April 4, 2017
By Mish Schneider
Ironically, our 2-year old’s Sesame Street birthday cake decoration perfectly illustrates the current market condition.
Elmo is NASDAQ. He has the higher position on the seesaw. Yet look at his face. He’s worried.
Abby with the lower position on the seesaw, represents the Modern Family. She looks up to see if the coast is clear.
The NASDAQ 100 telegraphs the crowded longs in Amazon, Facebook and Netflix. It reflects the powerful move to new highs in Tesla.
The Modern Family, particularly the Russell 2000, telegraphs its attempts to assume the higher position.
Yet each time IWM and his kin (Semiconductors, Biotechnology, Retail, Regional Banks and Transportation) try to rally, Elmo or NASDAQ buoyantly rise faster.
NASDAQ looks worried. The Russells look cautious.
Is Wall Street the new Sesame Street?
Why, with new highs in Amazon and Tesla, would the NASDAQ 100 have any reason to worry?
When too many pile on to one side, the chances for a tumble increase.
Besides that, in 2000 before the Tech bubble, NASDAQ soared. In December 2015, ahead of the January 2016 major drop, NASADQ soared.
Both times, the Modern Family already exhibited signs of stress.
Today, the Russell 2000 confirmed back into a warning phase.
Biotechnology, the other holdout in a bullish phase besides Sister Semiconductors (SMH), scraped the 50 DMA. 290 ultimately held.
However, should IBB trade and close under that level, 4 of the 6 Modern Family sectors will be in Warning Phases.
Retail, the weakest sector, stalled in a Bearish Phase. So that leaves Semiconductors as the Bullish holdout.
SMH held Monday’s low but closed the day under the 10 daily moving average. The resistance at 80.00 on the daily chart resembles a ceiling.
It’s as if whenever Elmo or the close cousin to SMH, NASDAQ, elevate to that price ceiling, they bump their heads. Hence, the worried look.
How long will QQQs and the FANG stocks hold up? What if they gain weight, which in turn gives the Modern Family more leverage to rise?
Sesame Street was built with the goal of holding the attention of children long enough to educate them. Wall Street, and its recently shifting paradigm, is achieving much of the same goal.
S&P 500 (SPY) Inside day. 234 the must hold point. Through 236.30 better
Russell 2000 (IWM) 135.40 important support to hold. Through 137 much better
Dow (DIA) 205.50 important support.
Nasdaq (QQQ) Inside day near the highs
KRE (Regional Banks) 53.65 important support. 55.00 key are to get above
SMH (Semiconductors) 79.00 low to hold, 80 must clear.
IYT (Transportation)162.75 key to hold with 165.15 the point to clear
IBB (Biotechnology) This must clear over 296 and hold 290.
XRT (Retail) 41.00 key point to hold. Back over 42 better
IYR (Real Estate) 79.00 point to clear
GLD (Gold Trust) 120.25 the 200 DMA with 118 pivotal
GDX (Gold Miners) 23.43 resistance clearing with an unconfirmed recovery phase
USO (US Oil Fund) Noise until it closes over 11.00
OIH (Oil Service Holders) 30.20-30.50 key weekly support
XOP (Oil & Gas Exploration) 37.40 should hold if good
TAN (Solar Energy) 17.45-17.50 to clear with volume
TLT (iShares 20+ Year Treasuries) 121 pivotal and if breaks 119.75 now looks like higher rates in store
JNK (SPDR BB Barclays HiYld Bd) Subscribers:
UUP (Dollar Bull) 25.78 support and 26.00 resistance
Every day you'll be prepared to trade with: