A Mind-Maker Upper To Make Up His Mind

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Oh The Places You’ll Go Dr. Seuss

We have just completed the first 16 days of trading in 2015. In those 16 days, Greece voted anti-austerity, Russian Credit was cut to Junk, Oil made a new multi-year low, the Northeast braces for the worst snow storm ever, the NFL ponders penalties for the New England Patriots (crippling snow not enough?), and Dr. Seuss’ “Oh The Places You’ll Go” turned 25.

I love that book! In it, “the protagonist (you, us) travels through several geometrical and polychromatic landscapes and places, eventually encountering a place simply called "The Waiting Place", which is ominously addressed as being a place where everyone is always waiting for something to happen.” Wikipedia

The “Waiting Place” applies neatly to the Trading Range, which perseveres after Day 16 in 2015 in the four indices as well as many other instruments.

After testing the top of the January 10-day Calendar Range of 135.03, the interest rates or long bonds (TLTS), on an intraday range basis, broke above then dropped below. There are a couple of situations to watch for when that flip from a significant high occurs. First, is the possibility that the high was a test of resistance which could yield a very low risk short opportunity (or betting that the rates are bottoming). The second is that it is merely catching its breath until it turns around and powers through the resistance thereby, providing fuel for sustained follow-through.

Regardless, the SPDR Barclays Hi Yield Bonds (JNK) closed just over its January Calendar Range high which could suggest that the money that had moved into the US Bonds is now moving into junk debt. Why buy JUNK DEBT? Perhaps the smart money is banking that the worst is over for the economy, rates that were the safest bet are not so much any longer and it’s time to invest in junk debt.

SPY, QQQs and IWMs drew an even closer line in the sand of support from the ultimate support at the January lows to the levels of the 50 Daily Moving Averages. Even though the Dow closed below the 50 DMA and confirmed the warning phase, in the wake of what started out as a Green Eggs and Ham Monday in the US Market instead became a Hooray For Diffendoofer Day!

S&P 500 (SPY) Bullish 204.80 the 50 DMA. January high 206.88

Russell 2000 (IWM) Bullish 117.28 the 50 DMA to defend. January high 120.56

Dow (DIA) Warning 176.84 the 50 DMA to get back above. January high 179.23

Nasdaq (QQQ) Bullish 103.35 the 50 DMA to defend. One more push over 104.33 ought to do it

XLF (Financials) Held 23.75. Still far from the 50 DMA at 24.28

KRE (Regional Banks) What was toppy looking is now a possible bottoming formation.

SMH (Semiconductors) 55.16 is the January Calendar Range high-now pivotal

IYT (Transportation) Unconfirmed bullish

IBB (Biotechnology) New highs

XRT (Retail) Looks a lot better

IYR (Real Estate) New highs

ITB (US Home Construction) Saved by the market and now, one more push to improve the phase if clears 25.40

GLD (Gold Trust) 123.37 a good place to clear for the bullish move to continue

GDX (Gold Miners) 22.32 first resistance with 22.95 the 200 DMA to clear. Support 21.64

USO (US Oil Fund) Closed on new multi-year lows

TAN (Guggenheim Solar Energy) I hope some of you use the info for trades-After mentioned the Friday move looking for follow through, it did and now unconfirmed recovery phase

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs like I wrote, if cannot get over 135 soon, perhaps we can finally get that correction

UUP (Dollar Bull) Inside day near the highs

EWG (Germany): Another one gave heads up on

FXI (China Large Cap Fund) Love the rest here-will go higher it seems

SGG (Sugar) Still causing cavities