November 4, 2015
Mish's Daily
By Mish Schneider
Why Are Many Investors Asleep During This Rally?
In 2012, a documentary film called “Searching For Sugar Man” met with critical acclaim. The story followed the efforts of 2 Cape Town, Africa fans in their quest to find out whether the rumored death of an American musician was true or not.
Last night, I wrote in search of enlightenment to help answer many questions about the market and hoped that Wednesday would shed light on whether or not the rally was dead or not.
Instead of definitive answers, I got an inside day in the Russell 2000s (IWM.) For those of you unfamiliar with Japanese Candlesticks, an inside day is also called a Harami.
An inside day is often used to signal indecision because neither the bulls nor the bears are able to send the price beyond the range of the previous day.
IWM had company. Both the Dow (DIA) and the S&P 500 (SPY) had inside days as well. Only NASDAQ (our Alpha male QQQs) took out Tuesday’s high, although didn’t close above it.
No surprise, future man-wife of NASDAQ, Semiconductors (SMH) had a strong day.
So how far did Wednesday and the strong performances in SMH and QQQ go considering other factors are still at play?
The Russell 2000s and their trifecta of resistance at the 118.50-119.00 level, from a technical standpoint, tells us that once through-bulls are back in control.
If IWM fails the 117.30 area, I would expect to see the bears arise.
With the terror that the Dow at 18,000 seems to strike in the heart of the bulls, I do wonder what impetus would give the market reason to clear that area.
Clearly, the Federal Reserve continues to play on both the bulls and the bears resolve.
The rest of the Modern Family (IBB, KRE, XRT, IYT) or key sectors and groups, pulled back from their resistance areas, but not enough to warrant thinking “reversal.”
Interestingly enough, Rodriguez (the very much alive subject of Sugar Man) was asleep during the 85th Academy Awards when the film was awarded an Oscar as the Best Documentary.
It seems the same could be said for many investors. Asleep during most of this rally, the impetus for more of it could simply be because sidelined investors wake up.
S&P 500 (SPY) 210 pivotal now with 213 the big area to clear
Russell 2000 (IWM) Inside day
Dow (DIA) Inside day. 99.17% RSI overbought on the weekly chart
Nasdaq (QQQ) With another new high on Wednesday, 114.39 the old high, an important level to hold on a weekly basis
Volatility Index (VIX) Another green close-investors are still nervous-possible reversal
XLF (Financials) Inside day over the 200 DMA-needs to clear 24.55
KRE (Regional Banks) Cleared but did not close over 43.91-looks like it wants to though
SMH (Semiconductors) major support at the 200 DMA 54.22 with a move over 56.00 needed
IYT (Transportation) Like most of the sectors, it doesn’t look bearish, but it doesn’t look bullish either-just like it recovered from death’s door-inside day.
IBB (Biotechnology) 327 important level of support
XRT (Retail) The September 17th high to clear 47.68
IYR (Real Estate) Holding the 200 DMA at 75.75
ITB (US Home Construction) The overall chart doesn’t look that great to me-looks like a giant top was made. What would change that? A move over 28.00
GLD (Gold Trust) Broke 106.47 the last low to defend but now way oversold
SLV (Silver) Broke the 50 DMA with a valid trendline at 14.20 level
GDX (Gold Miners) Barely holding the 50 DMA
USO (US Oil Fund) Held the 50 DMA at 14.83
OIH (Oil Services) Inside day over the 32.00 pivotal area
XLE (Energy) Inside day-still good
XOP (Oil and Gas Exploration) Doji on the 100 DMA
TAN (Guggenheim Solar Energy) Want to see a weekly close over 31.00
TLT (iShares 20+ Year Treasuries) Doji day
UUP (Dollar Bull) Close to some resistance at 25.69
EWW (Mexico) If they legalize pot this ETF should move over the 200 DMA 56.78
DBC (DB Commodity Index) Didn’t get the second close to confirm a better phase
SGG (Sugar) Now looks like a possible island top
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