March 9, 2015
Mish's Daily
By Mish Schneider
It seems safe to get back into the sheep conversation after recent activity. I titled the weekend commentary as Cast Sheep because that perfectly defined last Friday’s action (if you accept the premise of sheep in the first place.)
A Cast Sheep is one that has fallen onto its back and cannot get itself back up without help. So, if we press the analogy and use the current market action as sheep grazing, retreating, occasionally falling on its back, and in some cases getting slaughtered-BUT-after all is said and done, the surviving sheep come back to feast again, stands to reason the worst of the damage is done. For now.
Most notable is the inside day pattern in all 4 indices. If there is ever a reason to buy into the sheep theory-an inside day pattern makes the case. For starters, one would expect the sheep to tentatively return to the pasture. (New readers, an inside day is when the trading range of the day is inside the trading range of the day prior).
So, like a sheep caught in the headlights (were you expecting wolves?), if the trading range reconciles on Tuesday to the upside, percentages (given the bull phases) are in favor of a continuation to the upside. Perhaps, not new highs, but at least back to a trading range.
On the other hand, if the inside day reconciles to the downside, assume the sheep either ran for cover and will come back again sooner rather than later or worse, they decided to cross the road after seeing headlamps and splat…
S&P 500 (SPY) Over 209.42 I like this a lot more. Otherwise, the 50 DMA is 206.15 and the 6 month January calendar range hid is 206.88
Russell 2000 (IWM) My vote for most likely to succeed. However, has to clear 122 and hold the 50 DMA 119.48 and the January Calendar Range high is 120.56.
Dow (DIA) A prettier inside day but an inside day nevertheless. Watch the range break
Nasdaq (QQQ) That 108 resistance was palpable and now the key are to clear. Otherwise, could see 105-106 next
XLF (Financials) Inside day with support at 24.02 resistance to clear 24.60
KRE (Regional Banks) Inside day. Tried 41.06 the January Calendar Range High but has to close above if good
SMH (Semiconductors) 56.00 support but needs some signs of life
IYT (Transportation) confirmed warning phase with an inside day
IBB (Biotechnology) Looks ok-more like a gentle step down than a top
XRT (Retail) Inside day but not impressed unless it clears 98.50 and sticks
IYR (Real Estate) Narrow range inside day sort of in the middle of nowhere
GLD (Gold Trust) Inside day after Friday’s gap lower-weak
GDX (Gold Miners) Remember my story about getting stopped out at 20.13 with a loss? Now, its trading under 18.00
USO (US Oil Fund) Held 18 so with all the noise, still in a range-yet volume remains light
UNG (US NatGas Fund) Good basing action support at 13.00
TAN (Guggenheim Solar Energy) Please remind me to get back in close to 40.00
TBT (Ultrashort Lehman 20+ Year Treasuries) Retreating from the 100 DMA
Every day you'll be prepared to trade with:
