Grand (Papa) Was A Rollin Stone

May 24, 2015

Mish's Daily

By Mish Schneider

Sung by The Temptations 1972

Director of Trading Education and Reasearch at MarketGauge.com

www.marketgauge.com

Partner Wizard IP LLC, MarketGauge Asset Managemet Company, LLC

mish@marketgauge.com

We are almost into June, or at least close enough to remember one of my favorite bits by Chris Rock concerning Father’s Day. To paraphrase, he talks about how everybody takes Daddy for granted while going on and on about Momma. Whereas there are tons of songs memorializing Mamas, there’s only one song about Daddies-“Papa Was a Rollin Stone.”

Therefore, well ahead of Father’s Day, this weekend’s daily goes out to you, our Granddaddy the Russell 2000s (IWM).

Are Russell’s a Rolling Stone?

120-121.00 area is truly where Grandpa has to hang his hat and call his home in order to stay alive. That is the point that cleared not only the six month calendar range high in January (good until July 1st when the calendar range resets), but also the point it broke out of a yearlong consolidation from 2014.

The Russell’s though, are sure taking their sweet time proving that it will clear the April highs let along continue the upward trend after the breakout as we near the end of May. And since I have proclaimed IWM as the Granddad in our Modern Family, logic stands to reason that even with the other members of the family hanging out much closer to the high end of the 2015 trading range, IWM could just be talking “about saving souls and all the time reaching.”

If IWM Fails the Family, What Happens?

Chris Rock also says that “If the kids call their Grandmamma Mommy and their Mommy Pam, they’re going to jail.” Looking at Grandma Retail (XRT), she’s feeling the strain. Although ending the week with an inside day (traded within the range of Thursday’s price action), XRT has yet to clear the 50 DMA and return to a Bullish Phase. A move over the 50 DMA would help a lot.

Semiconductors (SMH) and Biotechnology (IBB) are two much needed (and appreciated) bright spots. As long as they both hold up, Grandpa IWM wont’ be “sent to an early grave.”

Regional Banks (KRE) stalled but held the fast moving average. 41.50 is now the near-term support and if the week begins with this under 42.15, we might see that tested. Over 42.60 will also help a lot.

Transportation (IYT) is taking all the heat. 151.25 area is where major support sits on the weekly chart. Friday’s action tested its resolve, but at least IYT held that support and climbed its way back over 152, the low from April. Over 154 and I imagine everyone in the family will purr. A breakdown of the weekly support in IYT, and even if Grandpa IWM “begs, borrows and steals to pay his bills”, if he dies too, all he’ll leave them is alone.

S&P 500 (SPY) 2 Inside days. 212 first support then 209.50. Over 213.78 new highs

Russell 2000 (IWM) 124.23 the 50 DMA then 124.95 the fast moving average-key areas to hold as the week begin or trouble

Dow (DIA) 182 is nearest support. Then, 180 stronger support. Over 183.00 good

Nasdaq (QQQ) Nearly to the top-111.16. Also could be forming a double top if that area doesn’t clear and the rest of the family weakens

XLF (Financials) 24.78 support and a start of 24.90 good

KRE (Regional Banks) Those 2 big volume days that looked like a possible top last week, might just be one if this does not get back over 42.60

SMH (Semiconductors) Over 58.00 better.

IYT (Transportation) Broke then held 152 now pivotal and if breaks 151.25 definitely fair warning

IBB (Biotechnology) Trying hard to keep the market solvent up at these levels

XRT (Retail) Inside day. 99.75 the 50 DMA and Promised Land

IYR (Real Estate) 76.37 the 200 DMA to clear

ITB (US Home Construction) Back to warning phase