April 5, 2017

Mish's Daily

By Geoff Bysshe

blankOn Monday I wrote about the one thing pattern that all the Modern Family members seemed to agree on was they were following Granddad’s (IWM) lead.

Unfortunately for the bulls, IWM is not feeling very bullish. In fact, the IWM is now down year-to date.

While ‘down year-to-date’ is not a new low for the year (which will be much worse), it is an ominous step in that direction.

If you’re a follower of MarketGauge’s trading tactics you may be familiar with the power of looking at how leading indexes trade relative to their 30-minute Opening Range to anticipate how strong the intra-day trend is.

Today, the IWM was trading under its first 30-minute low from 10:30 until the end of the day.

Meanwhile the QQQ was trading well above its first 30-minute high from about 10:30 until the Fed released its minutes from its most recent FOMC meeting, and Speaker Paul Ryan declared that tax reform could take longer than health care reform.

The Fed’s minutes weren’t overly bearish, but they certainly weren’t bullish. Speaker Ryan’s comments, however, are bearish. The market wants tax reform.

In a strong trend, like the one that appears to exist in the QQQ, this news may have caused the market to pull back intra-day, but it would not necessarily sink it like today.

However, today the market was NEVER in a strong trend. The IWM was going down from just over 30 minutes into the day! And as I mentioned above, it was trading under its 30-minute opening range an hour after the open.

If the QQQ and the IWM (and the SPY) can’t all agree on which side of their opening range they should be trading on then the trend is not very strong.

In an environment where the market is weak, bearish news is going to hurt the bulls just like it did today.

Today was just one day, but unfortunately it may have been a tipping point. The pattern we experienced intra-day today is also developing on the daily time frame.

Beware of the IWM year-to-date lows.

S&P 500 (SPY) Key support to hold is 233.90. Look for resistance at 235.50 and 236.50

Russell 2000 (IWM) Quite bearish below134, may find support at 133. Big Resistance at 136.50

Dow (DIA) Key level to hold is 205. Resistance at 207.25

Nasdaq (QQQ) 131.50 is the key level to hold. 132.80 is likely resistance.

KRE (Regional Banks) 53.70 important resistance. 55.00 key are to get above

SMH (Semiconductors) If it moves lower tomorrow it could be a significant top. Resistance at 79 and 79.60. Key support at 78 .

IYT (Transportation)162.75 key to hold with 165.15 the point to clear on a closing basis.

IBB (Biotechnology) This must clear over 296 and hold 286.50.

XRT (Retail) 40.50 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) Looks interesting over 23.50, support at 22.50

USO (US Oil Fund) Noise until it closes over 11.00

OIH (Oil Service Holders) 30.20-30.50 key weekly support. Interesting over 31

XOP (Oil & Gas Exploration) Minor support at 36.50 area, then 35.50. Resistance at 38

TAN (Solar Energy) 17.45-17.50 to clear with volume, and on a closing basis

TLT (iShares 20+ Year Treasuries) 122 is the number to watch on upside, and if breaks 119.75 now looks like higher rates in store

UUP (Dollar Bull) 25.78 support and 26.12 resistance

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