November 27, 2017
By Mish Schneider
No doubt acrobatics, such as the one illustrated, require incredible strength, flexibility and focus.
Only a handful of performers have the skill to pull off a one-armed handstand whilst balancing on a stack of chairs.
Likewise, only a handful of stocks have the strength, flexibility and the focus of investors.
The minority of stocks that do amazing feats of strength and balance have kept the investors bullish and the market robust.
Oddly, with Amazon, Google and Facebook all at new highs, many other sectors of the market hardly look like the “Greatest Show on Earth.”
In fact, many resemble the opposite of acrobatic finesse-precariously balanced, fearful of heights and out of favor with investors.
Which sectors require a net to catch them when they fall?
For me, my macro viewpoint typically follows the trail of the Transportation sector or IYT.
To review, the Dow Theory states that if manufacturing goods exceeds transporting goods, it could be an early warning sign that demand is diminishing while supply increases.
In the long run, that is not a favorable scenario for the economy.
Today’s action is classic.
While online shopping sales increased to its highest levels, that windfall is subdued by the poor brick and mortar retail sales.
Here’s where following IYT gets interesting.
IYT began up on the day. Friday’s high was 174.01. Today’s high 174.00.
From there, IYT (in a warning phase) sold off. It took out 173 or the 17-week exponential moving average. It tested and thus far held, the 100-DMA at 172. 11.
IYT’s decline trickled to the Russell 2000 (IWM.). Super wonder woman Sister Semiconductors (SMH) also declined. SMH could have a topping candle. Only, the volume does not support a strong reversal top.
Meanwhile, Regional Banks (KRE), tried to improve phases to bullish. Neither strong nor dexterous enough, KRE gained yet ultimately closed in the warning phase it began the session in.
As far as Granny brick and mortar, Retail (XRT) works hard to get in good enough shape to handstand on two arms, let alone one. That will require steroids.
While AMZN, FB, and GOOGL easily balance on one arm, they qualify as the “Greatest Show on Earth.”
Nevertheless, for the market to expand its audience, it will need more than one main event-we are seeking a 3-ring circus.
S&P 500 (SPY) 258.75 key to hold
Russell 2000 (IWM) 150.00 now pivotal support
Dow (DIA) 234.60 support to hold
Nasdaq (QQQ) 154.60 support to hold
KRE (Regional Banks) 55.35 should hold if good
SMH (Semiconductors) If cannot fill gap to 105.11 could see correction to 101.
IYT (Transportation) Back over 173 will be better-and under 172 pay attention to the anomaly in the market
IBB (Biotechnology) 308 near-term support.
XRT (Retail) 41.00 the 200-DMA key to hold
GLD (Gold Trust) You might want to look at buying volatility-seems it cannot stay in this range must longer
SLV (Silver) 15.90 support. 16.25 must clear
GDX (Gold Miners) If miners move up, there’s your sign for gold
XME (S&P Metals and Mining) Should hold 31.00 if good
USO (US Oil Fund) An exhaustion gap if this cannot clear 11.70. Then, could see 10.96
TAN (Solar Energy) Another exhaustion gap-time to trail up those stops
TLT (iShares 20+ Year Treasuries) 126.00 support
UUP (Dollar Bull) Got oversold so the bounce is expected.
FXI (China) New 2017 highs
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