November 18, 2015
Mish's Daily
By Mish Schneider
Last night we had a look at the Hudson River and that the Iroquois had named it “the river that flows both ways.”
The analogy to the market is striking representing both the strong and the weak. The River’s reputation as difficult and dangerous to navigate gives us a tangible image for the same troubles our 2015 market has delivered.
Therefore, it should come as no surprise to any of my readers when I continue this analogy after I researched which species of fish inhabit the Hudson.
For this evening, let’s focus on just the salty part of the River off of Manhattan Island and one particular fish that likes salinity.
Flounder.
Taken right from the Federal Reserve’s Open Committee Meeting (FOMC) minutes:
“A number of participants pointed to various reasons why the Committee should avoid a delay in policy firming.”
“Noted that a decision to defer policy firming could be interpreted as signaling lack of confidence in the strength of the U.S. economy or erode the Committee’s credibility.”
Flounder.
“Several participants indicated that, in the current low interest rate environment, it would be prudent for the Committee to consider options for providing additional monetary policy accommodation.”
Many will argue that a December rate-hike remains the Fed’s base case. The market action however, post FOMC minutes, keeps Flounder as our entrée du jour.
In the market, this one-sided focus is evident with the continued run in the top NASADQ stocks. Amazon, near the recent all-time highs, is in direct contrast to the Flounder’s other, darker side Solar City.
If we look at the Modern Family, The Russell 2000s, IWM crossed back over the 50 DMA yet is swimming on its side as it ran right into resistance at the 10 DMA.
Transportation (IYT) is trying to swim more upright having cleared both the 50 and 10 DMAs. Semiconductors (SMH) have yet to clear the 200 DMA. Definitely sideways until it does.
Retail (XRT) Bearish but promising, swims laterally until it clears 44.00
Biotechnology (IBB) swims on an angle until it clears 340.00. Regional Banks (KRE) may shed its Flounder status completely and become a Bass (fresh water), especially if it continues the move over 45.21
The Commodity Index Tracking Fund (DBC) may have moved out of deep water and swam off the bottom of the river. After making a new 2015 low early in the day, it ended on the intraday highs with better than average volume.
Oil and Gold went green with gold miners gaining a respectable 3.29% on the day.
Cotton, Live Cattle, and Cocoa closed up with Corn stabilizing ending the day unchanged.
We will continue to watch for DBC’s reappearance in shoal waters as the winter draws closer.
So, what’s it gonna be Fed? Flounder for breakfast, lunch and dinner? Inquiring swing traders wanna know!
S&P 500 (SPY) Been here before. IN fact just 2 weeks before. 213 big resistance and now 207 big support
Russell 2000 (IWM) Unconfirmed phase change back to recovery with 114.75 pivotal, and 116.76 overhead resistance
Dow (DIA) Until we see the Terror at 18k resolve, this looks like a good rally to overhead resistance
Nasdaq (QQQ) 112.80 pivotal. 110 support and over 115.47 takes it to new highs
XLF (Financials) If holds 24.25 good and must clear 24.97
KRE (Regional Banks) 44.80 pivotal 45.21 good to clear with 46 even better
SMH (Semiconductors) A move over 54.22 is best
IYT (Transportation) 145.30 pivotal and 150 the big overhead resistance
IBB (Biotechnology) 340 resistance, 329 pivotal and 349 big guns 200 DMA
XRT (Retail) Maybe a great double bottom. Need more evidence of that
ITB (US Home Construction) Finally closed over 27.70. Will want to see another day to confirm
GLD (Gold Trust) Inside day off of the new 2015 lows
SLV (Silver) Holding up better than gold.
GDX (Gold Miners) Also holding up better than gold with a possible reversal bottom
USO (US Oil Fund) Likes 13.00 so unless it takes out 12.81 would not be short
XOP (Oil and Gas Exploration) It’s still about 40.00
TAN (Guggenheim Solar Energy) Inside day and has to clear away form 26.00
TLT (iShares 20+ Year Treasuries) Cleared 120 which keeps Flounder on the menu
UUP (Dollar Bull) 2 doji days in a row-paused and ready
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