Indices Like a Mechanical Bubble Floating Through Space

August 3, 2016

Mish's Daily

By Mish Schneider


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Astronauts’ two main concerns are floating off into space and avoiding fatal mechanical defects during launch. We traders, once we launch our positions, metaphorically grapple with the primal awe and fear of pushing out into the void.

The Dow Jones Industrial Average (DIA) after a 7-day decline under the 10-day moving average, could barely remain green today. With a narrow range inside the range of Tuesday, DIA rallied enough to work off oversold conditions but not enough to foster new confidence.

Same applies to the S&P 500 (SPY). With its second close under the 10 DMA, should we anticipate that more correction is in store?

The Russell 2000 fared a bit better. After closing beneath the fast moving average for the second time since June 29th, the attempt to pierce back above it, although valiant indeed, nevertheless did not make the cut.

That leaves NASDAQ 100. Avoiding fire in the spacecraft thus far, QQQs continue to trade above the 10 daily moving average after receiving support from stellar earnings in 3 out of the 4 FANG stocks.

Considering the market’s recent orbit to new highs, are we now uttering the famous words: “Houston, we have a problem?”

In spite of some instrument’s spotty communication with ground control, space oddities such as the balletic effects of zero gravity occurred in several other instruments.

My Family ‘tells”, particularly Regional Banks, Transportation and Retail all rallied. Yet they barely voyaged beyond the constraints of resistance.

Biotech, our speculative brother, demonstrated the “right stuff” while Semiconductors, our astral sister, experienced weightlessness.

As earnings season progresses, a few specific stocks, Twitter, 3-D Printing, and Fit-Bit, all rocketed.

And what’s a star trek without the sun? First Solar’s strong earnings report should deliver renewable energy to the solar sector.

Meanwhile, in a parallel universe, the metals took a breather. Though, oil and energy managed a moonwalk.

Yesterday we sent the Family to Advanced Soft Tissue Release therapy to increase their range of motion. As testimonials suggest, the response to treatment was immediate.

Astronauts report that once you’re up in space you are probably OK. Nonetheless, a life spent too long in space eventually diminishes tissue mass.

In order for the market to avoid a calamitous event occurring on Earth while it exits beyond its boundaries, we still want to see the scrawnier Modern Family members pass the space physical.

S&P 500 (SPY) Inside day under the 10 DMA. Through 216.83 helps a lot. Under 214.57 brace for landing

Russell 2000 (IWM) 118.83 support. A strong move over 120.50 better

Dow (DIA) After its long strange trip to new highs, now, this needs rocket fuel only a close over 184.35 can give it

Nasdaq (QQQ) 114.22 key support.

XLF (Financials) Check out this chart-it’s the comeback over the 10 DMA the indices need

KRE (Regional Banks) Express train back to an unconfirmed accumulation phase which now must hold

SMH (Semiconductors) 2nd close under the 10 DMA since 7/06 but close to it for tomorrow

IYT (Transportation) 138.55 is the weekly MA it needs to close above

IBB (Biotechnology) 293 is the key weekly number to close above

XRT (Retail) Granny did what she needed to do today.

IYR (Real Estate) A reversal or at the very least a correction maybe to 82.00

GLD (Gold Trust) I believe it will take some real fear to get this above 132.50 now so time for more digestion and profit taking

SLV (Silver) 19.00 big support

GDX (Gold Miners) Don’t want to scare you all, but unless this fills a gap to 31.18 possible island top

USO (US Oil Fund) I am happy to have guessed wrong here. Instead of a nothing day, it had a reversal which confirms if clears 9.69 tomorrow and holds

OIH (Oil Services) Like USO maybe a reversal

XOP (Oil and Gas Exploration) That was pretty after I featured it yesterday.

TAN (Guggenheim Solar Energy) If you do not know how I feel about this you haven’t been reading this until today

TLT (iShares 20+ Year Treasuries) To get my best and new trade idea, I invite you to subscribe to MMMAdvantage

UUP (Dollar Bull) This looks better again

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