November 6, 2016
By Mish Schneider
I’m not sure who approached who more cautiously. The horse or me. I made the first move.
I held my hand out in a gesture of friendship. In turn, the horse put her head over the railing and gave my hand a sniff. In time, we found some trust.
Likewise, the market and investors spent nine days approaching one another cautiously.
Last Friday, investors made the first move. They stuck out their hand in a friendly gesture. The market responded in turn by giving the investor’s hands a sniff. But did they find trust?
Some of the stronger asset classes got stronger. Others that were on the fence (or rail) weakened appreciably. Several asset classes found relief but left us wondering for how long?
We are only two days away from the emotionally charged Presidential election. The S&P 500 had its first nine-day losing streak since 1980.
Will the market allow investors to saddle it up?
Or, will the market bite investor’s hands and then gallop away?
According to the Modern Family, the Russell 2000 fits the bill as the asset class to find relief but maybe not much more. With the small cap ETF close to critical support levels, IWM could easily create a stampede.
That stampede, however, could either carry investors on the market’s back or leave investors in the dust.
If the Retail Sector (XRT) has anything to say about that, it appears more like dust in investor’s eyes rather than a fun romp through the countryside.
A wild card, Biotechnology came back from last Thursdays’ rout yet not enough to clear last Thursday highs. If IBB truly is an accurate measure of how confident speculators are, then this must get stronger. If not, even a market whisperer might not offer much help.
Semiconductors, an asset class that has tried hard to straddle the fence, confirmed a warning phase for the first time since May.
Yet, on the stronger side, Transportation and Regional Banks gained and held their bullish phases. Trannies (more than Banks) offer the best chance of carrying the heavy load and preventing precipitous losses.
Although we can look at commodities and interest rates independently, that picture seems equally mixed as equities do (see below).
Therefore, investors may well show up with carrots, but should still be wary that the market could bite the hand that feeds it.
S&P 500 (SPY): Down 9 days in a row, we are looking for support at 208.25 the 200 DMA.
Russell 2000 (IWM) 116.95 area the monthly MA now resistance. 114.40 the 200 DMA support
Dow (DIA) 180 pivotal 177.58 the 200 DMA
Nasdaq (QQQ) 113.63 September low support. 115 pivotal
KRE (Regional Banks) 43.50 resistance and support 42.50
SMH (Semiconductors) Needs to clear and close back over 67.29 to get back in good shape. 64 next support area
IYT (Transportation) 143.45 the 50 DMA support must keep holding. Over 146 should help the market
IBB (Biotechnology) Inside day. Over 256.29 better. June low 240.30.
XRT (Retail) 40.00 area the underlying support. 42.25 now resistance
GLD (Gold Trust) Confirmed bullish phase-makes 123.80 pivotal with 125.45 overhead resistance.
SLV (Silver) 17.00 support to hold
GDX (Gold Miners) Has yet to clear the 50 DMA. A close over 25.43 will do it
USO (US Oil Fund) 9.82 September low.
TAN (Guggenheim Solar Energy) Another new low since 2013
TLT (iShares 20+ Year Treasuries) Support at 130. Closed right at the Weekly MA 131.75. Makes that a great pivotal area
UUP (Dollar Bull) I thought it might revisit 25. It got closer at 25.06
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