March 3, 2016
Mish's Daily
By Mish Schneider
Oh, what a tangled web we weave when first we trade what others conceive.
If there’s a field I do not play in with these daily blogs, it’s the field of politics. Oh sure, I make plenty of comments about the politics of trading. However, I stay far, far away from allowing any other political facts and opinions to sway my trading decisions and/or advice to you.
This week, I wrote a bit about how “when the combination of wealth inequality, political polarization, domestic policy uncertainty and shifts in monetary policy all line up at the same time, it can yield a zero-sum game.”
I recommended you take note on now political shifts take place vis-à-vis monetary policy. I’ve certainly made it clear that my primary focus remains on commodities. Undoubtedly, low interest rates don’t hurt.
I admit, in the current political climate, it’s harder than ever to ignore the constant influx of tweets, emails and Facebook posts concerning this year’s colorful campaign.
Nevertheless, I must ignore them. Simply put, thinking that the American political system is in trouble or doing great or that any one candidate can change the country for better or for worse (other than pressing the red button-that would be decidedly worse), will not help your trading.
Case in point, this rally.
Historical relationships considered the gospel no longer work. Gold goes up, equities go down? So far, not really.
Interest rates rally in a flight to safety, equities go down? So far, not really.
Equities go up, dollar goes up? So far, not really.
NASDAQ 100 FANG (Facebook, Amazon, Netflix and Google) stocks go up, the market goes up? So far, not really.
Low global demand/high supply of commodities deflationary, commodities prices continue to drop? So far, not really.
What does work?
One old fashioned principle you can dust off and post on your mantra board-Price. That works.
So far every day this week, I came in looking for my beloved move higher in commodities to follow in historical accordance with a decline in equities. Negative. I looked for the political landscape to seep its way into equities and create a climate of uncertainty. Negative.
Yet, did I go short? No. Did I go long? Yes, certain instruments. But clearly not enough. Did I enjoy profits in my commodities trades? Affirmative.
Point is, I read the tape, I didn’t get hurt rather, actually did ok.
Next week is a new week. Trade what you see and not what you think you see or what you hear. Important to remember that now more than ever!
S&P 500 (SPY) Low volume rally continues with200-202 next point of resistance and fairly significant too. 195 key support
Russell 2000 (IWM) Granddad’s Viagra kicking in. How long can it last? Back over the 200 week moving average if closes there by Friday
Dow (DIA) 170-172 big resistance
Nasdaq (QQQ) 108 big resistance and 103.50-104 key support
Volatility Index (VIX) Hello 200 DMA
XLF (Financials) Confirmed phase change to recovery.
KRE (Regional Banks) 50 DMA at 37.25 cleared today and now must hold tomorrow
SMH (Semiconductors) 52.55 the 200 DMA
IYT (Transportation) Planes, trains and automobiles powered with steroids. 133 key support
IBB (Biotechnology) Still well underperforming with 270 key resistance-reflects the lack of speculators
XRT (Retail) 44.60 good daily chart resistance. Where it stopped today. Support 43.20
IYR (Real Estate) More surrealism -73.95 weekly chart point
GLD (Gold Trust) Got to a top of a channel. 117.75 now should hold
SLV (Silver) Wokey, wokey today
GDX (Gold Miners) I think (never mind, see) the possibility of 25.00
USO (US Oil Fund) A close over 9.35 would be the best close in a month. Continuous contract now in a confirmed recovery phase
XOP (Oil and Gas Exploration) Big day up 4.67% and now in an unconfirmed recovery phase
UNG (US NatGas Fund) D(UNG)
TAN (Guggenheim Solar Energy) Just waiting a bit longer for momentum indicators to flip positive
TLT (iShares 20+ Year Treasuries) 130 pivotal
UUP (Dollar Bull) 25.25 is the area to hold
GREK (Greece) Even this cleared the 50 DMA!
FXI (China Large Cap Fund) confirmed phase change to recovery if holds 31.45 not bad
Every day you'll be prepared to trade with:
