Market Bubbles: Blow 'Em, Catch 'Em, Eat 'Em

July 28, 2016

Mish's Daily

By Mish Schneider


Whoever designed the packaging for this toy, appropriate for ages 5 and up, has my total admiration. The creator of slogans like “Blow ‘Em! Catch ‘Em! Eat ‘Em! along with “Squeeze Me! My Tongue Pops Out,” or “Candylicious Bubbles, Bubbles You Can Eat,” I’m willing to bet has no idea he/she is today’s market commentary inspiration.

Heck, we might as well add “Safety Tested, Kid Approved” to the mix. After all, each time any number of possible bubbles might burst in the market, the market “squeezes” out a new one.

Today’s almost bubble? Several actually. The Dow Jones Industrial Average DIA trading on a new week low. The Transportation sector falling to a 3-week low after Ford’s dismal performance and earnings. Semiconductors almost forming a reversal pattern after making new highs. Oil continuing its precipitous drop.

But, like my Naturally and Artificially Grape flavored friend pictured above claims, the market’s tongue popped out and all those potential bubbles were safely ingested.

The end of the week the end of the mouth-will the market continue to sing, “I’m forever blowing bubbles?”

With a clutch turnaround, Biotechnology IBB, our speculative sector, which early on looked like it would fail the 200 DMA, came roaring back.

The Financial Sectors, Big and Regional Banks, closed realtively strong. Transportation and the Dow wound up basically unchanged. Semiconductors took some deep breaths and hung in there. Oil, well, best we can say is that the extremely oversold condition makes it look ready for a bounce.

And speaking of bubbles, in Treasury Bond toyland, yields are flattening, rates rose marginally. Gold and Silver declined slightly while holding on to key short-term support levels.

What can we expect tomorrow, the last day of both the week and month?

As I wrote above, a relief rally in oil for starters. With an inside day in the Russells, a new 2016 high close. The U.S. Dollar to close above 25.05. The rates to firm more. (Yet, not a phase change kind of move.)

And Granny Retail? She rested today. Tomorrow she might spring back to life. After all, a fun Grandma blows bubbles with her kids.

Lucky for us, “Bubbles made in the USA” stay in the USA. Who cares about zero nutritional value. We manufacture “Bubbles You Can Eat!”

S&P 500 (SPY) Inside day sitting right on the 10 DMA. 217.27-215.62 range to watch break either way

Russell 2000 (IWM) Inside day. 120.00 support and over 121.47 new highs

Dow (DIA) Needs to clear 185 and hold 183.70

Nasdaq (QQQ) With Alphabet, Amazon and Facebook, perhaps the almighty Nasdaq is back! 115.75 the December 2015 high

XLF (Financials) Consolidation mode continues but good close over 23.60

KRE (Regional Banks) Must end this week over 40.40 to change longer term trend to up

SMH (Semiconductors) 62.32 is the gap high to hold. Looks like digestion

IYT (Transportation) 143 pivotal 138.60 weekly support to hold

IBB (Biotechnology) Confirmed the Accumulation phase and still has 290 as the wiggy place to clear

XRT (Retail) Must clear 45.80 for the month to be a game changer

IYR (Real Estate) Back over 84.50 better

ITB (US Home Construction) 29.35 support to hold

HACK (Purefunds ISA Cyber Sec ETF) Megatrend paying off big time

GLD (Gold Trust) Cleared 126.75 and still has a small gap to fill to 129.16

SLV (Silver) 18.90 now support. 19.45 recent highs. More importantly, a weekly close over 19.11 is bullish

GDX (Gold Miners) 29.15 support

USO (US Oil Fund) Interestingly, if holds over 9.64 holds a gap from April 6th and will support my time to rally theory

OIH (Oil Services) If closes over 28.00 still a contender

TAN (Guggenheim Solar Energy) Holding the 50 DMA

TLT (iShares 20+ Year Treasuries) Could see 139 and still hold trend

UUP (Dollar Bull) I made my prediction

FXI (China Large Cap Fund) Consolidation mode

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