Cock-a-Doodle-Do or Die?

January 23, 2017

Mish's Daily

By Mish Schneider


mdaily20170124

Photo by Kerry Alphabet

Each year, I have researched both the Chinese New Year symbolic animal and its associated element to help define the personality of the upcoming market and trading.

Last year, we had the monkey-a trickster through and through.

This Saturday marks the beginning of the Year of the Rooster, also known as the Year of the Cock and the Chicken. Furthermore, this is the year of the fire rooster.

Fire roosters are confident. They are guided by instinct. They must resist the urge to overthink or they might lose sight of the overall picture.

Roosters are also exhibitionists and attract crowds. In 2017, astrologists warn fire roosters to do more and speak less.

Add that all up and this year’s market could very well be one where it performs flamboyantly, seeking trader’s attention. Traders who pay attention, should make like a rooster and not overthink the details.

However, traders should also heed the warning to watch for signs of too much talk and not enough action.

How will we know the difference?

According to Feng Shui master Raymond Lo:

“Regarding the economy, the fire element is often the driving force behind the stock market.  As such, fire year often generates optimism and drives up the stock market.”

To help us gauge if the optimism is either lasting or fleeting, we can rely on a few classic indicators. For instance, the trading parameters for the January 6-month calendar ranges become a statistically reliable way to check the pulse.

Case in point, the Russell 2000’s January 6-month calendar range low is 133.59. Once IWM initially broke that level intraday, the Rooster market lost some of its audience attention.

Since our flamboyant and optimistic fire Rooster lives to remain the center of attention, IWM closed back above that point.

On that note, I have observed that in the last several months, intraday swings are fun for day traders. For swing traders, intraday movements can turn out frustrating. Best then, to focus on the big picture or the closing price levels.

Nevertheless, the big picture is also the sum of several parts (or in our case indicators.) Although our attention-seeking Rooster spared the Russell’s in calendar ranges, IWM did enter an unconfirmed warning phase. (First close under the 50 daily moving average since October. Needs a second close beneath to confirm)

It seems that the most challenging part of trading in 2017 will be knowing when to focus on the details and when to look at the big picture.

In rooster terms that translates to knowing when to give serious attention to the market cuckolding and when to determine that the cuckolding is more talk than action.

This is the first in a series this week on the Chinese New Year and the takeaway metaphors for the stock market.

S&P 500 (SPY) 226.00 pivotal support, then 224.50 and above 228.34 the high better.

Russell 2000 (IWM) 135.50-136 pivotal Resistance. 133.59 pivotal support on a closing basis. Then 132

Dow (DIA) 197.40 pivotal support. Then 195.25. Through 198.50 better

Nasdaq (QQQ) 122.50 support to hold

KRE (Regional Banks) 53.72 to defend. 55.10 point to clear

SMH (Semiconductors) 72.60 pivotal area. 74.00 resistance to close above.

IYT (Transportation) 166 pivotal area. 163.25 support

IBB (Biotechnology) Confirmed distribution phase plus Death Cross on the weekly chart

XRT (Retail) 43.90 pivotal resistance

IYR (Real Estate) A close this week over 78.25 would be interesting

GLD (Gold Trust) Must clear 116 to keep going

SLV (Silver) 16.00 pivotal support 16.50 resistance

GDX (Gold Miners) 23.00 pivotal area. 24.10 resistance

OIH (Oil Service Holders) 33.00 the 50 DMA support

TAN (Solar Energy) 18.00 key

TLT (iShares 20+ Year Treasuries) 120.25-119.50 is the support this rally took off from. If holds has legs, if not, expect to see TBTs hold over 40.00.

UUP (Dollar Bull) 25.80 support

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