December 18, 2014
Mish's Daily
By Mish Schneider
P.M. Dawn
The market is so blissed out on this holiday run, it barely noticed the declining oil and Russian ETF prices. After 2 dramatic inclines, the recent highs elude the SPY, DIA and NASDAQ yet interestingly enough IWM failed by centimeters to meet its 11/25 high of 118.78 with Thursday’s high 118.73. Significant? Everything is potentially significant in the Year of the Contrarian Horse.
What is definitely significant and worth repeating is the self-fulfilling statistic that since 1980, the SPY has been higher in December 82% of the time when the market has been in a bullish phase. December 1st close was 205.38. Therefore, after Thursday’s session is now officially over that price. So far so good. If it does nothing else but sit around at these levels, statistics fulfilled. If it climbs higher excellent-nice gift to conclude a tumultuous year. If it closes out lower, then we are back looking at losses that are generally less than one percent adding a tad more to that percentage.
The leading equities were mixed. Some Retail, some Biotech, some Semiconductors as far as the typical momentum stocks go had a great day. Others that have been seriously beaten to a pulp woke up: Tesla, Solar City-yes, Elon, you got a bit richer, Freeport-McMoRan, and MGM Resorts, to name a few.
The Interest Rate picture cooperated with the reverse psychology I have been writing about. If rates stay too low, it means the market is in trouble. Thursday, rates firmed but not by nearly as much as the market did-I’d say, friendly for market but not ebullient.
But let’s not forget how this year has gone thus far-just when the bulls get comfortable, volatility grows as selling balloons wreaking havoc. I wouldn’t exactly panic here, but I would anticipate anything as long as the rates stay low, and oil, Russia, emerging market pressure continues.
S&P 500 (SPY) The only thing to add here is whether or not it can match, clear and/or take out the recent highs. 202 is pivotal
Russell 2000 (IWM) 118.78- a gap above will look pretty if it holds
Dow (DIA) 178 resistance and if that clears looking at new highs likely. Trouble under 174.50
Nasdaq (QQQ) 105 resistance and 103.35 area support to hold
XLF (Financials) 24.45 key support if this is to continue
KRE (Regional Banks) About to have a Golden Cross
SMH (Semiconductors) 55.40 pivotal and 54.94 key tight support to hold
IYT (Transportation) 162 major overhead resistance
IBB (Biotechnology) Not surprising this is so close to the highs
XRT (Retail) Made a new high
IYR (Real Estate) Very near to the highs-also not surprising
ITB (US Home Construction) Amazing how well this held the 200 DMA on the correction and now, into resistance so must continue forging on
GDX (Gold Miners) Watch the 50 DMA for a phase change
USO (US Oil Fund) Looks ugly which all of sudden doesn’t matter? Good for consumers, bad for certain economies, could be deflationary
XLE (Energy) Like this best of the four oil/energy related ETFs I feature
TBT (Ultrashort Lehman 20+ Year Treasuries) 48.06 point to clear
UUP (Dollar Bull) Nice comeback greenback!
EEM (Emerging Markets) Maybe the whole emerging world is bottoming
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