Evening Watch List for November 2nd

Mish Schneider | November 2, 2015

The Future in Commodities Futures

Last Friday, Regional Banks (KRE), which I have been tracking as a key member of the Economic Modern Family, confirmed the reversal pattern.

As a reliable indicator to measure the sentiment of the overall US economy, KREmeeting the criteria for a 2-day reversal pattern is troublesome. What it says to me is that any euphoria that the FED has any real confidence in the economy and will thereby tighten by the end of year, has waned.

Let’s face it. What the FED is looking for is higher inflation numbers (though you know what I always say-be careful what you wish for!) Furthermore, with the GDP floundering, the FED wants to see more signs of sustained growth.

So, lower rates it is. The opposite of Paul Volcker’s 1979. Or in the words of the musical group The Smashing Pumpkins in their hit “1979”:

“We were sure we'd never see an end to it all. And I don't even care to shake these zipper blues.”

As mentioned last week, I’ve been skeptical about this recent market rally. Naturally, there are stocks that move counter. Naturally, earnings season provides both Agony and Ecstasy to those who hold positions into an instruments earnings. In the upcoming weeks, lots of retail names report.

However, with the Economic Modern Family (IWM XRT KRE SMH IBB IYT) in disarray, I remain fixated on the bottoming action in many commodities.

The interest in agricultural commodities begins with cocoa. CHOC had vicious drops in price early on in 2015. Those spike lows became bottoms. Reports of drought impacting yield have kept cocoa prices high.

Sugar, under pressure until mid-August (or exactly the time when equities tanked), has rallied about 40% since then.

Now, Corn is trying to bottom along with cotton and coffee.

Concerning oil and the metals, seems all are trying to bottom as well.

If we look at the 2 basket commodity fund ETFs, DBC and DBA, we see similar basing action.

Maybe this is more of a case of “fake it til you make it.” I for one, can relate to that. I told you last week that as a young pup, I started my career on the commodities exchanges in NY. I literally took the express train from my Special Education classroom in Harlem down to the Exchange in the World Trade Center.

As a newbie to high finance, my only choice was to fake it til I made it. And guess what? Hasn’t worked out too badly.

Watch commodities. Just sayin.

S&P 500 (SPY) 206.22 the 200 DMA to defend now if this has a chance to holdSubscribers: Negative Pivots in all

Russell 2000 (IWM) Ultimately closed on the 10DMA support. One push over 116.00 level good but if cannot, under 114 back to weak

Dow (DIA) 175.65 the 200 DMA in focus.

Nasdaq (QQQ) New 60 plus day high then petered out. But no big range or volume so anything can still happen

XLF (Financials) Call this a maybe reversal which makes sense given the action in KRE

KRE (Regional Banks) The good news is this landed on the 10 and 100 DMAs. Support at 42.65 level if holds could make this resurrect.

SMH (Semiconductors) Although this hasn’t corrected enough to make me want to buy, it did manage to close right on the 200 DMA

IYT (Transportation) Support at 143.60 the 50 DMA

IBB (Biotechnology) Couldn’t hold the 50 DMA after the valiant effort

XRT (Retail) Closed once again over the 50 DMA and needs that second close above to confirm recovery phase

IYR (Real Estate) Sloppy action and back under the 200 DMA

ITB (US Home Construction) Wouldn’t rule this out just yet unless it falls hard under 26.50

GLD (Gold Trust) If this starts the week off over 109.40 maybe that was it for the correction

SLV (Silver) Back over 15 could still be okay

USO (US Oil Fund) Basing action and a close just on the 50 DMA

OIH (Oil Services) Looks better if holds Friday’s lows

XLE (Energy) Came close to a breakout but not quite-eyes here as well.

UNG (US NatGas Fund) Looking for follow through from Friday’s new lows close on the high-over 10 looks good

TAN (Guggenheim Solar Energy) Worth watching as it sits on the 50 DMA

TLT (iShares 20+ Year Treasuries) Bounced off the October low and closing with an inside day on the 50 DMA

UUP (Dollar Bull) Still looks good if holds the 200 DMA at 25.20

EWG (Germany) Worth watching

***Market Tone: Short-term Neutral, Intermediate-Term Negative 2, Long-Term Positive 3

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.

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"How To Vet the Evening Watch Picks"

Longs:

ACE
ACN**
ADBE
AEM
CB
COST
CSC
CTB
CTRP**
CTSH**
CTXS**
D**
DHR
DLR**
EA
EQIX**
EW
EXPE**
FSLR**
GE
GME
GOOG**
INCY
JNPR**
K
LEA**
LGF
LMT**
MYGN
NFLX
NKE
NOC**
OC
PBF
PSX**
RCL**
REGN**
SBUX**
STZ
SYNA
TPX
TSO**
TTWO**
VLO
YOKU