Dull The Edge That Demonizes; Sharpen The One That Urges Us To Good Acts

February 19, 2015

Mish's Daily

By Mish Schneider

War, murder, music, art. We would have none without metaphor.

By Robert Sapolsky

Sheep will graze for an average of seven hours per day, mostly in the hours around dawn and in the late afternoon, near sunset. Sheep are very selective in their grazing habits. They eat grass, clover, forbs, and other pasture plants, but they especially love forbs. If you want to maintain good grass growth, you have to rotate pastures.

Goats have evolved with a greater ability to browse and to digest lower quality herbage than sheep. They are actually called “browsers,” which is a fancy word for picky eaters. They like variety yet unlike sheep, do not eat grass preferring weeds, bushes, leaves and if nothing else is around, will nibble on wood, wicker and your hair.

Since Metaphors R Us, let me put that in market terms after day one of the Chinese New Year or the Year of the Sheep/Goat.

The S&P 500 grazed for the full 6 ½ hours of the market’s session. To keep SPY well fed, the pasture (sectors and groups) rotated into certain tech stocks, forbs if you will, particularly cyber security (Fire eye) and social media instruments (Facebook).

The Dow “browsed” like a goat, with the December high eluding our picky eater. DIA dined mainly on weeds such as American Express, AT&T and Exxon Mobile, but did at least find some good nibbling on IBM, Boeing, washing it down with Coca-Cola.

Main feature for both the goat and sheep (SPY and DIA) is their brethren NASDAQ and the Russell 2000s kept the wolves (Volatility Index) at bay.

We want our sheep to grow an abundant coat of wool and our goats to produce a healthier dose of milk. For that, we need hay, which is like candy to both animals. For the market’s health and happiness, candy looks like solid earnings reports as we remain in the thick of earnings season, Fed policy reflecting a dovish stance yet with room for the rates to rise, the Greeks baring gifts, Cowboy Putin resting in the stable and Super-dude Apple trading at $130.00.

S&P 500 (SPY) 4 days of consolidation near the highs-looking for forbs.

Russell 2000 (IWM) Another New high close

Dow (DIA) In need of hay to clear 180.71

Nasdaq (QQQ) Another New high close

XLF (Financials) 24.90 the January Calendar Range high, and needs to clear first 24.37 and hold 24.15 the 50 DMA support.

KRE (Regional Banks) Back through 40.12 so much better

SMH (Semiconductors) 56.64 resistance from December

IYT (Transportation) 165.17 January high

IBB (Biotechnology) New high close

XRT (Retail) Taking its time but is consolidating near the highs

IYR (Real Estate) Broke the 50 DMA for an unconfirmed warning phase

GLD (Gold Trust) Action suggests a move to 112 unless it clears 116.90