May 20, 2016
Mish's Daily
By Mish Schneider
Last Night (Week) a DJ Saved My Life-Michael Cleveland
In the song, the lyrics tell the story of a woman who is bored alone at home. She wants to speak to her man, but cannot reach him. She considers leaving him and eventually does. However, she never arrives at her destination, wherever that is. Once in her car she has a wreck. But a DJ plays a hot song on the radio which saves her life. Profound.
After a couple of weeks of a market that traded in a relatively boring fashion, many influential investors stated their intentions to leave or liquidate their long positions.
Furthermore, after the Federal Reserve comments, it seemed like the market was heading for a wreck. Makes one wonder what is the Fed’s destination and will they get there?
Meanwhile, the market’s DJ continued to spin. And we continued to dance.
What was the hot song the DJ played and did he save our lives last week?
I found NASDAQ the most compelling with action that embodied that certain “spin.” QQQs left traders twirling between a bullish and bearish bias.
After the May 6th low of 104.40 attracted a significant number of buyers, QQQs had a decent rally on better than average volume. Last week, QQQs tested and held that level.
NASDAQs action helped prevent the rest of the market from collapsing. Nevertheless, NASDAQ ended the week neither above the major daily or weekly moving averages. It sits atop a key monthly moving average.
For the upcoming week, we are back looking at some important levels in NASDAQ as well as in other instruments. QQQs need to hold 104.40. To fuel the bulls, it must clear 108.
The S&P 500 sits between the 50 and 200 daily moving averages in a Warning Phase. The Russell 2000 rests below the 50 and 200 DMAs yet very close to both. One good song can get it moving over 111. Otherwise, we wait to see what happens at 107.
Retail resurrected from support at 40.00. Question now is if she has another chance at a dance over 41.70. Transportation must hold 134.25 to stay afloat. Over 140.60 and we should see Trannies catch dance fever.
The Financial Sectors, Regional Banks (KRE) and XLF both closed at the weekly highs and over their 200 DMAs. If the Federal Reserve is the market’s DJ, then the Financials look saved by their song.
This coming week, Bulls gotta get out on the dance floor. They do not want to hear the DJ (Fed) spin “Dancing with Myself.”
S&P 500 (SPY) 206 area to clear. 210 hurdle. 201-202 ultimate support
Russell 2000 (IWM) Squeezed out a move above the 50 DMA for an unconfirmed phase change to Recovery. Needs to confirm. 107 underlying support with 111.00 the 200 DMA
Dow (DIA) 174 pivotal 172 support. 177 resistance
Nasdaq (QQQ) See above
Volatility Index (VIX) There’s been no love for those who buy fear.
XLF (Financials) This week, 23.05 pivotal and the weekly moving average to clear and hold above 23.35
KRE (Regional Banks) Expressed train to an unconfirmed Accumulation Phase. (9th phase change since April) 40.20 pivotal. 40.85 the weekly MA to clear
SMH (Semiconductors) Unconfirmed Bullish Phase with 53.75 pivotal and point to hold for this to confirm. This gives the market the most hope especially over 56.00
IYT (Transportation) 134.27 important support. If Through 140.60 get bullish.
IBB (Biotechnology) A weekly close under 249 would not be good
XRT (Retail) 40.00 support. 41.75 resistance
GLD (Gold Trust) 119.50 the 50 DMA which it managed to hold again. 118 big support and back over 120 better
SLV (Silver) Possible island top if cannot fill gap to 15.90. Still above the 50 DMA
GDX (Gold Miners) I still say this has more rally in its blood especially over 24.50
USO (US Oil Fund) Friendly here with support 11.45. Through 11.90 again is good.
XLE (Energy) Holding over the weekly MA which makes me think this is a good buy as well
XOP (Oil and Gas Exploration) Couldn’t quite get the weekly close over 34.57. Now must clear 35.22
UNG (US NatGas Fund) Better over 6.80
TLT (iShares 20+ Year Treasuries) TBTs don’t really get interesting until they clear 39.00. However, 35.00 is now really good support to trade off of.
UUP (Dollar Bull) 24.55 pivotal
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