June 14, 2016
Mish's Daily
By Mish Schneider
Photo by Mish
King Kong Vs. Rallysaurus
Last night you met Rallysaurus, our nearly extinct bull market dinosaur. Today, I give you Kong. He is our Year of the Fire Monkey on steroids.
If Kong strikes fear in the heart of the Rallysaurus, one thing we have learned from the plethora of Kong films- “It was beauty that killed the beast.”
So who then is beauty?
She could be the Federal Reserve. Although doubtful we will hear anything new from the Fed, we can most likely assume the same old. No rate hike until maybe September and only if…blah blah blah.
Maybe beauty looks like a non-Brexit. She threatens to leave the Union, but ultimately cannot muster up a majority vote to do so.
Speaking of beauty, the Russell 2000 and the S&P 500 maintained their bullish phases. Fortune 500 and 2000 small cap companies. Hmmm. Maybe what they lack in beauty they can make up for in size. Like our Rallysaurus.
Regardless, the battle is epic. That’s why I find comfort and beauty in the charts.
The Russell 2000 has support 110.75 up to 112.50. If it can make its way back over 116.50, that would look a lot more positive.
The S&P 500, with better than average daily volume, defended its price above the 50 daily moving average. That makes 207.75 a pivotal area to close above or below from.
Transportation (IYT) took a direct punch in the face from Kong. A death blow? Perhaps. Although a return over 140.00 would renew it impressively.
Biotechnology IBB has to get back over 272 and Retail XRT must reclaim 42.00. While both performed poorly, neither failed so badly that a rally is inconceivable.
Furthermore, a run over the high (57.10-20) area from Monday in Semiconductors SMH our T-Rex, will put a feather in the Rallysaurus’ cap.
Regional Banks KRE closed beneath 39.75. That begs the question, does the market need the financial sector more than it needs our “Beautiful Dreamer” Janet Yellen? Or, do they go hand in hand?
Hard to say these days from a fundamental relationship. Technically, a move back over 40.10 in KRE and a break of 135.35 in TLTs should work in tandem.
Nasdaq confirmed a warning phase yet closed green and above the 200 DMA. There’s still fight left in the ‘ole Rallysaurus. Question though--is this it’s last stand?
And where is the Dow and the unshakable gremlin it sees when it flies up to 18,000? In a confirmed warning phase as well yet only a meager 325 points away from cruising at altitude.
Hence, for now we leave King Kong standing on top of the Empire State Building pounding his chest. What happens from here will determine whether he is a rampaging monster or a tragic antihero.
S&P 500 (SPY) 207.75 is the 50 DMA and pivotal. Then, it could test weekly support levels at 202.50. Over 211, way better
Russell 2000 (IWM) 112.50 level important. 115 pivotal and over 116.50 impressive
Dow (DIA) confirmed warning phase
Nasdaq (QQQ) Held the 107.50-107.75 support on 2 timeframes. Confirmed warning phase, so has to close back over 108.40 to look better again
XLF (Financials) Unconfirmed distribution phase
KRE (Regional Banks) Worse-unconfirmed bearish phase
SMH (Semiconductors) 54.50 support
IYT (Transportation) I warned you that the bottom was in in February because of trannies. Now, if this cannot pop back over 138.60, could be the first real sign that bears prevail
IBB (Biotechnology) 260 support with 272.50 resistance
XRT (Retail) Already in a bear phase, Granny has 40 to defend.
IYR (Real Estate) 78.00 big support and over 80 new life
ITB (US Home Construction) If holds 26.55 area then still has a shot
GLD (Gold Trust) 120.50 support with next big resistance at 126
SLV (Silver) 15.75 support with overhead at 17.00 then 19.00
GDX (Gold Miners) 25.10 the 10 DMA and now 25.55 pivotal
USO (US Oil Fund) Held near support again. 12.00 resistance to clear.
XOP (Oil and Gas Exploration) Holding the 50 DMA
UNG (US NatGas Fund) 7.40 a good point to use for a stop.
TAN (Guggenheim Solar Energy) 20.00 seems cheap-we shall see
TLT (iShares 20+ Year Treasuries) 135.35 a close above or below will tell us next direction
UUP (Dollar Bull) Unconfirmed return to a recovery phase
FXI (China Large Cap Fund) held support levels and now over 33.20 looks better
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