HAP: Natural Resources ETF Makes a New 2016 High
Unless I have a specific idea early on, or the market yields phenomena I haven’t already covered, my writing process is pretty much the same each day.
I go to the kitchen to rustle up some snack to feed my brain. I return to my desk, close my eyes and wait for an image to appear. I then decide if I can stretch that image to correspond with the market.
Today, it was The Hellstrom Chronicle. Wow. Really Mish? So maybe it had something to do with that poor man from Australia who was sitting on the toilet only to get bit in a very vulnerable place by a highly venomous red back spider.
Or maybe, it’s because of the Zika virus. Yesterday, the Senate neared a deal to give $1.1 Billion to fight the disease, which is rapidly spreading. Amazingly, the stock market has yet to factor in this virus, unlike what happened after the Ebola virus scare in 2014.
So if Hellstrom Chronicle, a 1971 film about insects that eventually reign supreme over the human race, is in my mind, what does that mean?
As you know, I have been watching and trading commodities. I found a small ETF that has made a particularly powerful move off of its January 2016 lows-HAP MV Natural Res ETF.
If there were an insect index, I’d show you that. Insects, either swarming or disappearing like honey bees, have an ongoing influence to our natural resources. The HAP chart is my next best thing.
The reasons for rallies in commodities usually stem from mayhem-drought, floods, geo-political uprising as examples. Mayhem creates havoc in the markets. It can lead to overwhelming inflation.
Today the Fed stated, “Inflation is expected to remain low in the near term, in part because of earlier declines in energy prices, but to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further.”
Sounds so orderly, doesn’t it?
Side by side are two weekly charts. HAP and the S&P 500 (SPY). The peak in HAP came in April 2011 at 43.44. The 2014 peak you see above was 41.10. From there, as HAP declined, SPY rallied. An improving labor market helped the market forget about falling global demand for resources. At the time, deflation was a real threat.
Fast forward to today and you see HAP on new 2016 highs with SPY not too far from the 2015 highs.
Global demand on the rise? Yes. Labor market still in good shape? Yes.
So, what about those insects? In Hellstrom Chronicles, there is a catch-22. Bugs take over because humans have not heed the warnings. At the same time, we are defenseless since there’s not much we can do about it anyway.
The Fed has a similar catch-22. Raise interest rates, and the market suffers. Do nothing, and wait for the assumed orderly and timely 2% inflation target. Lower rates, and that pretty much guarantees tipping the inflation scale.
“Nature has a funny way of breaking what does not bend” Alice Walker
S&P 500 (SPY) December high 211. 207 big support Subscribers: Positive pivots in all except QQQ
Russell 2000 (IWM) 113.20 daily chart support. Has to close the week above the 50 week moving average at 114.40.
Dow (DIA) 178 good support and 181.42 recent highs
Nasdaq (QQQ) 107.90 the 200 DMA for this to retake
XLF (Financials) 23.78 fills a gap on the weekly charts. Today high 23.77
KRE (Regional Banks) Confirmed accumulation phase. Weekly chart resistance at 41.08 to clear by Friday
SMH (Semiconductors) 55.66 point to clear and 54 point to hold
IYT (Transportation) Needs to clear 148 hold 140
IBB (Biotechnology) 276 support to hold 290 point to clear
XRT (Retail) 45.60 the weekly MA to close above
IYR (Real Estate) 77.40 pivotal, especially on a closing basis
GLD (Gold Trust) Holding the 50 DMA
SLV (Silver) I have no problem with this taking time to consolidate at higher levels
GDX (Gold Miners) This is what an orderly bull run looks like
USO (US Oil Fund) 11.42 the 2016 high way back in January
XOP (Oil and Gas Exploration) 35.55 the number to close above this week
TAN (Guggenheim Solar Energy) good volume and test of the 100 DMA 25.03
TLT (iShares 20+ Year Treasuries) 129.50-130 key resistance
RSX (Russia) Subscribers: 17.00 support and 18.00 resistance. Inside day
CORN (Corn) Subscribers: 2 Inside days. Over 21.74 like to see it test 22.50
DBA (PwrShs DB Ag Fd) Subscribers: 21.28 point to clear
DBC (DB Commodity Index) Subscribers: confirmed accumulation phase
SGG (Sugar) Subscribers: A close over 35.92 this month looks great
PHO (Water) Subscribers: Cleared the 200 WMA at 23.35. Must close week above there
***Market Tone: Short-term Positive 3 Intermediate-Term Positive 6 Long-Term Positive 9
NOTE: *All starred picks are from the automated list of picks (which now includes short picks!) denote that it has one or more of the 18 chart patterns we have used on the radar screen. For example, inside day, 2 days under floor trader pivots, phase change, brick wall or return to the 10 DMA, etc.
Longs
ACN**
ADSK**
AFL**
AGQ
APA
ASML**
ATI
BBD
CAT
CENX
CL**
CLF**
CMC**
CME
CMI
COG**
CREE
CTRP**
DUK**
DVN**
FNSR
GE
GNRC**
HOT**
IBM**
K**
KBH
LMT**
LULU
MAS**
MGM**
MMM
NBR**
NEE**
NOC**
OC
RCL**
RIO
TEX**
ULTA**
V
WHR**
X**
XRX
Shorts
AAL
AAPL
AET
ALKS
COST
CTB
DAN
EA
EQR
GILD
GT
ILMN
INCY
LEA
LNKD
LYV
MNST
NFLX
REGN
RMD
SBUX
STRZA
TRIP
VLO
VRTX
WYNN
