Interpreting the Right Bear

Magnifying today’s weakness in bonds is the selling in the REITs and utilities. As you know, those are rate-sensitive sectors.

While it is certainly true that the sector ETF’s for the REITs and utilities, first and second below, respectively, are far from being completely damaged, the selling today is making a minor dent in them. The IYR is losing its recent breakout level, for example.

And the third chart is the daily of major ute ED, which shows a potential significant breakdown.

Indeed, many individual REITs and utes are not in as good of shape as their ETF’s had suggested.

Further weakness in bonds tomorrow and Friday likely sees me adding to my current bond short. I did, however, feel compelled to cover my Citi short inside 12631 for a loss given today’s strength.

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Obligatory post…Drop me your top afternoon tickers.

“Fed Days” usually see a bunch of head-fakes and volatility post-announcement. Let’s see where the dust settles in a bit…

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After a near-perfect gap-fill down to $19.70 this morning, the silver ETF, seen below on the daily timeframe, reversed sharply higher and is now outperforming gold and the precious miners headed into the Fed.

I have been looking for a reason to get back involved aggressively on the long side in this entire space. But the recent weak performance by silver has been a thorn in the side of upside momentum for the miners to stick, especially, even if gold has been resilient.

If silver can now regroup and resume the charge higher, I would pretty much have all I need to take a look at some levered long plays in the space, in an even more aggressive position sizing stance than before.

$19.70 remains the key piece to the puzzle, as it was the primary breakout area which must now turn into support to keep the new-bull-market case alive and well for the metals and miners.

Elsewhere, keep an eye on corn this afternoon, as bulls have a good chance to break it higher yet to follow wheat.

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Courtesy of The PPT algorithm, here are the most current top five readings from my “12631 RELATIVE STRENGTH” custom-made screen, identifying which stocks are exuding some of the best performances to the market at-large at any given moment.

I look for stocks whose Daily PPT Hybrid Score surges, while the Weekly Hybrid has been negative over the past week. This can often yield stocks which are emerging from consolidations.

Members can click here to view and save the screen.

Sorted for at least 500,000 shares of daily average volume to ensure liquidity.

Please click on image to enlarge.

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In front of a Yellen-filled afternoon it looks as though the market is grinding to a halt. I am not seeing too mud movement out there, beyond Zillow and First Solar to the upside, with copper being the downside leader. Homebuilders gapped up but, as usual, saw a fade.

The 30-minute chart for the biotech sector ETF, presented below, shows false breakdowns and false breakouts alike in recent days. Overall, biotechs have been in a mild price correction in recent weeks, though the sell volume pattern is concerning. I would still consider a short entry if the IBB loses $257.

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With the monthly ETN for copper, first chart below breaking major support again this morning, FCX SCCO are two copper miners which look ripe as short setups for aggressive traders playing this downside momentum.

On the second and third daily charts, below, note their respective bear flag technical setups as price weakens.

What are you trading this morning?

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