Here We Go Loopty Loo

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I racked my brain on Friday to find the humor and present the weekend commentary in the usual joie de vivre. However, I found the persistent range rather sobering, leaving me well, humorless, (yet hardly at a loss for words.)

As a chartist since dinosaurs went extinct leaving all that fossil fuel, I look for and track significant trend changes through key reversals, volume, phases and multi-year trend changes on daily, weekly and monthly charts.

I’ve seen and reported on quite a few key trend changes over the last several years since I began this daily commentary and the presence on twitter. One notable call out was when Semiconductors, back in 2012 took out a channel on the monthly chart that went back 12 years. SMH to date has made a 58% move higher.

Another call out more recently is the solar sector or TAN, which after seeing quadruple bottoms over the last 5 months gave me the confidence to make the bold statement that solar energy has bottomed. Since then, solar has increased 9% and that was only since last week.

Now, I’m compelled to comment on the volatility index (VXX) and what could materialize from that chart. Typically, volatility declines throughout bull moves and rises throughout bear moves. Typically.

Volatility derives from unpredictability, especially assuming the worst. Last week I wrote about the range of human emotions in the market.  We saw fear graduate into hope, which then deteriorated into worry. Volatile in the dictionary: uncomfortable, charged, explosive, inflammatory, turbulent. These are not the words one wants to consider for investing. However, we must consider these possibilities and look at what the VXX chart could be telling us.

First off, regarding price, the 100, 50 and 200 Daily moving averages all converge between 31.20 and 31.40. A twenty cent range with 3 powerful moving averages coming together is thrilling for a chartist!

Secondly, the phase of the Volatility index is Accumulation. Finally and most interesting is that the 50 is about to cross the 200 DMA for a Golden Cross. Not since 2012 has the 50 found itself above the 200 DMA.  Then, the phase would change to bullish.

On Friday, the indices all tested the top of the January 6 month calendar range and retreated with volume. NASDAQ not only failed the January high, but returned to an unconfirmed warning phase. I’m not suggesting we brace for a huge sell off. Rather, I merely want to highlight that with volatility increasing as the indices tested resistance, the market persists in a range until further notice. 25 trading days and counting.

“You can have data without information, but you cannot have information without data.”    Daniel Keys Moran

S&P 500 (SPY) confirmed Bullish Phase 204.39 now should hold or we go towards the lower end of the range

Russell 2000 (IWM) Bullish Phase should hold 117.55 the 50 DMA

Dow (DIA) Bullish Phase the 50 DMA at 176.47

Nasdaq (QQQ) Unconfirmed Warning Phase Would be good to see this clear 103.14 the 50 DMA and stay there. If not, fair warning

XLF (Financials) 24.00 would be good to hold and back over 24.18 would be even better

KRE (Regional Banks) As much as I like this, it’s nowhere near the January high. Now, rather buy a dip around 39.00

SMH (Semiconductors) Unconfirmed Warning Phase with no real mind of its own now

IBB (Biotechnology) Support at 311

XRT (Retail) Inside day and good place to look for follow through to upside back over 96.00

IYR (Real Estate) Rates affect this sector

ITB (US Home Construction) As much as I like this, it’s nowhere near the January high. Now, rather buy a dip around 25.75

GLD (Gold Trust) Rate sensitive for sure. Held the 50 DMA with the 200 DMA the resistance

GDX (Gold Miners) Closed weak but holding the support around 21.10

USO (US Oil Fund) 18.50 support but now needs to clear the 50 DMA

TAN (Guggenheim Solar Energy) Quadruple bottoms since last October

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs Did not like the jobs report and chatter about when FED will raise rates-ok if they do but slowly Janet!

UUP (Dollar Bull) Back over 25.00

FXI (China Large Cap Fund) The gapper doing what it does-gapping-this time down