Did the Prodigal Son KRE, Do Enough?

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With all the horror globally, I was pleasantly surprised to see the Stock Market begin this week reflecting the world’s solidarity and dare I say, optimism.

It is in the spirit of this solidarity, I was heartened that the latest crises around the world have crystallized all to be done for the sake of humanity.

Furthermore, perhaps a happy offshoot, is what a united world can do to improve global economic growth.

Now, let’s hope the Federal Reserve is biting too and will relent on its talk of a December rate hike, pushing projection more towards next March.

On Sunday I wrote “The future for the Modern Family still might rest with KRE.” In a bullish phase, although hurdles remain for this to recapture the old 2015 high (45.62), Monday was a step in the right direction.

Naturally, we need the others to hang in there as well. Big Brother Biotechnology helped by crossing back over the 50 DMA. Granny Retail could well have put in a reversal from her recent bleed by posting a new 60 plus day low and then rallying with way better than average volume.

Transportation (IYT), in a Bearish phase, has more work to do. The Russell 2000s or Granddad IWM, needs a second close over 114.78.

Semiconductors (SMH), second best in phase to KRE, cleared Friday’s high, with major resistance overhead at 54.22 the 200 Daily Moving Average.

All in all, a good showing. Though, the proof will be for most, in the 50 and 200 Daily Moving Average’s pudding.

Commodities

Living in reality, although the rally on Monday helped calmed jitters, I will continue to focus on the soft commodities primarily, with an eye towards oil, energy and the metals.

I found out this weekend that my stubborn perusal (along with occasional cash commitments) to commodities has some fine company.

Jim Rogers, international investor, recently told Barron’s:

1. “I would probably start to buy oil in a small way, energy in a small way.”
2. “I own gold, but I wouldn’t buy gold at the moment. I still expect a great opportunity to buy gold in the next year or two or three. I guess I would buy agriculture with both feet, energy with a toe and watch the others.”
3. “I would certainly put a fair amount of money in agriculture. It could be 10% of a portfolio.”

   I doubt Mr. Rogers knows who I am, but I can tell you this-if he read my dailies, he would know that I have (for some time now) and will continue (for some time) to be vocal about these areas for investment.

“I now understand that my welfare is only possible if I acknowledge my unity with all the people of the world without exception.” –Leo Tolstoy

S&P 500 (SPY) 203.50 area pivotal 206.50 resistance. Good move but not an accumulation day in volume

Russell 2000 (IWM) 114.75 the 5 DMA and pivotal. Would like to see a move to 117, but first 113 has to hold this week

Dow (DIA) Resistance 175 and better at the 200 DMA at 175.80. Again, no real volume but at least a bullish engulfing day.

Nasdaq (QQQ) 112.10 overhead resistance. 109.80 area support to hold

Volatility Index (VIX) Met the resistance area at 22.00 head on and retreated big time

XLF (Financials) Never tested 23.46 the 50 DMA and now really has to clear 24.20 the 200 DMA to be good

KRE (Regional Banks) 44.75 resistance with support now at 42.90

SMH (Semiconductors) A move over 54.22 is best

IYT (Transportation) Over 145.10 will be a lot better

IBB (Biotechnology) Stopped at 317, the ugly line in the sand. Needs a second push over 325 the 50 DMA

XRT (Retail) Met 4 of the 5 criteria for a possible one-day reversal from the lows. What’s missing? An expanded range.

IYR (Real Estate) 73.50 resistance to clear

ITB (US Home Construction) 26.50 keeps this alive. A move over 27.70 is a close your eyes and follow trade

GLD (Gold Trust) The action was not compelling enough to take a position either way. 103.43 my bottom line support to hold

GDX (Gold Miners) Over 14.02 good trade to probe

USO (US Oil Fund) Met all the criteria for a reversal pattern. Should hold Monday’s low 12.81 max risk

XLE (Energy) Loved the move but didn’t have great volume

XOP (Oil and Gas Exploration) Really, over 40 is the spot to get excited about

UNG (US NatGas Fund) Holding the one day pattern reversal low from 9.35. Needs to close over 10.00 not just trade there

TAN (Guggenheim Solar Energy) Had some volume. Over 30 starts to get more interesting

TLT (iShares 20+ Year Treasuries) Could not clear 120 so now looks a bit heavy

UUP (Dollar Bull) The Greenback came back-big close on big volume

SGG (Sugar) Over 35.10 should continue higher