Mom, What's Normal? Just a Setting On The Dryer, Honey

May 12, 2015

Mish's Daily

By Mish Schneider

Mom, What's Normal? Just a Setting On The Dryer, Honey

I’m a relationship type of girl. Once you’re in good favor, I will do whatever I can to help you be the best version of yourself, loyal and protective.

Screw with me, and I will offer you the chance to explain yourself, accept an apology and forgive. But, if you instead become belligerent, dismissive or worse, abusive and uncommunicative, forget it-you’re toast!

I have advised specifically about stocks as well as traded throughout the Bull Run beginning at its nadir in March 2009. One could say I am in a long-term relationship with the Bull Market.

Throughout the last 6 years, we have had our issues-the market and I. However, there were always ample explanations and forgiveness after the nastiness. In fact, as the good friend the Bull Run has been, he/she has served up many new and better opportunities soon after we have had a good rout.

In former dailies, I have talked about the seven year itch. That’s fairly typical in a lot of relationships and certainly a perfectly reasonable explanation for the new personality trait the market has exhibited thus far in 2015-the stubborn trading range.

Is stubborn a deal breaker? Just as the bear market ended dramatically in spring 2009, it does stand to reason that the bull market since 2009 needs some equally if not more dramatic conclusion before I send him/her packing! Stubborn is annoying, but only dramatic if you allow that behavior to get to you. And should it get to us?

On the one hand, the market seems to absorb pretty much everything negative or that perceived as such and hence, continues to hold near the highs. On the other hand, it stalls near the highs, taunting one’s loyalty instead of rewarding it. Some would say that suggests it’s just waiting to crash.

To date, I remain in the former camp-you (market) had me at the bottom in 2009 and although I am more incredulous now than ever, you still have me. And why?

My Modern Family. Regional Banks (KRE) made new 2015 highs on Tuesday. The Russell 2000s (IWM) as long as it trades above 120, keeps faith alive. For Retail (XRT), I remain true provided it continues to close above 97.00.

Semiconductors and Biotechnology both have been up and down their 50 DMAs and thus far, spring into action just when they need to. Both are in bullish phases.

Transportation (IYT), the black sheep, well that one is about to send us into family counseling, but we’re at least optimistic provided it hangs on to 152.

My next daily, I will reiterate the 3 signs of a top I have posted several times throughout the years. Top is relative of course, but after 5 plus months of stubborn behavior, I would imagine the top, should it materialize, could be substantial.

In the meantime, my loyalty settles for less than perfection and makes allowances for weaknesses. However, hear me loud-true loyalty takes years to build and only seconds to destroy!

S&P 500 (SPY) Closed just shy of the interim support at 210-a good start above on Wednesday would be a positive. Otherwise, watching the 207 area.

Russell 2000 (IWM) 120-123.85 range within the range

Dow (DIA) If this can clear 180.88 early on and hold, good. If not, 178.50 most likely

Nasdaq (QQQ) 108 pivotal

XLF (Financials) 24.24 key support

KRE (Regional Banks) New 2015 high

SMH (Semiconductors) 55.00 support and through 56.80 good

IBB (Biotechnology) 350 pivotal

XRT (Retail) Over 99.65 clears the 50 DMA

IYR (Real Estate) Held recent lows as rates eased some

ITB (US Home Construction) Has to clear 27.30 to be good

GLD (Gold Trust) That negative slope in the 50 DMA has prevented us from even looking at trading this right now

GDX (Gold Miners) Good day if holds now over 20.00