April 27, 2015
Mish's Daily
By Mish Schneider
At the risk of sounding like “Monk”, the obsessive detective brilliantly acted by Tony Shaloub in the 2002-2009 TV series, the “connect the dots” game I’ve played with my “modern family”, and the “drama” among Retail, Semiconductors, Biotechnology, Regional Banks and Transportation, all under the watchful guise of the Granddaddy Russell 2000s keeps preventing us from fully committing to the long side.
We came into this week watching to see if any of those groups could catch fire and if the Russell 2000s might take out 2015 highs or break down under the 50 DMA. Thus far, it tested the 50 DMA but held.
Furthermore, the Dow at 18,000, which has been the cruising altitude to maintain, came with the counsel to “keep your seat belt fastened throughout the flight, as we may experience turbulence.”
In the series “Monk”, his obsessive attention to detail allowed him to spot tiny discrepancies, find patterns, and make connections. The takeaway is that for active traders in general, we all seem to have taken on Monk-like behavior. Is it serving us well or not?
Yes, I like to focus these days on the discrepancies of the modern family sectors along with the Russell 2000s. And it does indeed help with finding patterns and making connections. However, these discrepancies, patterns and connections are typically good for a day or two. Intermediate and longer term, I go back to the overall trading range in so many instruments, stubbornly in place even when the details suggest that the range might break one way or another.
Regional Banks ultimately failed the 50 DMA-need a second day confirm. Semiconductors cleared its 50 DMA- need a second day confirm. Retail is holding its 50 DMA and in a trading range. Biotechnology tested and held the 50 DMA-if it breaks it on Tuesday, guess what? It will need a second day confirm. Transportation hasn’t gotten close to taking out the 50 DMA so let’s use 156 the 200 DMA as our line in the sand.
In some episodes of Monk, the killer's M.O. is known, but not who did it or why. In the ongoing episode of the Market, we know the M.O. of our trading range. Many of us are still trying to figure out what makes it test the highs and lows of the range and why.
S&P 500 (SPY) Cleared 212.24, then sold off. This could be the reversal from new highs thing that has happened a lot this year. Question always is whether or not it confirms that reversal. Support at 209.00
Russell 2000 (IWM) 123.86 the 50 DMA to hold. Back over 125.12 better
Dow (DIA) Fell to the fast moving average and held marginally after trying to take out the trading range since March. Perfect example of what type of trading action I’m talking about.
Nasdaq (QQQ) New high intraday then failure to hold Friday’s low. If this gaps lower, we are looking at a possible island top-of course that too requires confirmation.
XLF (Financials) Closed right under the 50 DMA giving us a confirmed phase change back to warning. Fins have been a reason why the market is not currently trading much higher.
KRE (Regional Banks) Been above the 50 DMA since February 6th. Until Monday.
SMH (Semiconductors) Unconfirmed phase change to bullish if holds 56.23 area
IYT (Transportation) 160 the point to clear 156 the point to hold
IBB (Biotechnology) Whoa big brother-sorry to hear you’re not feeling well. At least you held the 50 DMA. Get better soon!
XRT (Retail) Holding the 50 DMA at 99.56
ITB (US Home Construction) Looks like it might pierce below 26.59 in which case looking at the possibility of 25.15
GLD (Gold Trust) Unconfirmed recovery phase if holds 144.45
GDX (Gold Miners) Amazing how tough this has been to get the close over 20.00. But when it does….
USO (US Oil Fund) Consolidating just over the 100 DMA. Needs to hold 18.25 and clear 20.29
OIH (Oil Services) Consolidating and worth watching
TAN (Guggenheim Solar Energy) Perhaps we can get a correction to around 45.00
TBT (Ultrashort Lehman 20+ Year Treasuries) The Interest Rates should remain choppy with a good possibility of a rate rise, but with no real commitment on that as yet
EEM (Emerging Markets) Closed on another new 2015 high
EWP (Spain) Resistance at the key monthly moving average 36.32
EWY (South Korea) Consolidating after last week’s gap higher
BAL (Cotton) Futures look good and even better over 68.00
SGG (Sugar) Futures close above the 50 DMA and for the first time since 2010 look like its bottoming
PHO (Water) Worth watching if closes over 25.55 for a long term swing long
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