Have The Russell 2000s Been Naughty or Nice?

---

Santa Baby, just slip a rally under the tree for me;
Been a patient good girl, Santa baby,
So, hurry cause your down my chimney in two nights –Eartha Kitt

After Monday’s inside day in most indices (trading range within the trading range from last Friday), Tuesday began with Santa’s imposter reindeer Bjorn, still racing around the streets of London.

However, like an “at the ready” NASCAR racing crew during a full-blown pit stop, in just 12 seconds, Santa and his elves removed Bjorn’s bridle and instead, sent in Rudolf the Red Nosed Reindeer.

The speed of Santa’s crew gave Santa, Rudolf and the other reindeer the quantum leap they needed to fuel a bigger rally.

But will Santa determine that Granddad Russell 2000 and the rest of his Modern Family have been naughty or nice?

Did Tuesday’s rally do enough for the Modern Family to not only get the bulls through Christmas, but through the following week as well?

IWM cleared 112 which we can now consider a key level of support to hold. The road to the overhead 50 DMA is far enough away that more rally up to around 115-115.85 is feasible. If that happens, IWM will still be in a bear phase but it would certainly make its next moves super interesting for both bears and bulls.

For Granny Retail (XRT), the market needs to see that she will hold 42.00 for a potential double bottom. Furthermore, like Gramps, the 50 DMA is well overhead, up at 44.75. That’s enough distance to think more upside. But will that be where Retail’s rally ends?

A huge participant Transportation (IYT), after last week’s ginormous volume on the way down (blow off volume), got over 135 on Tuesday. Talk about miles to go, Trannies will need a lot more than an efficient pit stop crew plus a well-intentioned reindeer to get it up to 144, where the 50 DMA lives.

Biotechnology (IBB) is where hope began on Monday. The market needed to see it hold 328 and clear 335. Still does.

Regional Banks (KRE), scared the market on Monday. But, on Tuesday, after holding the 65-week moving average at 41.28, the savior status it has enjoyed all year seems more likely to resume.

Semiconductors filled the gap between Friday’s low and Monday’s high. Encouraging. In order to see encouragement flourish into a bona fide buy signal, SMH has to get back over 54.50, both the 50 and 200 DMAs.

The Modern Family, although in better shape, thus far only proves that they are in a trading range between the August lows to October highs. It will take a whole lot more to bring the family out of their negative phases.

Concerning other instruments, the Real Estate ETF, which I have been hopeful about, is back in an unconfirmed bullish phase. Many stocks in 3D printing, one of the megatrends I am watching, had a banner day. Solar stocks took a healthy rest.

As for raw materials, I leave you with another verse of Santa Baby:

Santa honey, one little thing I really need…
The deed…to a platinum mine, Santa baby,
So hurry with commodities delight!

S&P 500 (SPY) Not so unexpected bounce from 200. Has a gap to fill to 204.54 which if does, makes it look healthier

Russell 2000 (IWM) 112 pivotal, 115.85 resistance

Dow (DIA) 175.70 major overhead resistance. 174 pivotal. 171.40 key support

Nasdaq (QQQ) Back over 112.40 would be stronger. 111 pivotal

XLF (Financials) About to run into 4 major moving averages. Until it clears 24.26 with gusto not much to read

KRE (Regional Banks) We know one thing-41.00 big support to hold. 43.60 equally strong resistance overhead

SMH (Semiconductors) 54.08 is the 200 DMA. 54.50 the 50 DMA with 53.37 pivotal

IYT (Transportation)140 substantial resistance with 135 pivotal and 132.36 the low to defend

IBB (Biotechnology) A move back over 335 would be a reason to cheer. Under more like 328, not so much

XRT (Retail) 42.00 rock bottom support. Over 44 better

IYR (Real Estate) We will need a second close over 74.79

ITB (US Home Construction) Friday low 26.52, Monday’s low 26.60. Tuesday’s low 26.64. Some good buying when it gets down to these levels. All about 27.70

GLD (Gold Trust) 102.25 if good, should hold

USO (US Oil Fund) Some short covering but with low volume

OIH (Oil Services) Better than USO since has a good 2-day reversal pattern in the works

XLE (Energy) Not quite the possible reversal pattern of OIH so like that one better

UNG (US NatGas Fund) Could still be a reversal pattern since Tuesday was an inside day

TAN (Guggenheim Solar Energy) 30.90 key weekly moving average support

TLT (iShares 20+ Year Treasuries) 121.75 big support and if breaks that level a sea change (assume higher rates equals more economic confidence)

FXI (China Large Cap Fund) 35.37 a good level to hold if this has a chance of heading back over 36.50