Woes/Whoas in the Rally of Enchantment
A license plate paradox. How can one have dismay or grief (the meaning of oy vey) in the Land of Enchantment?
Similarly, did the market just have a “woe is me” moment during what many believed would continue as the rally of enchantment? Or is that a “Whoa is me?”
Last week, I mused about bears. Out of hibernation and growing in population, they remain confined to a preserve. Bears understand they could continue to multiply if they stay within the preserve walls. Yet, they run the risk of getting hurt if they venture beyond their anointed boundary.
I ended the week wondering how many bears plot their escape regardless of the risks?
In Sunday’s commentary we recalled the 2015-2016 market theme, “When the market looks amazingly strong, never discount that things could turn utterly sour.”
Did we see first signs of that happening this last day of May? For me, I turn to my Economic Modern Family of Fire Monkeys for answers.
We came into this week with the S&P 500 close to the November 2015 resistance at 211.50 and the April 2016 swing high 210.92. Today’s session high for SPY-210.69.
The Russell 2000, clearly the mover and the shaker of this recent rally, closed last the week over a key weekly moving average. Today, Granddaddy IWM marginally cleared the December 30, 2015 high of 115.35 (the high before the crash) to make a new 2016 high of 115.54. Closing at 115.00, the Russell continues to take an important leadership role.
Last week’s high (114.60) now becomes a pivotal number for tomorrow with support all the way down to 108 before bulls should totally throw in the towel.
Semiconductors needed one more push over 56.99 to keep going north. Today’s high 56.93.
Retail, Transportation and Biotech came into the week with two distinct possibilities. In either put up or shut up mode, all closed green. If IYT can clear 140.60 and hold, expect the others to keep going. Should IYT fail 138.75, red fire monkey tails will be raised.
Remember, as this is the Year of the Fire Monkey, if they realize that a path is not fruitful, they will attempt a new one instead.
Naturally after 5-6 days in a row of an enchanted rally, some correction and profit taking is in order. No fruit supply lasts forever.
Question now is where will the monkeys turn to for their next meals? Will they enter bear territory where seasonal berries become plentiful? Or will they find the bear preserve too confining and head out beyond the woods in search of greener and fruitier pastures?
S&P 500 (SPY) April high 210.92. Has to hold 208.50 Subscribers: Mixed. Positive Pivots in IWM QQQ Negative in SPY DIA
Russell 2000 (IWM) An accumulation day with a higher close and good volume, hard to get bearish. Anything can change of course. Would take a strong reversal pattern to bring the bears back in
Dow (DIA) After 2 inside days the dow tried to clear the highs and ultimately closed below the lows. 177.29 is the 50 DMA support to defend.
Nasdaq (QQQ) 110.60-111 next resistance. Has to hold 108
XLF (Financials) Closed red but with no discernable pattern
KRE (Regional Banks) 41.91 is the place for this to close above on Wednesday. Otherwise, could see 40.10 quickly
SMH (Semiconductors) 56.00 pivotal. Then the December high 56.99
IYT (Transportation) Confirmed phase change back to warning. Has 2 hurdles. The 50 DMA at 140.60 and the weekly MA just slightly below that.
IBB (Biotechnology) 272 support. Now through 275 could see 290
XRT (Retail) 41.75 is the support to hold
IYR (Real Estate) Sitting on the 50 DMA
ITB (US Home Construction) Inside day right near the 2016 highs-inflection point.
GLD (Gold Trust) Held 115 level which is my bottom line hold point
SLV (Silver) 14.90 support with 15.20 pivotal
GDX (Gold Miners) After a great rally, closed under the 50 DMA. Keeping eyes on
USO (US Oil Fund) 11.80 support
OIH (Oil Services) 28.50 on a weekly close is important to clear
XOP (Oil and Gas Exploration) Chopping around, but still looks good
UNG (US NatGas Fund) Needs a close over 6.97
TAN (Guggenheim Solar Energy) 2 Inside days. 21.80 should hold as we await a phase change
TLT (iShares 20+ Year Treasuries) 129 support held.
UUP (Dollar Bull) 24.95 substantial resistance
FXI (China Large Cap Fund) Cleared the 50 DMA for an unconfirmed phase change to recovery
RSX (Russia) Subscribers: Having issues finding its way-aside is good
CORN (Corn) Subscribers: Typical after a great close to the week to see it sell off. 21.94 the 200 DMA
BAL (Cotton) Subscribers: Good digestion after a big move
DBA (PwrShs DB Ag Fd) Subscribers: 20.50 good support
JO (Coffee) Subscribers: 17.92 ultimate support.
***Market Tone: Short-term Positive 1 Intermediate-Term Positive 7 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
AEM
AMGN
AMZN
AON
APA
ATI
BDN
BMY
CBS
CDE
CHKP**
CLF**
CLR
DD**
DHR**
DLR**
DNR
ETP**
FB**
FBHS**
FCX
GDXJ
HES**
KORS
LMT**
LNKD**
MDVN
MU**
MUR
NEM
NWL**
PAA
PXD**
RMBS
SINA**
SLW
SODA**
SWK**
TCK
TEX
TRMB**
ULTA**
USG
XME
XRX
Shorts
ALK
BA
CI
DIS
ERJ
LNG
MYL
NKE
PANW
SBUX
TIF
TPX
TSO
UAL
VLO
