May 23, 2016
Mish's Daily
By Mish Schneider
In Yellowstone National Park, Grizzlies have gone from a population of 150 to 700. The authorities are thinking of taking them off the endangered list. Although hunting is banned in the park, if they cross out of the park into Idaho, Wyoming or Montana they are fair game for hunters.
Such is the case with the market grizzly bears. They have increased in numbers. They are considered less endangered since the bull move began in 2013. Thus far, the bears are safe from hunters, provided they remain within the confines of the current trading range.
Last week, evidence of the bears became more apparent. One can attribute the increasing numbers to the Federal Reserve’s talk of higher rates. Or, perhaps bearish statements made by Goldman Sachs amplified their numbers. George Soros’ liquidation of 37% of his stock holdings didn’t hurt either.
Many commodities are in a holding pattern and the dollar rallied off the recent lows.
Regardless of how we look at the market, it seems we can all agree the bears are out and about. However, they must, like the Yellowstone Grizzlies, stay within certain boundaries. Bulls, like hunters, loom outside the periphery ready to shoot to kill.
After the QQQs made a low on May 6th of 104.40 the market attracted buyers. NASDAQs action helped prevent the rest of the market from collapsing. Currently, NASDAQ resides below the major daily and weekly moving averages. With a week left to the month, QQQs are above a key monthly MA.
The S&P 500 sits between the 50 and 200 daily moving averages in a Warning Phase. The Russell 2000 confirmed a Recovery Phase on Monday, trading above the 50 yet beneath the 200 DMA.
The rest of the Modern Family remains mixed.
The Financial Sectors, Regional Banks (KRE) and XLF held above their 200 DMAs. Transportation (IYT) had a teeny range and an inside day (traded within the trading range of Friday.)
Semiconductors amply cleared the moving averages and are the sole inhabitant of a Bullish Phase. 56.00 has culpable resistance. Biotechnology (IBB) took yet another stab at the 50 DMA but could not close above it.
Retail (XRT) missed the opportunity to take center stage and clear over 41.75, the 200 week moving average. The week, however, is young. Either Retail comes out of hibernation or it scurries back to its den under 40.00.
A single bear will roam over hundreds of square miles. Surprisingly fast and known to act aggressively, they are not afraid of humans or bulls.
In order for the market to stay safely outside the bear’s path, the Modern Family must unite in a rally. NASDAQ has to clear 108. The bulls must avoid leaving the bears food handouts.
S&P 500 (SPY) 206 area to clear. 201-202 ultimate support
Russell 2000 (IWM) Phase change to Recovery confirmed. 107 underlying support with 111.00 the 200 DMA to close above
Dow (DIA) 174 pivotal 172 support. 177 resistance
Nasdaq (QQQ) 104.40 critical support and needs to clear 108
XLF (Financials) 23.05 pivotal and the weekly moving average to clear and hold above 23.35
KRE (Regional Banks) Confirmed Accumulation Phase. (9th phase change since April) 40.20 pivotal. 40.85 the weekly MA to clear
SMH (Semiconductors) Confirmed Bullish Phase with 53.75 pivotal. This gives the market the most hope especially over 56.00
IYT (Transportation) 134.27 important support. If through 140.60 get bullish.
IBB (Biotechnology) A push over 268 better. Under 249 not good
XRT (Retail) 40.00 support. 41.75 resistance
IYR (Real Estate) Looks kind of bear flaggish
GLD (Gold Trust) Broke 119.50 the 50 DMA for an unconfirmed warning phase. 118 big support and back over 120 better
SLV (Silver) Still marginally above the 50 DMA
GDX (Gold Miners) I still say this has more rally in its blood especially over 24.50
USO (US Oil Fund) Friendly here with support 11.45. Through 11.90 again is good.
XLE (Energy) Holding over the weekly MA which makes me think this is a good buy as well
XOP (Oil and Gas Exploration) Must clear 35.22
TAN (Guggenheim Solar Energy) Good volume. Like to see this hold 21.50 and clear 22.00
UUP (Dollar Bull) 24.55 pivotal
Every day you'll be prepared to trade with:
