Did NASDAQ and Semiconductors Have A Shotgun Wedding?

October 19, 2015

Mish's Daily

By Mish Schneider

A shotgun wedding is a wedding that is arranged to avoid embarrassment due to an unplanned pregnancy.

Back in the day, the father of the pregnant daughter might resort to using coercion (like a shotgun) to ensure that the man who impregnated his daughter makes an “honest woman” out of her.

Today, a shotgun wedding is used as a general term to describe any pregnant woman who weds, even if there are no disgruntled relatives.

Over the weekend I wrote about the marriage between NASDAQ (The Farmer in the Dell) and Semiconductors (the male wife). I named the TLTs (Long 20+ Year Bonds) the cheese that stands alone, as all eyes are here.

You might be wondering how a male wife can even be pregnant. Let’s call the pregnancy a metaphor to represent a growing family, or continuing rally.

Whether you believe the FED will keep the status quo, raise rates or add liquidity, hard to imagine anyone would argue that the FED’s actions will have a huge impact on the outcome for the market.

So, if we have a husband, a pregnant wife and the cheese, why the Shotgun Wedding?

In order for Semiconductors to give birth to a healthy rally, help is required.

As SMH is part of the Modern Family, who of the immediate relations can be counted on to lend a hand?

Granddad Russell (IWM)? Perhaps. But only if IWM holds over 114 and clears 116. Granny Retail (XRT)? At this point? Doubtful as it remains below the 50 DMA. Although, as a woman, finding any excuse to shop for baby clothes, XRT is not out of the woods if Grandpa drives her to the mall.

Big Bro Biotechnology (IBB)? Hard to say. Certainly the recent rally in NASDAQ compared to the sideways action here, is not really impressive.

Prodigal Son Regional Banks (KRE)? With its recent death cross and price action just above the 50 and 200 DMAs, seems that KRE is waiting in the wings.

Trannies (IYT)? As far as I can see, another maybe.

Since the essence of a Shotgun Wedding is that it is hurriedly planned, that could explain the Modern Family’s delay on retuning their RSVP.

Bulls have to hope the Modern Family shows up. Bears have to assume if the Family stays home, the marriage between NASDAQ and Semiconductors is doomed.

Until we know which way that will go, keep your eyes on the cheese.

S&P 500 (SPY) Consolidating. A move over 204 takes it over the 65 week moving average with 202 decent support to hold

Dow (DIA) 170 pivotal with a move over 172.54 reason to think 175.50 next

Nasdaq (QQQ) 109.46 next resistance point with 107.70 level support to hold

XLF (Financials) 23.69 place to clear with 23.40 nearest support.

KRE (Regional Banks) Over 42 would be impressive and has to hold over 41.40 now

SMH (Semiconductors) 54.15 the 200 DMA to clear with 53.30 support to hold

IYT (Transportation) Inside day. When trannies get confused never a good thing. Think Dow Theory. 144 huge area to hold

IBB (Biotechnology) A close over 320 would be good. It also has to hold 308

XRT (Retail) 46.25 the 50 DMA to clear and hold

IYR (Real Estate) 76 major overhead resistance with 73.20 support

ITB (US Home Construction) A move over 27.73 clears all major daily moving averages