July 20, 2016
By Mish Schneider
The type of full moon that occurred last night, July 19th is commonly known as the Full Buck Moon. It symbolizes the time of the year when a male deer or buck, starts to grow new antlers.
The Modern Family’s Big Brother, Biotechnology (IBB) finally bucked up and got some antlers.
No surprise the Russell 2000’s already existing antlers grew bigger. IWM made a new high close for 2016.
That’s how the Modern Family works. Someone takes the lead. And if the coast is clear, the others follow in kind.
This year, the ultimate lead goes to Sister Semiconductors. En fuego since post Brexit, SMH had the runaway gap last week and continues her ascent with fervor.
I would be remiss however, if I didn’t mention that the division among the family prevails, even with Biotechnology growing a pair.
Exciting as today’s rally was, now that IBB has something to show, there is concern that those antlers could attract hunters.
Last night I presented a photo of petroglyphs depicting hunters in pursuit of herds of antelopes and bison. Antelopes have antlers. Bisons have horns. Antlers and horns attract attention.
One could argue that Biotechnology as last to join the herd, makes it the most vulnerable. Heading into the last two sessions of the week, I will watch to see if IBB gains momentum thus strengthening the rest of the herd.
Looking at the Dow, the follow through from the runaway gap seems certain that it will escape the hunter’s bow. The Dow though, is not in the Family.
As our Granddad, the Russell 2000 even with the new 2016 high close, sits inside the consolidation pattern that began over a week ago. IWM must continue to follow in kind and break above the resistance levels. Remember the question on whether or not IWM is an old geyser or an old geezer? We should know the answer soon enough.
Ironically, now that Big Brother joins in, Regional Banks KRE the Prodigal Son, sits out. Although in a better phase than IBB, KRE has to clear the 50 and 200 day moving averages with gusto. If not, KRE becomes easy prey.
At the risk of repetition, a united family instills confidence whereas a divided one makes for difficult trading and volatile moves.
Even with Transportation up, IYT has not cleared last week’s highs. Granny Retail looks a whole lot better than she did before. However, Granny can’t quit now. XRT cleared the July 6-month calendar range high. That means we will be watching 44.43 to hold.
If the full moon inspired our Biotech buck to start growing antlers, in order to reach maturity, they must have no interruption. It takes four months for antlers to fully develop. It takes one proficient hunter to take that buck down.
S&P 500 (SPY) Made a new all-time high. Not much to be concerned about unless it breaks under 214.70
Russell 2000 (IWM) Needs to clear 120.44 for more upside. Consolidation pattern persists. Under 118.83 expect to see 117.
Dow (DIA) 187 a target and 183.70 must hold
Nasdaq (QQQ) Strong day with 115 next resistance
XLF (Financials) 23.60 pivotal and where it closed slightly above. If clears could see 23.80 or higher. 23.20 first line of support
KRE (Regional Banks) Holding 40.00 barely.
SMH (Semiconductors) A thing of beauty our sister.
IYT (Transportation) 143 pivotal. 146.07 the 2016 high. Another area of concern
IBB (Biotechnology) 280 looks possible. 271 a really good place to hold
XRT (Retail) I worry that this is so far from 2016 highs that it may never get there before the stronger sectors peter out
IYR (Real Estate) The strong silent type of a rally
ITB (US Home Construction) Consolidating
GLD (Gold Trust) Sitting on chart support. 125 pivotal. Back over 126.05 would buy more
SLV (Silver) 18.28 the low of the gap higher from July 1st.
GDX (Gold Miners) 27.75 fills the gap and might send this back down to 25.00
USO (US Oil Fund) I would get interested over 10.88
OIH (Oil Services) Held the 50 DMA. Still on watch
TAN (Guggenheim Solar Energy) Like to see this clear 22. 21.20 support
TLT (iShares 20+ Year Treasuries) Still has a small runaway gap in place. That is key-better over 140 but under 137.56 fails
UUP (Dollar Bull) If it ends the week over 25.06 most likely will see even higher
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