December 23, 2015
Mish's Daily
By Mish Schneider
Thank you Santa Baby! You complied and gave us 3 days of a rally, even allowing some really beat up instruments to see a reprieve.
When I first began comparing the market, Modern Family and National Lampoon’s Christmas Vacation, we left off with a hopeful and happy ending after a very tumultuous start of the holiday season.
In the film, on December 23rd, Clark (whom we are calling Granddad Russell 2000) is seen staring out the window at his future pool, fantasizing about Department Store Mary, who is appearing to give Granddad a memorable daydream striptease. (For some of us that striptease fantasy was this rally)
He's quickly interrupted by Eddie's (whom we are now calling Louis or USO-OIL) daughter who tells him she believes Santa isn't coming. Granddad Russell reassures her that the opposite is going to happen.
Interestingly, oil finally put in a robust rally with volume!
And so this week it has. With the big turnaround after a test of mid-September lows in the Russell’s (IWM), and with one day before Christmas, IWM continued to run up. Yet, the basic and fundamental question is will IWM and the rest of the Modern Family experience post-holiday blues?
IWM and the road to its overhead 50 DMA has grown shorter. 115-115.85 is the big gun resistance. Ultimately, the test of the market’s resolve after the long Christmas weekend will be measured on whether or not that level can clear.
Granny Retail (XRT) has similar issues. The possibility of will she or won’t she march to the 50 DMA at 44.75 will also be a huge measure of how much power our matriarch will have as we enter 2016.
Transportation (IYT), needs to get up to 144, where the 50 DMA lives. Wednesday’s action puts it only halfway there.
Those 3 key family members are all still in bearish phases. So, as encouraged as the market may be with the NASDAQ 100 and the pre-Christmas rally, with ½ the family negative, this rally could indeed be short-lived.
Sorry don’t mean to be the Grinch!
However, the top ten megatrends to watch in 2016 are and will continue to be a reliable place to look for both buy and short opportunities.
Clearly, should the market hold and continue higher, money will flow into those ETFs and individual equites.
I emphatically stress that in order for you to have your own grasp of what the future holds, (as good as any economists’ I might add) look to our quirky yet reliable Modern Family.
For more on the rest of the clan, please read below.
S&P 500 (SPY) filled the gap to 204.54 and held the level all day. 206.20-206.55 are the 50 and 200 DMAs to clear.
Russell 2000 (IWM) 115.85 resistance. A failure of 113.60 would tell me perhaps we won’t see a test of that resistance
Dow (DIA) Got through the overhead resistance and closed with an unconfirmed phase change to bullish. Now, 174 pivotal with a second close above the 50 and 200 DMAs necessary to confirm.
Nasdaq (QQQ) Closed over 112.40 with an unconfirmed phase change to bullish. A second close above the 50 and 200 DMAs necessary to confirm.
XLF (Financials) Cleared 2 of the 4 major moving averages. Until it clears 24.26 with gusto not much to read
KRE (Regional Banks) 42.61 resistance overhead. 43.60 even stronger resistance overhead
SMH (Semiconductors) 54.10 is the 200 DMA. 54.50 the 50 DMA. Stopped just shy of the 200 DMA. Must at least clear the 200 DMA as a key sib in the family.
IYT (Transportation)140 substantial resistance with 135 pivotal
IBB (Biotechnology) Now, with the move over 335-that has to hold. Furthermore, it must get passed 342 and stick.
XRT (Retail) 43.25 are closest support to hold. Then, it’s all about 45.00
IYR (Real Estate) Bullish phase confirmed. From experience, hard to be too negative with this group does well.
ITB (US Home Construction All about 27.70
GLD (Gold Trust) 102.25 if good, should hold. Over 102.60 better and over 104 best
USO (US Oil Fund) More short covering with big volume. 11.00 should hold if good
OIH (Oil Services) Those 2-day reversal patterns are awesome when they work. Now, question is will that reversal stick as a bottom in place?
XLE (Energy) Followed oil. 60.80 support to hold. 64 big overhead resistance
XOP (Oil and Gas Exploration) 31.65 resistance to clear
UNG (US NatGas Fund) Nice but needs to fill gap to 7.82
TAN (Guggenheim Solar Energy) Narrow range, inside day. Over 33 is an add.
TLT (iShares 20+ Year Treasuries) 121.75 broke so that assumption that higher rates equals more economic confidence not so crazy. Watch that area as pivotal now
UUP (Dollar Bull) Looking at the weekly charts, this looks higher longer term
EWP (Spain) Nice island bottom if confirms- a real one
EWG (Germany) Back over the 50 DMA if sticks
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