August 20, 2017
Mish's Daily
By Geoff Bysshe
While the media focuses on all the people leaving Trump’s administration, the market tells you where the resulting next opportunity will be.
On Friday the energy commodity complex (USO, UNG, and KOL) started acting as if it’s ready to run.
For starters, on Friday USO exploded higher from a very import level 9.50.
As a result I looked around and decided to expand the coverage (below) of the energy sector to include UNG (Natural Gas) and KOL (coal).
Mish has covered both in the past, but right now I think there is a bullish inflection point that you can profit from in all of these commodities that is just over head if all three move higher.
Therefore, if these ETFs moves up next week, I’ll be following them for you in depth in the coming days so we can profit from what appears to be a compelling bottom.
Getting long the energy sector, however, is a counter trend idea, and as you may know, my favorite trades are WITH the big trend not against them. So we’ll tread lightly here next week.
Stocks fell again this week bringing their big trend into serious question.
SPY is now well under the 50-DMA, however DIA and QQQ are sitting one their 50-DMA, and IWM is sitting on its 200-DMA and the low end of an 8-month range.
If you’d like more details on the why the market may reverse higher, despite deteriorating market internals, both of these issues are covered in this week’s Market Outlook.
With 3 of these 4 indexes on support (only the SPY is below), we should start the week with an open mind.
S&P 500 (SPY) 241.50 key support. Resistance at from 243.70 to Friday high (244.20) then 244.80-245 is a big area.
Russell 2000 (IWM) Bottom of 10-month range is the 133.50 area. A break lower would mean 130 is the next big level of support. Expect resistance at 136 and 137.
Dow (DIA) Sitting on the 50-DMA at 216, Next support is 214.75. Expect resistance from 218-218.5.
Nasdaq (QQQ) Straddling its 50-DMA, bulls need a close over 142. If it breaks Friday’s 14.65 low look for support at 138.
KRE (Regional Banks) Sitting on the bottom of a well defined 6-month range. 51 is the floor. 54.00 is major resistance.
SMH (Semiconductors) Range bound – 84 to 88. 85 is good support.
IYT (Transportation) Must hold Friday’s low (163.47). 162 then 160 are next support. Expect resistance at 165.
IBB (Biotechnology) Sitting near 305 which is a pivotal area, but the big areas to watch are 300 below and 312 above
XRT (Retail) The 38 level was a major low in 2016 and 2014.
IYR (Real Estate) Stuck in a big range, but short-term key levels are 78.70 support and resistance at 81.
XLU (Utilities) Reached multi-year highs. Needs to close over 54.60, expect support at 53.60.
GLD (Gold Trust) Key levels to break are 122.80 and 123.50. Over that it runs. Look for support at 120.50.
SLV (Silver) 16.30 clears key high and the 200 DMA. 15.50 area is support.
GDX (Gold Miners) Same idea as GLD. Key levels to break are 123.25 and 213.50. Look for support at 22.30-.50
USO (US Oil Fund) As long as its above 9.50 I think the bottom is in! I’ll be watching this closely in the coming week. See UNG and KOL below.
UNG (Natural Gas) Still in a bear trend according to phases. However, if it has a 30-min Opening Range breakout over 6.75 it could indicate a multi-week bottom. The all-time low is 5.78, the weekly base high is 9.80. So the risk is just over a $1 and the first target is just over $2, but if it breaks $10 then $12 is the next stop.
KOL (Coal) Watch this for general support for any rally in USO and UNG. Note the high after the election of President Trump has been the defining resistance level. A break above it could be the ‘secret’ tipping point to a rally in the energy complex.
TAN (Solar Energy) 22.00 resistance and 21.00 support. That’s all you should focus on.
TLT (iShares 20+ Year Treasuries) I’ve been very vocal in my training webinars since June that the surprise here will be to the upside. Look to get long over 126.50. Should not break 124.50. Big support at 124.
UUP (Dollar Bull) This is simple and big. 23.96 to 24.20 is the low zone of a multi-year range. Look at your weekly charts for any close over a prior week’s high that is over 24.20. Until then, stay away.
FXI (China) has to hold 41.50 on a closing basis. Bullish if it closes over 42.80.
EWW (Mexico) It looks good. Should hold 56, stop under 55.30.
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