Crisp Images, Perfect Alignment, Exquisite Setups

January 12, 2017

Mish's Daily

By Mish Schneider


Photo by JR Lancaster

Tonight, the first full moon of 2017, called the “Full Wolf Moon,” will rise. Named as such by Native American tribes, the wolf packs howled hungrily outside the villages during cold January.

Today in the market, the bull packs howled hungrily.

Just as the market headed down to test frosty support levels, the bulls found fresh kill to eat.

In the 6-month January Calendar Range countdown, we have two more trading days left to establish the trading range.

When you assess the January 6-month Calendar range, for those traders who have stayed aside or kept their existing portfolios light, that makes next Wednesday an excellent day to plan trades.

Note how tidily the moon sits upon the cairn in the photo above. Will tonight’s full moon sit as tidily on the market’s cairn of support levels?

The January trading range remained intact in three of the Modern Family members.

Transportation, Semiconductors and Biotechnology have the identical range listed yesterday. Unscathed by today’s initial sell-off, that makes for some tidy trading in the days ahead.

SMH: 71.32-73.38

IYT: 161.58-165.51

IBB: 266.72-287.17

Unless the highs or lows break by the close next Tuesday, these ranges offer manageable risk/reward ratios.

In the other 3 Modern Family members, slight adjustments were made on the low end of the range.

The Russell 2000 (IWM) made a new January low at 133.59 before recovering. 137.96 is still the high.

Regional Banks (KRE) posted a marginally new January low at 54.58. The 56.73 high remains the number to breakout from.

And Retail (XRT) ticked down to 43.51 after its prior low at 43.63. The high to clear by Tuesday is 45.34.

Calendar Ranges work even better when accompanied by another one of my favorite technical signals-the 60 Day + reversal pattern.

Today, the ultrashort 20+ year Treasury Bond ETF, (TBT) not only possibly made a new January Calendar Range low, but also a potential reversal pattern low.

Should that work out, buying against the low of the range offers even less risk and more reward than waiting for the top of the range to clear.

My friend JR, who took that photo, has the skill and the tools to crisply capture an image such as the one above. He has the patience to sit and wait for the perfect alignment before he shoots.

Our camera is the tool for viewing trading ranges. Our patience to wait for perfect alignment should yield an equally exquisite setup.

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

Russell 2000 (IWM) 133.50 support 135.50-136 pivotal.  Over 138 better

Dow (DIA) 200 to clear 197.50 should hold now if good.

Nasdaq (QQQ) 121.00 support

KRE (Regional Banks) 55.90 pivotal, 56.50 point to clear and 54.25 support that should hold

SMH (Semiconductors) 72.35 level pivotal support. 74.00 resistance to clear. 70.75 the 50 DMA

IYT (Transportation) Support 163.50. 168 resistance

IBB (Biotechnology) Held the moving averages. 274 support to hold

XRT (Retail) Will consider a weekly close under 43.76 weak

IYR (Real Estate) If this breaks a trendline around 75.70 that would not be good

GLD (Gold Trust) I’m still more neutral here

SLV (Silver) Must clear 16.00 now to be good

GDX (Gold Miners) Needs to maintain a weekly close over 22.35

USO (US Oil Fund) 12.00 is big resistance and 10.80 big support

TAN (Solar Energy) Not inspired to buy until a phase change

TLT (iShares 20+ Year Treasuries) As mentioned above, TBTs might have reversed-must clear/close over 39.04

UUP (Dollar Bull) Holding the 50 DMA

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