September 29, 2016
By Mish Schneider
Artist: James Palmer Mulligan (our godson)
Imagine the 3 wires coming out of the subject’s ears as 3 different moving averages. On the left side the trend points up. On the right side, the trend is mixed. Near-term or the green wire looks higher. The red and yellow wires look lower.
Now if you will, visualize the bloodshot eyes as the confusion and diversion in the market. Henceforth, many traders are either in cash or in the case of numerous hedge funds, burnt out.
The smart phone plugged into the subject’s head flies above to remind us that a nervous market will overreact to the constant onslaught of input.
The gray matter (here pink) rising from the subject’s head represents how stretched trader’s brains have become trying to think one step ahead. So stretched in fact, their heads have popped open.
This week I’ve covered the solar and oil markets, both of which I anticipated could and did rise together. What remains unanswered however, is how if at all, that impacts the macro picture of the market?
Since First Solar rallied before most of the other solar stocks and before oil did, the stock remained firm yet ran into profit taking.
Oil, with one day left in the week, has yet to definitely prove it can close above a key weekly moving average. If it does, that would reverse a two-year downtrend.
In the interim, the market’s bloodshot eyes have kept its vision blurry. If you hold up the classic eye chart to each of The Modern Family members to read, the results are mixed. Some have 20/20 vision, while others test as blind as a bat.
We have had concerns about Retail for weeks. We believe Granny XRT needs cataract surgery. Meanwhile, Sister Semiconductors got Lasik surgery with the news about NXP Semiconductors. SMH closed on new highs.
The rest of the family’s vision falls somewhere in the middle. Transportation and Regional Banks may just need reading glasses. Besides Granny, Big Brother Biotechnology might see better if he takes that patch off his left eye.
“Don't roll those bloodshot eyes at me
I can tell you've been out on a spree
Well it's plain that you're lyin'
When you say that you've been cryin'
Don't roll those bloodshot eyes at me” Pat Benatar
S&P 500 (SPY) Better if can clear over 217. Pivotal point 215 then 212 rock bottom support
Russell 2000 (IWM) Working a reversal top unless it gets back over 124.75. The 50 DMA at 122.50 up next
Dow (DIA) Don’t mean a thing if a gremlin’s on the wing. 180 bottom line support
Nasdaq (QQQ) 116.55 the 50 DMA
KRE (Regional Banks) Held the 50 DMA so wouldn’t rule this out just yet
SMH (Semiconductors) News highs-sort of amazing
IYT (Transportation) 144-146 the resistance to clear. 141.50 support
IBB (Biotechnology) Had a 5% correction already, Back above 290 safer
XRT (Retail) Well, you cannot say I haven’t given you a daily report on her weakness. Could hold here but if doesn’t, watch it
GLD (Gold Trust) My bias has not changed
SLV (Silver) A weekly bull flag forming taking its time to break out of
GDX (Gold Miners) 26.50 pivotal support held
USO (US Oil Fund) 10.88 the 50 week moving average
TAN (Guggenheim Solar Energy) Between 19.80-20.05 support area
TLT (iShares 20+ Year Treasuries) 138.30 the 50 DMA pivotal. I am changing bias here from negative back to bullish
UUP (Dollar Bull) Until it closes over 25 or under 24.60 I’m neutral
Every day you'll be prepared to trade with: