Is Transportation the Market's Main Protagonist?

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Monkey D. Luffy-One Piece

In my forever quest to keep the idea of the Modern Family alive, well and creative, I learned of an anime family with the names “Monkey D.” Besides the family notion, I happily found anime characters that refer back to this Chinese Year of the Monkey.

Anime, short for animation, refers to Japanese hand-drawn and computer animation. What then, intrigues me about this particular anime or manga?

Monkey D. Luffy, a striking resemblance to the Transportation sector, is a pirate and main protagonist. He is the son of Monkey D. Dragon and the grandson of Monkey D. Garp. Luffy has a worldwide reputation for causing trouble yet usually emerging as the victor.

Luffy is infamous for being the only known pirate to not only attack 3 important government facilities, but also to escape from all of them alive. That makes him a clever rebel!

Garp, the Granddad, is intelligent, yet absent-minded and somewhat sadistic. He has a hot temper and will hit his sons across the skull to get his point of view across. He reminds me of Granddad Russell 2000 (IWM).

How is IWM intelligent, absent-minded and somewhat sadistic?

The intelligence of following this index is it best represents the small-cap companies located in the US, therefore, the “real” US economy. Technically, IWM broke down first of the 4 indices. That leaves the question on whether this recent move is a bottom or a bear market rally bounce.

IWM’s absent mindedness remains to be seen vis-à-vis sustaining or forgetting to sustain this rally. Sadism can easily come to both bulls and bears, depending upon what it does from here, crash or rip.

If we think of Monkey D. Luffy as the Transportation sector (IYT), Luffy, as a pirate, depends on sea transport. IYT depends mainly on trucking and railways. Regardless, both rely on moving goods across land, air and sea.

Can we say that IYT is our main protagonist? Absolutely! As I mentioned previously, it was the first sector to crash in our Modern Family, and now the first sector to rebound.

Is IYT a clever rebel? Yes again! IYT’s momentum shifted while IWM made a new low. Will IYT emerge as victor? It is the first one in the family to confirm a Recovery phase. As long as it remains in one, indeed that makes IYT a victor and a rebel in the 2016 bear market.

That leaves me wondering about Monkey D. Garp, Granddad or IWM. I see all moving averages have a downward pointing slope (negative). IWM has however, traded above and is now holding the fast or 10 DMA. That is not a phase change, but does mean that the short-term rally is intact until it closes back beneath the 10 DMA.

Given IYT’s better phase couple with Granny Retail (XRT) going into an unconfirmed Recovery phase, we can take the position that as long as IWM holds around 97.50, more rally is likely.

Let’s try to be clever, rebel monkeys as well. Watch the Phase change confirm in XRT. If cannot confirm, then watch IYT to hold the 50 DMA and IWM to hold the 10 DMA.

These levels are critical and pivotal. Lastly, I do not suggest you trade rebelliously. Yet, I do highly recommend you turn off the “talking heads” and follow what price suggests.

Rebelling against the “noise” will help you to emerge as “victor” in the battle against trading because of what you hear rather than what you see.

S&P 500 (SPY) I will be surprised to see this clear 195. However, would not think about going short until I see failures in IYT XRT and IWM. Nor would I first get long.

Russell 2000 (IWM) 97.80 the 10 DMA. 101-102 resistance

Dow (DIA) Right into some resistance now. But also, holding momentum support. Hard to say what comes next

Nasdaq (QQQ) 103.50 is monthly resistance to note with support now at 99.00

XLF (Financials) Best news here is that this is back over the 200 week moving average. 20.87 is the number it must close the week out over to sustain

KRE (Regional Banks) This closed red-I call that a red flag. Let’s not forget that KRE is the prodigal son who must get back to prodigal status.

SMH (Semiconductors) Momentum indicator more neutral here. 50.00 big resistance with 47.50 minor support to hold

IYT (Transportation) Confirmed the recovery phase. 128.85 has to hold now

IBB (Biotechnology) Impressive bounce off the 200-week MA-not sure how much we will get so instead rather say it has to hold 255 area

XRT (Retail) Marginal move into an unconfirmed Recovery Phase. This has to close tomorrow over 41.63 to confirm. Otherwise, 40.74 is the 200 WMA and the place to hold

IYR (Real Estate) Looking here, it still looks weak.

GLD (Gold Trust) Looks to me like the inside day suggests this can easily head up as down from here although up is in line with momentum and phase

SLV (Silver) 14.40 support at the 200 DMA

GDX (Gold Miners) Inside day here as well and looks better than GLD

USO (US Oil Fund) Hasn’t been above the 50 DMA since last October-watch for that or a move over 9.87

XLE (Energy) Closed just under the 50 DMA-so now leading the oil sectors

TAN (Guggenheim Solar Energy) Not as strong as the others on this bounce.

TLT (iShares 20+ Year Treasuries) Still in bullish phase. 4 days down expect this to head back up soon-looking at 130.58 resistance

UUP (Dollar Bull) 25.27 the overhead resistance. Back under 25 trouble

EEM (Emerging Markets) Getting close to its 50 DMA

FXI (China Large Cap Fund) Has to hold around 29.45