Evening Watch List for October 26th

Mish Schneider | October 25, 2015

The Long and the Short of It

Bulls and Bears Win

With Halloween just around the corner, our Economic Modern Family has been brainstorming which costumes best reflect the recent division among the members.

If you are new to this daily, last week I traversed everything from nursery rhymes (The Farmer in the Dell) to an American colloquialism (Shotgun Weddings) to try to help make sense of the market’s extraordinary action.

NASDAQ took Semiconductors as its bride. Semiconductors, although male, became pregnant with a market rally. The couple, instead of eloping, invited the rest of Semi’s family (Economic Modern Family,) to a shotgun wedding. As of the end of last week, QQQs and SMHs were waiting for the Family’s RSVPs.

At the conclusion of the Farmer in the Dell, the cheese stands alone. We anointed the Federal Reserve as the cheese since the next direction of interest rates stands as a possible sea change.

Then, a surprise came when Draghi or the Italian cheesemeister, declared the ECB will buy more bonds beginning in December.

Later that night, while the US slept and China markets awoke, China cut rates as well. With a wedding banquet featuring cheese as the hors d'oeuvre, compliments of Europe and Asia, even without any domestic cheese offerings (Yellen and crew), the US markets rallied more.

Back to the Economic Modern Family, the Wedding and Halloween

Last 2 weeks, if you follow me on twitter, I recommended 3 short trades that dropped really hard, well underperforming the market. (Solar City, Under Amour and Walmart).

In fact, although I recommended a few longs as well, unless you were in the NASDAQ 100 leaders into earnings or certain Semi’s after the Intel report, those picks ran up but not nearly to the same percentage as the shorts that fell.

The perfect Family Halloween costumes reflect those dichotomies-Bulls and Bears.

Granny Retail (XRT) is definitely a Mama Bear. She ain’t buying and she ain’t going to the wedding at this point. Granddad Russell 2000s is Papa Bear but more like a sweet Winnie the Pooh bear, since it’s over the 50 DMA.

Semi’s Bull. Prodigal Son Regional Banks (KRE) Bull. Big Bro Biotechnology (IBB) Bear, though still thinking about crashing the wedding. Transportation (IYT) Bull but adding a dancing bear tutu skirt to the ensemble. Also considering going as Goldilocks.

As we head into this week, interest rates remain a major focus. The strong US dollar and Commodities also make the list, given evidence of El Nino’s impact and Hurricane Patricia.

As far the shotgun wedding and the family RSVPs, that’s the sort of drama that will make this Halloween a real trick or treat!

S&P 500 (SPY) Over 206 and therefore not only the new level to hold but also an unconfirmed phase change to Accumulation Subscribers: Pivots Positive in all

Russell 2000 (IWM) Confirmed return to a Recovery Phase with 116 just within reach

Dow (DIA) Over 175.62 the 200 DMA and therefore not only the new level to hold but also an unconfirmed phase change to Accumulation

Nasdaq (QQQ) 114.39 is the 2015 high. Think we will see it?

Volatility Index (VIX) Strangely closed green which tells me I’m not alone feeling scared of this paranormal rally.

XLF (Financials) Closed just shy of 24.20 the 200 DMA

KRE (Regional Banks) Cleared 42.72 the 100 DMA now the area to hold

SMH (Semiconductors) 57.40 good target55.50 pivotal

IYT (Transportation) September 17th high 149.86. Friday high 149.82

IBB (Biotechnology) Over 320 will look so much better

XRT (Retail) Looks skeletal. To get meat on the bones needs to clear 46.46 last week’s high

IYR (Real Estate) Could only get one close over 76.00.

ITB (US Home Construction) A close over 28 gets me interested

GLD (Gold Trust) Subscribers: Keep a mental stop of 112.15 to get long with a stop under 111

SLV (Silver) Like over 15.19 if holds 15.00

GDX (Gold Miners) GDX needs to clear 17.00, but looks like it will

USO (US Oil Fund) Held the recent trading range lows at 14.14

XLE (Energy) Over 69.70 looks great

TAN (Guggenheim Solar Energy) If oil prices stay low so will this have trouble going up much more

TLT (iShares 20+ Year Treasuries) Sitting on the 50 DMA. Better over 124.60

UUP (Dollar Bull) Express from an unconfirmed Recovery phase to an unconfirmed Accumulation Phase. 25.20 the 200 DMA

EWI (Italy) Like the compression over the 100 DMA and Friday’s inside day

CORN (Corn) Subscribers: Like over 23.10

DBA (PwrShs DB Ag Fd) Subscribers: If can clear 21.20 I’m interested

JO (Coffee) Subscribers: If clears 19.37 I am interested

***Market Tone: Short-term Positive 1, Intermediate-Term Positive 2, Long-Term Positive 6

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.

Tap here to view the September Live Coaching recording:
"How To Vet the Evening Watch Picks"

Longs:

ACN**
AEM**
AGO
AMZN**
BMR
BYD**
CAM
CRM**
CSIQ
CTSH**
CTXS**
CXO**
DHR**
EQIX**
EXPE**
FB**
FBHS
GD
GOOG
K**
KLAC
LGF
MCD**
NFX**
NOC**
NOW**
OC
RTN**
SNDK
SWI
YOKU