November 9, 2015
Mish's Daily
By Mish Schneider
On Sunday, I went on my version of a rant about the Federal Reserve and their lack of resolve.
Last May, I had Janet’s photo on my twitter feed and I would have sworn that I saw a rate rise behind her eyes. Back then, I cheered Janet on to make that bold step.
Now, I am in the ‘too little too late” camp. In fact, I see nothing good from a rate hike in December except panic in the already beat up commodities which should create a domino effect in the stock market.
Was I surprised to see the market drop over 200 points early on Monday? Not at all. The title of my weekend daily was: The Tangled Web Good Economic News Creates.
The TLTs
Oversold, Monday TLTs made a new 60+ day low. Prior to that, the low was 118.55 made September 16th, just as the stock market had spiked higher (the proceeded to sell off again in the days afterwards).
A while back I reviewed the 5 Criteria for a Reversal Trade. TLTs only met one of the criteria-it made a new 60+ day low. TLTs did not close within 25% of their intraday highs, have an expanded range nor extraordinary volume.
However, add to the mix the US Dollar. Possible that we saw the highs for now after Friday’s “good news” jubilation.
Therefore, we have the perfect scenario to watch unfold this week. Watch to see if the TLTs confirm with a second day move higher on Tuesday (would have to close above Monday’s high to confirm a potential bottom).
Secondly, watch the US Dollar to confirm with a move lower. Likewise, it would have to close under Monday’s settlement price.
If both the TLTs and the UUP confirm bottoms and tops respectively, I will imagine Janet’s face looking similar to Saint Nicholas as described in “Twas the Night Before Christmas.”
“A wink of his eye and a twist of his head
Soon gave me to know I had nothing to dread.”
S&P 500 (SPY) Back looking at 206.41 the 200 DMA to hold. Then 210 the resistance to clear
Russell 2000 (IWM) Possible brick wall top but more likely I would say that with more oomph if this opens or trades and closes Tuesday under 117.20. Otherwise, back over 119 it should be good.
Dow (DIA) 175.73 the 200 DMA with 177.85 pivotal area to clear
Nasdaq (QQQ) Runaway gap low is at 112.07 and ultimately the point to hold. Over 114.50 better
XLF (Financials) Broke 24.50 and could be a topping candle.
KRE (Regional Banks) Possible reversal and bearish engulfing candle. Need more evidence of that
SMH (Semiconductors) Inside day. 54.22 the 200 DMA to defend and 55.60 the point to clear.
IYT (Transportation) Doji day after the Norfolk Southern rumor
IBB (Biotechnology) Range to break one way or another 320-340
XRT (Retail) If holds today’s low then maybe still has a shot to play catch up
IYR (Real Estate) Held the 50 DMA
ITB (US Home Construction) Has spent 5 weeks trading around converging moving averages-big move one way or another coming-26.50-28.00 range to break one way or another
GLD (Gold Trust) Did this wake up after testing the July-August lows? TLTs will decide.
SLV (Silver) Oversold now with 14.00 pivotal
GDX (Gold Miners) Good day but not a valid reversal just a good day
USO (US Oil Fund) 14.00 good support level to hold
OIH (Oil Services) 32.00 pivotal
XLE (Energy) 68.50 level a good risk point to hold. Back over 70.00 probably good
TAN (Guggenheim Solar Energy) A move over 30.60 would be good
TLT (iShares 20+ Year Treasuries) If holds Monday’s low and clears 118.90, pay attention
UUP (Dollar Bull) Watch for a break of 25.74
EEM (Emerging Markets) Held the 50 DMA
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