Checking the Market's Vital Signs

November 22, 2015

Mish's Daily

By Mish Schneider

A week ago, the stock market closed with a world in mourning after 2 weeks of horrific terrorist attacks.

A week later, and with a world still very much on edge especially after the most recent attack in Mali, the stock market surfaced as a ray of hope.

I do a lot of thinking about how my Modern Family fares. Regardless of how well certain stocks are doing, I’m always on the lookout for signs of post-traumatic stress.

Here’s why. Three-in-Five S&P 500 Stocks are down at least 10%! Moreover, 23% of the index’s components, 135 stocks, have fallen into bear-market territory.

Is the Family feeling optimistic and robust? Are they suffering from Munchausen Syndrome or heading for a stroke? Maybe they are on the “Road to Wellville?”

If I think of myself as a Concierge Doctor for the Family, my diagnoses and prescriptions vary for each member.

Many of my Modern Family expressed their hopefulness (and we can speculate all day long why the market was hopeful) by rallying. Yet most rallied to overhead resistance and not necessarily with enough enthusiasm to be as hopeful when this week begins.

For example, Biotechnology, our dear Big Bro, ran to but could not clear 340.00. With a weak Recovery Phase in place, and with an inside day Friday (a trading range inside the trading range of the day prior), we should have a pretty good idea how this week will look by noting where IBB winds up at the close of Monday’s session. Diagnosis: Pernicious Anemia with a chance of Recovery if given enough B-12.

Although not a family member, the Federal Reserve’s role impacts the family and is one which is tiresome trying to predict. Furthermore, how the Treasury Bonds (TLT) closed last week leaves us equally unclear.
Diagnosis: Arrhythmia. Continue to monitor symptoms with the possibility of recommending a pace maker.

Going in order of my invented age, Russell 2000s or Granddad, has not led as I would have wanted him to. Instead, IWM traded within a range between the 50 (114.80 area) and the 100 DMA (117.33 level).
Diagnosis: Hypertension which could improve if he sheds a few pounds and gets some exercise. (Like hurdling over the 100 DMA!)

Next in line-Granny Retail (XRT). Still in a bear phase, she left us with a possible double bottom from the August and now November lows. I’m guessing the huge amount of call buying last week is in anticipation of an abundant Black Friday.
Diagnosis: Osteoporosis which could mend with proper weight bearing exercises such as lugging around lots of heavy shopping bags filled with mall-bought goods.

Besides Big Bro, next oldest sib is Transportation (IYT). Trannies also left us hanging in the balance. 150.96 is the 200 DMA. A bit overbought now, the question will be if IYT begins this week pulling back, can it hold 147? If so, I see the consolidation solid but not amazing. Yet, this too should be impacted by holiday shopping sales.
Diagnosis: Constipation which can dissipate by eating enough bran cereal and prunes. Using a laxative is not out of the question.

Next we have Semiconductors (SMH). Semis definitely ran into resistance as it also cleared the 200 DMA.
Diagnosis: Macular Degeneration which can alleviate with laser therapy and vision aids. Needs to increase long sightedness and move further away from the 200 DMA.

Last but definitely not least Regional Banks (KRE), the Family’s beloved Prodigal Son. As the sole inhabitant of a Bullish Phase, his job is to continue to pull his weight by not selling off and closing above 45.23 area.
Diagnosis: Sciatica which should alleviate with a visit to the Chiropractor or Acupuncturist. Ibuprofen every 6 hours will reduce inflammation.

Dr. Mish ends with this thought: “With friends like you, who needs enemas?” Road to Wellville –Book by T. Coraghessan Boyle. Quote by Alan Parker Screenwriter

S&P 500 (SPY) 213 big resistance and 206.50 big support

Russell 2000 (IWM) See above

Dow (DIA) Until we see the Terror at 18k resolve, this looks like a good rally to overhead resistance. 175 is the 65-week moving average to defend

Nasdaq (QQQ) 112.65 pivotal and over 115.47 takes it to new highs

XLF (Financials) If holds 24.25 good and must clear 24.97

KRE (Regional Banks) 44.80 pivotal 45.21 good to clear with 46 even better

SMH (Semiconductors) Now 56.36 is the biggest area to clear if rally is to continue with 54.22 the place to hold

IYT (Transportation) 145.45 pivotal and 150.96 the big overhead resistance

IBB (Biotechnology) 340 resistance, 329 pivotal and 349 big guns 200 DMA

XRT (Retail) Like that this filled a gap. If this is indeed a double bottom, then it should clear and hold over 45.50

IYR (Real Estate) Resistance at 75.27 the 20O DMA

ITB (US Home Construction) 28.19 last hurdle to clear with 27.45 the place to hold

GLD (Gold Trust) A close over 104 would help a lot.

SLV (Silver) Under 13.40 trouble. Over 13.80 way better

GDX (Gold Miners) 12.92 is the reversal bottom low so this is not necessarily over yet