Cast A Sheep's Eye

May 11, 2015

Mish's Daily

By Mish Schneider

The week begins with firming rates, a decline from the top of the trading range in the Dow or DIA, though not nearly significant enough to say the falling TLTs (20 Year Treasury Long Bonds) had much to do with it, yet clearly, the rates had an impact on commodities prices.

All of my Modern Family members acted well. Regional Banks (KRE) love higher rates, even closing on a new 2015 highs. The Russell 2000s (IWM) were the green representative of the 4 indices, but really, Grandpa-not enough to clear the 50 DMA.

Retail (XRT) Granny did okay. Over 100 will get her to the mall. Where she shops will be more determined by the plethora of retail chains reporting earnings this week.

Semiconductors and Biotechnology chopped around with nothing ventured, nothing gained-forgive me-recycling titles. Transportation (IYT) emerged with more identity crises. Do Trannies want to break down under the 200 DMA back to recent lows or clear the 50 DMA and join the siblings in their bullish phases?

Another day watching the family for our best macro picture “tell” kept us from over or even underreacting to the overall low volume trading range action.

I will venture to say that the day can be interpreted as positive-it’s the 2015 version of positive though-the one where we witness the habits of sheep, which can be pretty boring but henceforth predictable.

Like watching ticks on the radar screen and hoping the market goes up or down, watching sheep and imagining them jumping a fence or heading to slaughter can be more anxiety provoking since it’s not something they do unless you don’t want them to. That’s the nature of the current trading range. Neither the bulls nor the bears who are actively counting sheep, are getting what they want when they want it.

S&P 500 (SPY) 212.48 is the high of 2015. Trading range alive and well with 210 next support.

Russell 2000 (IWM) 123.87 is the 50 DMA-has to clear or market will continue to stall

Dow (DIA) 182.68 the 2015 high or again, like SPY trading range with support at 179.90

Nasdaq (QQQ) Bears will see a bearish engulfing pattern. Bulls will see a marginal drop into support.

XLF (Financials) So typical of 2015. Makes a new high then retreats from it

KRE (Regional Banks) For us, best news of the day-over 41.50, new 2015 closing high but certainly not a new high-still needs to happen

SMH (Semiconductors) Dull doji day but holding the bullish phase

IYT (Transportation) 156.40 now pivotal

IBB (Biotechnology) 350 pivotal

XRT (Retail) Inside day

IYR (Real Estate) One that does not like the firmer rates.

ITB (US Home Construction) Has to clear 27.30 to be good