April 12, 2016
Mish's Daily
By Mish Schneider
If Only Time Stood Still…
When you want it to, naturally.
Last Tuesday April 5th, my mom came to visit us for a week. With her departure home this evening, it feels like the week just flew by. Since we live 2000 miles apart, when we finally get together, I WANT time to stand still.
In the course of the week mom’s been here, time of course has not stood still. Unless you are long or short the S&P 500. Time has stood very still there, testing traders’ patience.
In one week, the SPY low posted Monday was 203.09. The high made last Wednesday, 206.49. With the average true range $2.24, the trading activity over an entire week is what it usually is on any given day.
Volume, equally scant, suggests that many traders are sitting and waiting for the current trading range to break one way or another. However, I wonder whether a range break will actually bring in volume of any substance. I would sure like to see that happen.
Since April 1st, the highest closing price in SPY is 206.92. With a couple of closes since at 206.25 and 206.42 and today’s closing price of 205.92, the breakout zone looks obvious.
Technically, the chart pattern fits a classic consolidation. Consolidation or a well-defined trading range like the one you see in the chart above, is regarded as indecision. Once the consolidation breaks one way or another, volatility should increase in the direction of the breakout/down.
As your Modern Family storyteller, I checked to see how IWM, XRT, IBB, KRE, IYT and SMH fit in with SPY’s daily chart consolidation.
The Russell 2000 certainly does. So do Semiconductors. Although not as pretty, we can say the same for Regional Banks. Above the 50 DMA but definitely in a holding pattern.
Granny Retail though, broke a consolidation pattern last week and sold off to test and today hold, the 50 DMA.
Similarly, to Granny, Transportation fell from recent highs, sitting now under the 200 DMA. Biotechnology has a whole other chart pattern going on-a possible bull flag. Once Bios took out 270, it broke out of a decent consolidation pattern. Now, with a retracement back to the 270 area, we wait once again for its next move.
My plan is to watch the Family for action-and that means volume. For now, the only member with action is Granny. Retail has had 4 days of better than average daily volume while the others have had way under the average. Granny shook out longs. She may have attracted new ones today. Wait another day for follow-through.
“Time Waits for No Man” or the complacent Trader.
S&P 500 (SPY) Broken record: 201.50 support. 204 pivotal. 207.14 point to clear
Russell 2000 (IWM) 110.50-108 trading range to break either way
Dow (DIA) 177.88 the point to clear with 174 closest support
Nasdaq (QQQ) 108.00-110 the stubborn trading range.
XLF (Financials) 21.70 the 50 DMA. Over 22.50 looks better
KRE (Regional Banks) 38.50-the real breakout zone
SMH (Semiconductors) Sideways which typically is better for continuation of the current trend when/if breaks out of consolidation
IYT (Transportation) Now it has to regain the 200 DMA at 140.02 if good
IBB (Biotechnology) Held The 10 DMA is at 269.75. Over 279.50 looks good
XRT (Retail) 43.10 support. 45.05 overhead resistance
IYR (Real Estate) New high close for year
GLD (Gold Trust) 121.40 area next resistance if holds 118
SLV (Silver) Highest close since last June
GDX (Gold Miners) 25-26 should be next target if holds 21.00
USO (US Oil Fund) 10.15 now support. Over 10.80 should continue
XOP (Oil and Gas Exploration) Big move up to the 200 DMA-would expect some digestion
UNG (US NatGas Fund) Unconfirmed Recovery Phase
TAN (Guggenheim Solar Energy) If can clear 23.14 with volume that would be interesting
UUP (Dollar Bull) 24.40 pivotal. 24.53 now a good trailing stop point if short
EEM (Emerging Markets) Confirmed Accumulation Phase
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