Pop! Goes the Weasel!

March 13, 2016

Mish's Daily

By Mish Schneider

Draghi Cranks the Market

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I was surprised to see how many versions there are of this nursery rhyme. The song dates back to 1853 as an old English dance. In a Church of England pamphlet (1855), the song is described as having “senseless lyrics.”

One American version, first printed in Boston in 1858, goes like this:

“All around the cobbler’s house,

The monkey chased the people.

And after them in double haste,

Pop! goes the weasel.”

Monkey, eh? Chasing people in double haste? Did the Weasel just POP?

Could this be our Draghi? An Italian monkey during The Year of the Fire Monkey, that chases away sellers and lures in buyers to buy in double haste only to eventually hear POP! goes the weasel?

I wonder.

As a very young child, I would turn the crank of my Jack-in-the-box toy and sing along to the music of “Pop! Goes the Weasel.” At the end of the song, the monkey (dressed as a Jack of Hearts) popped out of the box. As I drew away startled, my mother would smile at me reassuringly.

Now I turn to our market’s Modern Family for both reassurance and information on how the monkey might or might not be leading us astray.

The Russell 2000 (IWM) or Granddad, did not start this rally. Brother Transportation (IYT) did. And although Trannies started the rally when the momentum shifted to positive, compared to Sister Semiconductors (SMH), IYT is in a Recovery Phase to Semi’s Accumulation Phase.

Actually, SMH if holds above the 52.95 area, that Head and Shoulders Top I wrote about last week in the S&P 500, really begins to look more like a massive double bottom. Honestly, folks, I find it hard to believe but remember, PRICE trumps all else!

Elsewhere, IWM lags. Over 109.25 that changes to a degree. However, I will continue to look here most carefully for any signs of playing catch-up or rolling over.

Granny Retail (XRT) sits right at the 200 DMA. This week’s action should be equally elucidating. Granny over 45.50 is strong. Under that level, questionable.

Prodigal Son Regional Banks (KRE) and Big Bro Biotechnology (IBB) have the most to gain yet can also turn out to be more of a ball and chain to the rest of the family if they cannot rally more from here.

We have a divided family among the Bearish, Recovery and Accumulation Phases. That could mean SMH, XRT are getting ahead of themselves. It could also mean IWM, KRE, IBB and IYT are simply slow to POP!

I love a bottom line and here’s mine.

Draghi is the new Alpha Monkey. The press just called him “bold” and “aggressive.” The markets and the rest of the Troop love him. Will neighboring bearish monkeys look to take him down? Maybe. Yet I have faith that the Modern Family will alert us in due time.

So for now dear friends and traders, I leave you with this:

“I’ve no time to wait and sigh, I’ve got no time to teasle. Kiss me quick, I’m off, goodbye! POP! goes the weasel!”

S&P 500 (SPY) Like with all phase changes, this must confirm with a second close over the 200 DMA. Otherwise, with this week’s FED meeting, I’d be more cautious taking a stance

Russell 2000 (IWM) Still far from the 100 DMA let alone the 200 DMA. That means if can clear 109.50 good start. If breaks under 107 though, suspect

Dow (DIA) 172.50 big point to clear! It’s yuuuuggge!

Nasdaq (QQQ) Must hold 106 and clear 108. Must.

XLF (Financials) Got right up to the 22.49 resistance and closed there. A contender but not a leader

KRE (Regional Banks) Looks better but still has to clear 38.47 the high from 3/07.

SMH (Semiconductors) Confirmed Accumulation Phase. 52.95 key support on a closing basis

IYT (Transportation) 136 now support. 138.87 the 3/07 high to contend with

IBB (Biotechnology) Over Friday’s high 262.16 would be a good first step

XRT (Retail) Needs another close over 45.50

IYR (Real Estate) Look here and the universe is a lot prettier. Must hold 74 area

GLD (Gold Trust) Sure it closed down but not by that much to think its over

SLV (Silver) Will look better if closes over 15

GDX (Gold Miners) 19.60 some daily chart support