It Could Still Be a Happy Xmas

---

This year, our Patriarch Granddad Russell 2000 (IWM) is really into Christmas, and promises his family the best Christmas ever. However, instead of the best Christmas ever, IWM seems to be turning Christmas completely around, causing a domino effect of disasters that eventually seems to drive everyone crazy.

The week of Christmas, Russell 2000 and the rest of the Modern Family are complaining about being broke. In fact, after the visit from Uncle Louis (USO-oil) and Cousin Yellen (TLTs), most of the siblings in the Modern Family are starting to think that perhaps Santa isn’t coming at all.

Granddad Russell is trying to stay optimistic and tells his family that they still have a few days left to turn everything around.

In the film, National Lampoons Christmas Vacation, by the time Christmas Eve rolls around, a gift from the boss arrives, but not exactly what the family expected. When the boss is confronted by Granddad, visibly upset, the boss has a change of heart. However, it is unclear whether or not Granddad gets what he needs in the end.

If this story rings a bell after last week’s further decline in oil, the overall market and after a “too little too late” attempt to raise the rates by Yellen, no wonder the adage states, “Art imitates life.”

Before I go through the Family, last week I published 10 Megatrends for both longs and shorts to keep eyes on in 2016. I also listed my Top Video Gaming Stocks. As both of these will be a roadmap for my own particular trading, I hope you find them helpful as well.

Notice please, that many of the stocks in the video gaming, 3D printing, solar and soft commodities space well outperformed last Friday. Furthermore, the shorts mentioned-hotels, big banks, and cable service providers, all sank with the market.

Bright Spot-Big Bro Biotechnology (IBB)?

Well, maybe a bit of an exaggeration, but…

In the battle between whether or not IBB has the Mother of all Bear Flags or a giant consolidation pattern, IBB at least held a critical level at 330 and above the 50 DMA.

As for the rest of the family, IWM closed under 112 but not under last Monday’s low, so maybe that’s something. Granny Retail, though, closed on new weekly lows. Our eyes now are on 42.00, the point that if there’s any chance of that double bottom, has to hold.

Looking at the other sibs, besides Big Bro, Semiconductors, although under both the 50 and 200 day moving averages, also held last week’s low and outperformed the S&P 500. Whether that is significant or not will be based on whether it can recapture 54.50 or not.

The rest of the sibs are not feeling so well. Transportation (IYT) gapped lower and closed on the lows. Yet, in the spirit of our National Lampoon, possible it could be a blow off as volume was over double the daily average, which tends to occur at blow off tops and bottoms.

Prodigal Son, Regional Banks (KRE), which usually tops our list, after last week is our last but not least family member to note. Fingers crossed, KRE did hold the 65-week moving average at 41.28. Maybe that’s a good place to look at on Monday.

Most importantly to consider is that this year has rarely been obvious. New highs have met with major selling. New lows have seen major buyers come in.

So, if art indeed imitates life, (the life of the stock market anyway), National Lampoon’s Christmas Vacation ends happily.

The boss adds 20% to the usual bonus, a SWAT team comes into the house and holds the family at gunpoint, Uncle Louis lights up the Sewage and they all run outside to sing the National Anthem and watch a radioactive Santa fly through the sky.

S&P 500 (SPY) Landed on 200.00. If it opens lower and recaptures that level I would venture to say worst is over ahead of the long weekend. If it opens higher, should have trouble at 203.

Russell 2000 (IWM) 110.28 last week’s low. If this can get back over 114, anything to the upside is possible

Dow (DIA) Don’t you hate those Golden Crosses that fail? Thinking that if this holds the 169 level can work itself up to 174 again and we will take it from there

Nasdaq (QQQ) 109.38 was last week’s low. 108.89. So we are in the ballpark of support at the 200 DMA

Volatility Index (VIX) Aptly named.

XLF (Financials) 23.34 last week’s low

KRE (Regional Banks) Back over 42 would be a relief.

SMH (Semiconductors) 54.10 is the 200 DMA pivotal. 52.31 underlying support with 53.37 last week’s low

IYT (Transportation) As said earlier, hopefully a blow off bottom in the works

IBB (Biotechnology) A move back over 335 would be a reason to cheer. Under more like 328, not so much

XRT (Retail) Online shoppers-maybe you should get out and go to the mall-a little exercise won’t kill you, will help Granny and definitely comfort the market

IYR (Real Estate) Now ruling this one out just yet. If holds Friday’s lows and clears back over 74.80 good

ITB (US Home Construction) Friday low 26.52-loves this level so far.

GLD (Gold Trust) Looks more like an exhaustion gap in the works if confirms on Monday with another green day

SLV (Silver) Over 13.60 would look more convincing

USO (US Oil Fund) Weak

OIH (Oil Services) Considering this is really fossil fuel, maybe those dinosaurs will go completely extinct.

XLE (Energy) Unfortunately for energy and oil companies, weak oil is bad for them

UNG (US NatGas Fund)

TAN (Guggenheim Solar Energy) Not much of a correction which means if holds around 31.50, should continue its ascent

TLT (iShares 20+ Year Treasuries) 121.75 big support and if breaks a sea change (for the better I suspect)

UUP (Dollar Bull) 25.60 support

EEM (Emerging Markets) 32.39 is all I would be willing to give this

FXI (China Large Cap Fund) 2 inside days in a row. Always good to look at those patterns and see which direction they reconcile in. Over 36.58 much better