June 10, 2015
Mish's Daily
By Mish Schneider
Christof, Producer The Truman Show
Dome, sheep pasture, minivan-whichever one chooses to use as a metaphor, the market’s trading range quite frankly, is not only historical but also incredible!
If we stick to the relationship between the Federal Reserve, or at the very least, the interest rates and the overall market represented by the Granddaddy Russell 2000s as our Producer and Truman of an artificial world under the dome, Wednesday’s impressive action indicates the rising rate possibility as good news.
Rising rates and falling US Dollar though, is yet another one of those anomalies that could keep our Truman suspicious of the Producers, hence, preventing the Russell’s from making new 2015 highs.
For us spectators and/or participants of or in the dome, it was a relief to see that everyone in the Modern Family found some joy.
Regional Banks roared again to new highs-affirming its role as best ally to the Russell’s. Transportation underperformed. It seems that one way to break out of the dome for the others will be if Trannies at the very least, close out this week back over 152.
Semiconductors popped back over the 50 DMA for a return, unconfirmed until a second day close, to a Bullish Phase. Biotechnology, performed well and now needs to clear and close over 368 for market confidence.
Grandma Retail tried to clear the 50 DMA and could not. With this sector a huge component of the US GDP, the case for continuation of the current trading range increases. After all, way more than Transportation, (sorry Dow Theorists), this sector measures the state or at least the perceived state of the economy perhaps like none other. Granny has to bust out over 100 or fail miserably under 96.00.
The Bottom Line
Market is absorbing and even accepting an interest rate rise. Investors in hard and soft commodities have to be a bit baffled here-higher rates-bad-lower dollar-good. That leaves supply/demand, inflation/deflation and how convincing the global (and US) economic recovery is which of course, then trickles down to consumer confidence.
S&P 500 (SPY) Unconfirmed return to a bullish phase which means 210.24 the 50 DMA pivotal
Russell 2000 (IWM) 127 is the top of the range. Support now 124.37 the 50 DMA
Dow (DIA) Could not clear the 50 DMA on a closing basis. Dow, interestingly enough, closed right at 18,000-oh the Terror!
Nasdaq (QQQ) Unconfirmed return to a bullish phase. 108.50 the 50 DMA pivotal now. Over 110 better still
XLF (Financials) New 2015 highs and looks good for more
KRE (Regional Banks) Maybe approaching overbought. Deserves a standing O though!
SMH (Semiconductors) Did its job clearing 56.71 the 50 DMA-now lets see if it can stick.
IBB (Biotechnology) Over 368 will help.
XRT (Retail) Inside day. Over 100 will save her. Under 96 might kill her
IYR (Real Estate) Oversold bounce or a decision that higher rates are not so bad if everyone else is okay with it
GLD (Gold Trust) A close over 114 will get us interested
USO (US Oil Fund) Climbed near resistance so will see if it has gusto to clear 21.50 soon enough
TAN (Guggenheim Solar Energy) Held 40.00
TLT (iShares 20+ Year Treasuries) New 2015 low with support at 110
EEM (Emerging Markets) Possible reversal in the works
DBC (DB Commodity Index) Has to close over 18.00
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