Ewe Keep Me Hanging On

January 23, 2015

Mish's Daily

By Mish Schneider

In the persistent journey of the Fab Four and their January Calendar Ranges, post-Draghi, the week ended with only a brief visit by NASDAQ to the top of the January range. However, even though NASDAQ got high with the help of its friends, Amazon, Apple, Google, and Netflix, alas, the high was ephemeral as the QQQs could not close well enough for the range break to count for that much.

After all, the S&P 500, Dow and Russell 2000s never came close to the top of their January range. Question going into this week will be can NASDAQ hang on and lead the charge?

One positive is the confirmed phase changes in SPY, QQQs and IWM to Bullish making a closer line in the sand of support from the ultimate support at the January lows to the levels of the 50 Daily Moving Averages (see notes below.) The Dow closed below the 50 DMA and back into an unconfirmed warning phase.

That tells me to watch for either SPY, IWM failing those 50 DMAs thereby dragging NASDAQ along with them or, for SPY, IWM and DIA to begin this week holding the 50 DMAs with NASDAQ on lead guitar, clearing 104.20 once and for all, striking up the rest of the band!

Speaking of Calendar Ranges, the interest rates or long bonds (TLTS), came real close to the top of its range on Friday. 135.03 is the January Calendar Range high. Simply put, we use the first 10 trading days of January, look at the intraday high and low that was put in place, and then weigh significance on which way that range breaks as statistically (historically) in favor of a decent follow through over the next few weeks to months. Essentially, a break above has statistically revealed follow through for a rally, conversely, a break below for further correction.

Noteworthy, Oil (USO), closed below its January Calendar Range.

In years past, I have studied these ranges, but it seems that this year in particular, the range has some real legs!

I began the year speculating that we might be range bound, but now I ask for how long? We traders have a real roadmap to follow. One that requires a lot of patience as the indices travel in between the highs and lows.

The whole market thus far could be also in tandem with my 2015 Chinese New Year “sheep” theory. Think of sheep grazing peacefully, occasionally getting sheared, sometimes dodging wolves, but typically hanging out with the herd.

S&P 500 (SPY) confirmed Bullish Phase with an inside day 204.77 the 50 DMA. January high 206.88

Russell 2000 (IWM) confirmed Bullish Phase 117.24 the 50 DMA to defend. January high 120.56 far

Dow (DIA) Unconfirmed Warning Phase with an inside day 175.82 some support. 176.83 the 50 DMA to get back above. January high 179.23

Nasdaq (QQQ) confirmed Bullish Phase 103.32 the 50 DMA to defend. Posting as closing above 104.20 (104.26). Big eyes here.

XLF (Financials) Held 23.75. Still far from the 50 DMA at 24.30

SMH (Semiconductors) 55.16 is the January Calendar Range high-now pivotal as we start the week.

IBB (Biotechnology) Still strong like bull

XRT (Retail) Confirmed the bullish phase

IYR (Real Estate) Closed slightly down from the new highs

ITB (US Home Construction) If the market turns back down, I would go here first for shorts especially after Friday’s action

GLD (Gold Trust) I’d say more resting

USO (US Oil Fund) Time to fill up the car