Market Analysis for Trading on 10/10/2014

Mish Schneider | October 9, 2014

The most fun I had today was shopping on Amazon Prime for facial cleansers. (Incidentally,AMZN stock dropped 2.3% while approaching daily support at around $314-315)

First off, I had the time to research the best rated cleansers, a luxury for me since my eyes are typically on the next great trade and not internet shopping! Secondly, I wanted to avoid trading as much as possible since one cannot be long in this market nor short after Wednesday’s daunting short-covering action.

Third, I could FEEL the skin on my face wrinkling from a combination of over contorting, frowning, laughing (more grimacing really), and at times, nearly weeping (not really, but some might have wept today).

Clearly, we should not expect that we went from the 200 point swings as the new 100 point swing to now 300 point swings as the new 200 point swing. Try saying that ten times fast!

What can we expect for the last day of the week? I’m hoping not too much, but that’s just my face talking in its attempt to avoid more stress wrinkles. I mean how many more of these complete reversal days can we have in a row? One would think active traders are thoroughly exhausted by now!

All indices closed above Wednesday’s lows. There is some merit to that albeit minimized by the extended trading ranges each day this week. After all, to take out a previous day low when the range is nearly 300 points becomes mathematically less probable.

There is a classic chart pattern and a rare one at that called “railroad tracks.” That pattern describes the action in the indices the last two days. Railroad tracks point to distribution, i.e., professional selling. Because they often occur near a top, the pattern is a sell signal.

With that in mind, the 200 DMA beckons a soft or hard landing in SPY QQQs and DIAsas the next point to watch. Til then, will be watching for some other signs such as a blow off move or real institutional buying with a two-day confirmation of a better phase in most likely,NASDAQ.

S&P 500 (SPY) 192.35 last week’s low still there as some minor support until the 200 DMA below Subscribers: Negative Pivots

Russell 2000 (IWM) Railroad tracks and inside day-new 2014 lows this week-makes you wonder what would have to happen to bring the life back?

Dow (DIA) 165.67 the 200 DMA with (not that I want to scare you), October 19th 1987 in my mind.

Nasdaq (QQQ) 95.97 last weeks low back in sight. Inside day-a miracle would be a move over 99.00

XLF (Financials) 22.33 the 200 DMA

SMH (Semiconductors) 47.94 the August low.

IBB (Biotechnology) Marginally held the 50 DMA making this STILL the best place to go if market firms

XRT (Retail) 83.04 August low

IYR (Real Estate) Held 70.00 which continues to make that the key area

GLD Closed green-I would watch here carefully. Of course, nothing holds up when everything crashes, but I can see a case for a rally with lots of fear around

USO (US Oil Fund) New 2014 lows

FCG (First Trust ISE Reserve NatGas) 15.20 the 2012 low and 15.22 the 2013 low

TAN (Guggenheim Solar Energy) Subscribers: Back to looking for 33 as a buy order

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs having issues around 119.50-has to clear or who knows-the bond bubble?

UUP (Dollar Bull) 22.65 is the low of the most recent runaway gap-holding

EEM (Emerging Markets) Boost here over the 200 DMA

SGG (Sugar) Subscribers: Over 44 looks really good