December 2, 2015
Mish's Daily
By Mish Schneider
I wrote most of this piece before hearing about the horrific tragedy in San Bernardino. As I have devoted so much of my life to working with people with disabilities, I am so heartbroken that it’s hard to think straight.
Therefore, please read the relatively light-hearted commentary about the market in the spirit it is meant to achieve-as one that helps you keep the machinations of the market in perspective.
Daily:
Occasionally, I feature other relatives of the Modern Family when their visits either appreciably help them out or completely wreak havoc.
For example, earlier this year, the Family visited Uncle Eddie (GREK) as the Greece default dominated the headlines. Ultimately, named after the Uncle in National Lampoon’s Vacation, GREK disrupted the road trip, but the Family made it to Wally World nevertheless.
With Christmas only a few weeks away, Cousin Catherine (whom we shall name Yellen) and Uncle Lewis (USO since he literally throws a match triggering an explosion) and her crew have arrived unannounced in the RV they are also living in. Times are bad but hopes are high.
In National Lampoon’s Christmas Vacation, Clark Griswold, who we can replace with Granddad Russell 2000s, begins to wonder why his boss has not given him his yearly bonus, which he desperately needs.
Cousin Yellen meanwhile, sees “continued growth sufficient to boost jobs and raise inflation.” She expects the increasing labor market to goose inflation rates back to 2%.
Cousin Yellen warned that the U.S. central bank could inadvertently create a recession by waiting too long to raise the interest rates.
The conundrum remains low commodity prices and a strong dollar. With the weak ISM data on Tuesday, many are already looking for recession, regardless what the Federal Reserve does.
Over the coming weeks, I will write more about the plot of Christmas Vacation and how it relates to the Modern Family. For now, let’s see how each are preparing for the holiday given the unexpected arrival of their Cousin and Uncle.
Granddad Russell 2000, is hovering around the pivotal trifecta of resistance between 118.85 and 119.50. We should have a much clearer picture by the end of this week on whether this rally is over or not.
Grandma Retail held 44.00 though has yet to clear the 50 DMA and head back into Recovery.
Prodigal Son Regional Banks could not clear 46.00. His Sciatica got worse forcing him to limp back close to the November 5th high of 44.79.
Semiconductors made a new multi-month high early on but the shock of reading the Fed’s comments along with the conflagration caused by Uncle Lewis (USO) put it under some pressure.
Big Bro Biotechnology’s has chronic Pernicious Anemia. Although, given how poorly IWM performed, it does appear the B-12 shot kept him from completely falling apart as we fear he might.
Transportation’s constipation has turned dire. Back under the 50 DMA and in an unconfirmed bear phase, Yellen’s cheerful talk of an economic Recovery has not helped the Trannies move their bowels.
Currently, TLTs (20+ Year Treasury Bonds), reflect the market’s uncertainty. Regardless of what the Fed’s next moves are, Cousin Yellen made one thing clear-they may not have the ability to ward off recession no matter what they do with the rates. Hence, Granddad IWM may not get that bonus after all.
S&P 500 (SPY) 210 pivotal with 206.60 big support
Russell 2000 (IWM) 119.36 pivotal with 117.75 support
Dow (DIA) 175.75 support with 180 the hurdle to clear
Nasdaq (QQQ) Never like to see new highs and then a failure. However, that reversal will need confirmation
XLF (Financials) If holds 24.25 good and must clear 24.97
KRE (Regional Banks) If 44.79 cannot hold looking at 43.40 support next
SMH (Semiconductors) Leading now with a possible reversal. Again, would need confirmation.
IYT (Transportation) On November 16th made a low of 142.54. If cannot get back over the 50 DMA, look there to hold
IBB (Biotechnology) Could be forming the mother of all bear flags unless it can close over 341.50
XRT (Retail) Tried the 50 DMA but couldn’t do it. Did hold the 10 DMA though
IYR (Real Estate) Broke the 200 DMA-restart-74.20 the 50 DMA
ITB (US Home Construction) If long, should be out of ½ with a trailing stop now
GLD (Gold Trust) If IYT is constipated, this has the opposite issue
SLV (Silver) Totally premature though like to think about these setups: 2015 low 8/25 13.35, today low 13.28-possible reversal pattern-definitely needs 2 confirm with a close over 13.45 on Thursday and some volume
GDX (Gold Miners) Makes the point for why we need a 2-Day confirmation on everything
USO (US Oil Fund) the 2015 low is 12.37 back in August
OIH (Oil Services) Been in a range since early October-it’s getting ready to do something-especially if clears 32
TAN (Guggenheim Solar Energy) 26.50 now support with 28.00 next level of resistance
TLT (iShares 20+ Year Treasuries) Confirmed move to a Recovery Phase. Now has the 200 DMA to clear
UUP (Dollar Bull) testing the 25.95 pivotal area
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