Evening Watch List for January 11th

Mish Schneider | January 10, 2016

Bright Phases in a Nasty Week

After last week’s market demise, I decided to take a quick inventory of the 6 phases and which instruments remain in positive ones versus the plethora of ones in bearish phases.

Furthermore, I did another quick inventory of those instruments in protracted bear phases that might be showing signs of bottoming.

Granted, it’s a short list, so let’s spin that to mean, less is more!

Not to depress you, some of the positive phases I see are in ultrashorts that are now in Recovery or Accumulation Phases. That’s information however.

In the Macro picture, and given that my Economic Modern Family are all in either Distribution or Bearish phases, those ultrashorts could be handy to watch if you prefer to “buy” your way short.

Last week I wrote about the 200 week moving average. Not only is this moving average watched by many institutional firms, it represents the end or beginning of a 4-year business cycle.

Considering the market went from a bear market in 2008 into a 4-year bull cycle which lasted until the end of 2015, the two 4-year business cycles back to back (from bear to bull back to bear), coupled with the 200 week moving averages are extremely valuable to study.

To review the most significant 200 week moving averages, we need to look no further than in the Russell 2000 (Granddad) and Transportation (Transgender sib).

IWM literally landed right on the 200-week MA at 105. If you regard this as an area rather than an absolute number, IWM has to hold here and work its way back up to 110 this coming week to survive. Otherwise, I would expect IWM to work its way down to 90.-91.00 level over time.

IYT closed out the week under the 200-week MA. Unless it clears back over and holds above 127.25 this week, 109 is in its purview.

Positive Phases

If you're not familiar with how we define the phases check out this quick tutorial.

Besides the index ultrashorts, GLD and gold miners (GDX) are in Recovery Phases although they stand alone in the metals sector as such.

The 20 + Year Treasury Bonds (TLT) are in Accumulation along with the Japanese Yen (FXY) and sadly the Volatility Index (VIX). The Euro (FXE) is in an unconfirmed Recovery Phase (needs a second close above the 50 DMA).

Natural Gas (UNG) is the only energy sector now in Recovery. In market sectors, only Utilities (XLU) is in a Recovery Phase, also unconfirmed.

In equities, the ones I follow, First Solar (FSLR), Digital Realty (DLR) Kroger (KR) and Panera (PNRA) are in Bullish Phases.

In Accumulation and Recovery Phases are two of my favorite potential megatrend stocks Solar City (SCTY) and Sohu (SOHU). There are others in the solar space mainly. 3D printing is struggling to find a bottom after a protracted bear move. The phases are all still Bearish.

As for watching the end of protracted bear markets in hopes of catching them as they go into Recovery, I continue to see commodities, especially agriculturals, as the best bet.

After sitting in “deflationary” mode for quite a while, at some point, those phases will turn. Just look at the UUP or US dollar chart. It declined from 2008 until its nadir in May 2014. Currently, UUP is close to those 2008 highs.

“Never give up, for that is just the place and time that the tide will turn.” Harriet Beecher Stowe

S&P 500 (SPY) So ugly until you remember that August low was 182.95. Subscribers: Negative Pivots in all

Russell 2000 (IWM) Hoping that it recaptures 105 after ending the week oversold with blow off type volume

Dow (DIA) 157.50 the 200 week moving average

Nasdaq (QQQ) Big volume with support at 104 and a good place to bounce from if Monday holds up

Volatility Index (VIX) The 200 week moving average is so far away that it seems unlikely we will get there for a very long time if ever

XLF (Financials) 22.00 is the low to hold. Had big volume so maybe getting saturated to downside.

KRE (Regional Banks) Oversold. Very. Not as much on the weekly chart though so could see 36.50 the 200-week MA next

SMH (Semiconductors) Oversold on all timeframes. 48.00 support and 52 overhead resistance

IYT (Transportation) Needs to get back over 127.25 next week or next leg down inevitable

IBB (Biotechnology) Broke the 23 monthly MA with a lot of the month left. 307.25 nearby resistance

XRT (Retail) 40.45 the 200-week moving average

IYR (Real Estate) Nothing is too big to fail. 70 major weekly support

ITB (US Home Construction) 23.30 the 200-week Moving average

GLD (Gold Trust) The 100 DMA is at 106.44 with major support 104

SLV (Silver) Not doing what the GLD is unless it can clear 13.65

GDX (Gold Miners) Needs to clear 15.00

USO (US Oil Fund) Extinct for real

UNG (US NatGas Fund) Study the 2-day reversal pattern in December off of the new lows-what we need in some of the other beat up commodities

TAN (Guggenheim Solar Energy) Subscribers: Closed over 27.22 so still might get in with risk under 26

TLT (iShares 20+ Year Treasuries) 124 major resistance to clear

UUP (Dollar Bull) Inside day under the 50 DMA

FXI (China Large Cap Fund) Talk about a protracted bear market. Need an UNG type reversal here

CORN (Corn) Subscribers: Confirmed the reversal so maybe this has bottomed

DBA (PwrShs DB Ag Fd) Subscribers: Decided to wait to see if it can get above 20.37

SGG (Sugar) Subscribers: Watching the consolidation

JO (Coffee) Subscribers: Basing maybe

***Market Tone: Short-term Negative , Intermediate-Term Negative 3, Long-Term Negative 4

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

ACAS**
AIV
ANF
BMR
CCJ**
COH
CUBE**
CVRR
DLR
DLTR
DTE
EQIX
FAZ**
FCS**
FRAN
FSLR**
GERN**
K
LAMR
MCD
O
SCO
SCTY
SDS**
SFM
SRPT
STZ
SWI
TZA
ULTA
VXX**
YOKU