If Bored Remember-You Are On A Rock Floating In Outer Space

May 13, 2015

Mish's Daily

By Mish Schneider

Tuesday’s night’s commentary I told you a little about myself and my loyal nature not only to people, but until proven wrong, to the bullish bias of the market. I further went on to talk about the market’s seven year itch since our love affair began in 2009, seven years ago!

The “itch” seems to manifest by the market’s stubborn and fairly obnoxious choppy, trading range action peppered with sector and group rotation along with the occasional one day wonders-perfect example lately-AOL.

A characteristic I repeatedly read on twitter Wednesday about the market was “BORING!” That got me thinking about how boring fits into a long term relationship. Is it good or bad?

Boring as an adjective means dull, repetitious, and uninteresting. Concerning the market and the bullish bias, I’m not unhappy about that. It’s like calling your mate “boring” because he/she is like the sea and lacks variety. But like the sea, you’re sure glad he/she’s always there!

Boring as a noun means the act or process of making or enlarging a hole. That is not the definition we want to see to describe market action-not if you are a bull anyway. Nor do I imagine any of us want a mate who “bores” through your spirit or one could say, presses your buttons. Grounds for divorce!

That brings me to a promise I made in Tuesday’s daily-to write once again the signs of a top since as mentioned, “the bear market ended dramatically in the spring 2009, so it does stand to reason that the bull market since 2009 needs some equally if not more dramatic conclusion.”

I’m not advocating for a top. En contraire, the move in Regional Banks (KRE), the digestion in Biotech (IBB) and Semiconductors (SMH), even the minor sell-off in Retail (XRT) after the poor retail sales stats has me content with boring. Although Transportation (IYT) continues to weaken, at this point, it’s so close to long term support going back to an important weekly moving average, I’m not too concerned until it breaks under 151 on a weekly basis.

Since a promise is a promise here goes: 3 Signs of a Top

1. Double the average volume on a move to new highs or a blow off top. Has to confirm within a couple of days.

2. An island top-gap over all work to new highs, followed by a gap lower for 2 or more days leaving literally an island.

3. A chart pattern such as a double or triple top with follow through. (Although no real follow through, the S&P 500 chart could have a potential double top from the February 25^th high and the April 27^th high. If that is the case, to confirm has to break under 204, the low made between those 2 dates).

S&P 500 (SPY) Closed at 210-right on support. If cannot hold the 207 area.

Russell 2000 (IWM) 120-123.85 range within the range-only index in warning phase

Dow (DIA) Needs to clear 181.28 to begin and hold 179.85 area

Nasdaq (QQQ) 108 pivotal

XLF (Financials) 24.24 key support and over 24.70 better

KRE (Regional Banks) Sweet!

SMH (Semiconductors) 55.00 support and through 56.80 good

IBB (Biotechnology) 350 pivotal

XRT (Retail) Over 99.65 clears the 50 DMA

GLD (Gold Trust) That negative slope in the 50 DMA now positive. If it is truly bottoming, has to hold now over 115

GDX (Gold Miners) Up to the 200 DMA resistance

USO (US Oil Fund) Looks good longer term as long as it holds 20.00