May 17, 2016
Mish's Daily
By Mish Schneider
Welcome to the Jungle
We saw this sign at the entry of Negril, Jamaica’s Best (and only) Night Club. Although the management promises to “ensure” these rules are followed, we saw several patrons who pushed the limits without any obvious consequence.
The “Makers” of the Market have their own set of rules for 2016. They ensure a choppy, sometimes safe and not always attractive environment for its valued investors.
As such, the market will allow:
No Follow Through
No Confirmation
No Real Volume
No Overconfident Traders
No More QE from the Fed
No Easy Money
Enjoy the Best Market Stock Market in The World.
WARNING
On Monday, the Granddad of Indices, IWM, retook the 50 DMA and nearly closed above the 200 DMA today. With a positive phase change unconfirmed, it needed a second day to confirm.
Tuesday, IWM set a trap for the bulls. By the end of the session, the Russell 2000 returned back below the 50 DMA and back into an unconfirmed Bearish Phase. Naturally, that too needs a second day to confirm.
Last Friday, SPY closed beneath the 50 DMA with an unconfirmed phase change to Warning. Monday, SPY closed back in an unconfirmed Bullish Phase. Tuesday, SPY is back in an unconfirmed Warning Phase.
Like the customers of Jungle Night Club, SPY dances above and below the 50 DMA hoping no gigolos, hoodlums or pimps have infiltrated their party.
Semiconductors, which improved its phase from Distribution to Warning needed to confirm by holding 52.04. It did not. Now, SMH sits back in an unconfirmed Distribution Phase. That also needs to confirm.
We came into today’s session focused on Transportation IYT. Why? Because IYT started the February rally. Therefore, it makes perfect sense it could either continue to give the market hope or act as the market’s ultimate kiss of death.
Currently, IYT is in a Distribution Phase. Trannies tried hard early on to tackle the overhead 200 DMA. Although it closed green, a break of 134.25 will give the rest of the market additional concerns.
So Where’s the Best Club This Year?
The “in” crowd loves commodities. With new investors lining up at the Gold, Gold Miners, Oil, Agricultural and Soft Commodities velvet rope, Club owners are letting everyone in. And with a free drink coupon.
S&P 500 (SPY) Unconfirmed warning phase. 205.50 is the 50 DMA and now pivotal. 202.44 next support. 210 hurdle.
Russell 2000 (IWM) Unconfirmed Bearish Phase. 107 underlying support with 111.21 the 200 DMA
Dow (DIA) Unconfirmed warning phase. 174 some support 178 resistance
Nasdaq (QQQ) In the weakest phase of the indices (Distribution). Over 107.50 helps a lot. Under 104 weak
XLF (Financials) 22.80 the 50 DMA to hold if good
KRE (Regional Banks) 38.65 held therefore this did confirm the recovery phase if continues to hold
SMH (Semiconductors) Unconfirmed Distribution Phase with an inside day and 52.05 pivotal
IYT (Transportation) 134.27 important support. If that holds and this clear 140.55 get bullish.
IBB (Biotechnology) A weekly close under 249 would not be good
XRT (Retail) 40.00 some support but Granny looks sick
IYR (Real Estate) 77.25 the 50 DMA support
GLD (Gold Trust) 119.50 the 50 DMA. Inside day and more consolidation
SLV (Silver) Inside day and consolidating with a close over 16.50 reason to think higher still
GDX (Gold Miners) 25.94 the 200 week moving average to clear now. If does, first time since 2012
USO (US Oil Fund) 11.92 the 200 DMA which it hasn’t been above since August 2014. Unconfirmed accumulation phase.
XOP (Oil and Gas Exploration) A weekly close over 34.57 is a good sign for this
TAN (Guggenheim Solar Energy) 20.00 is the major support area.
TLT (iShares 20+ Year Treasuries) 130 pivotal
UUP (Dollar Bull) 24.60 resistance. This had a strong reversal early May. Not so bearish anymore
Every day you'll be prepared to trade with:
