A good measure of the market's hidden strength

September 6, 2015

Mish's Daily

By Mish Schneider

Note: Tonight’s evening watch was written by Jonathan Griffin Assistant Director of trading education and research.

Was the jobs report enough for the Fed to pull the trigger?

Friday’s economic data showed the addition of 173,000 new jobs formed during the month of August. The unemployment rate hit the lowest it’s been since April 2008 at 5.1%.

So the question is whether or not this was enough for the Fed to go ahead with the September rate hike?

The Answer is not clear yet again, the early talks out of the Fed indicate that this was not sufficiently decisive to tip the fed’s decision one way or another.

So with the Fed still on the fence as to when the rate hike will come we can only wait and speculate!

How’s the family doing now?

Ahead of the long Labor Day weekend I feel it’s a good idea to check in with the Modern Family before running off to camp or grill out for the weekend.

In a market trying to dig itself out of a hole, a good measure of initial strength is to close over the 10 DMA. If we could get all of our modern family members to do that, traders and investors would feel much better.

As bleak as the big picture looks and feels, 4 of our 6 Modern Family members are strengthening in the face of the weaker looking major indexes.

Read on to learn which modern family members are pulling their weight.

So let’s start with the Russell’s 200 (IWM), after gapping lower on Tuesday IWM traded within a range between 111.60 and 115.13, chopping around the 10 DMA.

Regional banks (KRE) Tested the 200 DMA before retreating and trading in a range of consolidation between 39.26 and 40.72 for the rest of the week. Also failed to hold a weekly support at 40.49.

Biotechnology (IBB) after consolidating, closed the week in a now confirmed distribution phase. With 344.75 the 200 DMA resistance. Not leading so much now.

Semiconductors (SMH) seems to be in the best relative shape, after reclaiming the 10 DMA, which now has a strongly upward slope, held support at the 10 DMA. There is still some resistance at 50.14 though.

Transportation (IYT) also managed to reclaim the 10 DMA on Thursday and held that support on Friday. The slope here has started to flatten implying this to be stronger support now.

Lastly we come to Retail (XRT) which failed to hold the weekly support at 93.50, yet is still holding over monthly support at 90.76. Another interesting note here is that the 10 DMA has also started to slope upward and Friday’s price action test at those levels.

All and all the market is mixed and rather weak still. So with that in mind always remember to plan, stick to your strategy and never forget about risk control.

Mish will be back with us after the long weekend.

S&P 500 (SPY) Consolidating, yet failed to hold over the 10 DMA during Fridays weakness.

Russell 2000 (IWM) Failed to hold the 10 DMA, but if can hold 111.60 we could see a bounce.

Dow (DIA) Some mild support here at 159.74.

Nasdaq (QQQ) Still weak, and getting closer and closer to having its own death cross.

Volatility Index (VIX) Back up 7.65% on Friday.

XLF (Financials) Retested support at 22.50.

KRE (Regional Banks) Needs to hold 40.13 and clear 40.49.

SMH (Semiconductors) Support at 48.39 and resistance at 50.14

IYT (Transportation) Held the 10 DMA to the cent at Fridays lows.

IBB (Biotechnology) Confirmed distribution phase. Some support at 331.70.

XRT (Retail) Trading into resistance at 93.50.