I'm Just Waiting on the FED

March 15, 2016

Mish's Daily

By Mish Schneider

Ladies and Gentlemen, The Rolling Stones!

I have two songs in my head today. One written by the Rolling Stones- “Waiting for a Friend”- and the other written by Robert Johnson covered by the Rolling Stones- “Love in Vain.”

Why? In the first song, Mick Jagger sings, “I’m not waiting on a lady, I’m just waiting on a friend.” I find that interesting since everyone in the market is indeed waiting on a Lady-Janet Yellen! The question being though-is that lady a friend? Furthermore, a friend to whom?

The second song, the lyrics read, “Well, it’s hard to tell, it’s hard to tell when all your love’s in vain.” That goes out to Mario Draghi and the Bank of Japan, both of whom offer the markets love in the form of negative interest rates.

Will all that love be in vain?

Defensively, the market tried to head south to the tune of about 100 points, only to find buyers that took the market right back up to positive by about 30 points. Ultimately, the Dow Jones closed basically flat.

The Head and Shoulders potential top in the SPY continues to play out indecisively-204 the breakout zone, under 200 maybe more rounding of the right shoulder.

The Modern Family has enough divergence to offer up several possibilities. Depending upon which asset class you look at, even before we know how the FED meeting and its impact will play out, the Family offers clues.

The Russell 2000 (IWM), after trying to take out the 100 DMA, well underperformed the SPY breaking the 10 DMA. Shaken if you will, but not stirred.

Retail (XRT) deteriorated in phase with a move below the 200 DMA. Hence, Granny returns to an unconfirmed recovery phase.

Transportation (IYT), as long as 135.50 holds, looks ok but still has some serious catching up to do to his one and only sister, Semiconductors (SMH).

SMH, in an accumulation phase, looks most promising provided it stays above 52.15 area.

Biotechnology (IBB) couldn’t stand the heat of Valeant Pharma (VRX). With that company’s stock plunging more than 50%, Big Bro IBB has barely moved off of the lows that the rest of the market put into place early February.

Regional Banks (KRE), a strong leading indicator in 2015, has taken a backseat in 2016.

Like the song says, “I’m just standing in a doorway, I’m just trying to make some sense.”

So while we ALL wait on a lady, maybe on a friend and follow her to the station with a suitcase in our hands, it truly is hard to tell, hard to tell, if all our love ‘s in vain.

S&P 500 (SPY) Wednesday will bring the results of the FED meeting. Meanwhile, 200 key support to hold, 202 pivotal and 204 should bring in buyers

Russell 2000 (IWM) 105 support, 107 pivotal and over 109 much better position

Dow (DIA) Sitting on the 200 DMA at 171.40. Gap to fill at 174.

Nasdaq (QQQ) Must continue to hold 106 and clear 108.

Volatility Index (VIX) If this doesn’t get down to 20.15 and turns up over 21.20 pay attention

XLF (Financials) If holds 22.20 could be flagging

KRE (Regional Banks) Has to clear 38.50

SMH (Semiconductors) In good shape if holds the 200 DMA

IYT (Transportation) 136 support. 138.87 the 3/07 high to contend with

IBB (Biotechnology) Not sure how sustained a rally without Biotech can be? 250 key

XRT (Retail) 45.50 pivotal with a close now beneath it

IYR (Real Estate) A move over 76.20 would be impressive. Has to hold 73.22