cap Fund) 37.80 major support to hold with 38.30 point to clear

SGG (Sugar) Subscribers: Futures did not have the same brick wall bottom as the ETF did but a bottom of a channel is holding

Bye for Now!