Frying an Already Sweet Market

May 8, 2017

Mish's Daily

By Mish Schneider

Aren’t Twinkies and Oreo’s tasty enough?

I mean really, does frying a Twinkie add value and taste or just gratuitous fat and calories?

After the French elections, the same question applied to Monday’s open of the U.S. stock market.

Many believed that the recent move to new highs did not taste good enough on its own.

Sunday night, lots of traders (especially pajama ones) got their glass of milk handy and waited for the opportunity to dunk their money into the fryer for a much higher market open.

Instead of an anticipated runaway gap in the S&P 500, the SPY opened weaker.

Two Modern Family members, Transportation (IYT) and Biotechnology (IBB) broke down into unconfirmed warning phases.

While NASDAQ made a new all-time high and the Dow had marginal gains, the Russell 2000 and SPY closed red.

Does rolling the sweet market in dough and then dropping it into hot oil make it taste better? Or, does it just add unnecessary health risks?

Many instruments well outperformed the indices and key market sectors.

One of my favorites, 3-D printing, also a 2017 trading pick, roared to close up over 11%.

First Solar, another 2017 pick, ended the session up nearly 2%.

Conversely, many instruments underperformed as well.

Fox, a short pick for 2017, closed down almost 2%. IBM lost another 1.32%.

Certain Commodities rebounded, particularly the softs and oil. That helped DBA, the ETF of the Power Shares Agriculture Fund, gain ½%.

I get that the market has set up a food truck that many would find hard to resist.

However, is the Modern Family already feeling the impact of too much cholesterol?

Furthermore, are the FANG buyers risking cavities from all that sugar?

Happily, at the market’s 2017 carnival, stock pickers can bypass Fried Twinkies and opt for sharing some relatively benign cotton candy instead.

If Europe can continue its course toward improving economic growth, the opportunity to find bottoming patterns on instruments that will benefit remain. And, with a lot less risk.

So carnival lovers, allow me to be your Barker.

Step right up and enjoy the rides. Caveat Emptor on the fried stuff.

S&P 500 (SPY) 239-240 resistance could turn into a launchpad if all goes well. 237.70 key support

Russell 2000 (IWM) 140 pivotal. 141.50 to clear and 136.70 to hold

Dow (DIA) Resistance at 210-212. 207.66 support

Nasdaq (QQQ) New-high close

KRE (Regional Banks) Inside day. If clears 55.40 better. 53.68 should hold if good

SMH (Semiconductors) 80.00 super pivotal. Through 81 new highs

IYT (Transportation) Unconfirmed warning phase. 161.50 support and through 166 much better

IBB (Biotechnology) Unconfirmed warning phase.

XRT (Retail) 43.80 the 200 DMA and 42.40 key support

IYR (Real Estate) This sector does not look like it’s at the same party