September 30, 2015
Mish's Daily
By Mish Schneider
When A Donkey Meets The Elephant In the Room
Monday night I wrote about the Dow (DIA) wondering if DJIA at 16,000 might be a cushion. And if so, does that correspond with important daily, weekly and monthly charts points?
The basic analysis-as the first index to turn bearish, the August 24th low could complete a 10% correction. However, a break of those lows could take it down to its monthly moving average at 133, while a hold and run over 170 brings the Dow back over the 200 week moving average.
I often think about Solar Energy, particularly the contrast between the political debates on the existence of climate change versus what I see as the bigger picture-
American investors looking to support American companies, regardless where one’s political viewpoints reside.
Solar Energy, once a fringe interest of the environmentally aware, has become a viable option in new home construction and renovation. More businesses and government entities are turning towards solar to power self-contained systems to promote energy reserves on site.
Living in New Mexico, we have even more reason to cheer on the survival of solar energy companies since the largest utility-scale installations are located in the deserts of the Southwest.
Although I avoid getting a TAN, why do I follow it?
With many solar energy companies to track (Solar City, SunPower, Trinity Solar) all ranked within the top 7 US based Solar Companies, TAN is a good barometer as an ETF. Solar City is TAN’s 3rd largest holding with First Solar, based out of Arizona with manufacturing plants in Ohio and Malaysia, TAN’s largest holding.
Technical Analysis
On all timeframes, TAN the Solar ETF, has broken down. On the daily chart, the Bearish Phase confirmed in late July. Tuesday, TAN made a new 2015 low testing yet slightly failing the support from the August 2013 low of 25.54.
On the weekly chart, TAN is well below the 200 week MA. Most notably, the 7 year monthly moving average has yet to clear and won’t do so until TAN trades above 50.00 (almost double from its current trading price at 25.45!)
The meager daily average volume of only about 195,000, speaks, well volumes! Not heavily speculated nor necessarily viewed as an essential component of the US economy, in the current market decline-
What might wake TAN up?
Technically, should TAN get back over 25.54 and then clear the 26.60 area or last week’s lows, watch for increased volume as a good indication that speculative money is coming back in.
Secondly, if all political platforms more vocally support one of America’s innovative resources and the companies that put their money to work in America, who can argue that that is not good for business?
S&P 500 (SPY) 190 pivotal with 173 area the 200 week moving average and 197 above the monthly moving average Russell 2000 (IWM) Closed under the August low which means unless this clears over 108.80 expect 102.50 could be next
Dow (DIA) 160 minor support. Over 164.00 could help the rest of the market. Then, we are looking at 154
Nasdaq (QQQ) Traded right down to the 98.70 level or monthly chart support-if can hold it, that’s one thing. If not, down to the 200 weekly moving average we go.
XLF (Financials) Back over 22.50 would help
KRE (Regional Banks) Safe for now and holding 40.20-40.50-one of the best places to look at if the market holds
SMH (Semiconductors) 47.55 support, 50 resistance and pivotal
IYT (Transportation) At September low but not yet to the August 24th low
*IBB (Biotechnology) Big volume again-Tuesday 4 times normal after Monday’s most volume ever! Blow off? 284.16 the August 24th low. Monday low 285.53. Before we chant double bottom, Big Bro has to close this month over 292 and get follow through early October.
XRT (Retail) Doesn’t look like we will get that monthly close over 45.38 to keep hope alive
IYR (Real Estate) Inside day. 200 week moving average 68.63-key!
ITB (US Home Construction) Breaking down with 25.36 key monthly support to hold
GLD (Gold Trust) 107.07 the 50 DMA to hold
USO (US Oil Fund) Waiting for 15.00
TLT (iShares 20+ Year Treasuries) Looks like that erratic price activity up and down the 50 DMA is reconciling to the upside.
UUP (Dollar Bull) 25.00 pivotal and over 25.17 clears the 50 DMA
CORN (Corn) Over 24.00 gets real interesting
DBA (PwrShs DB Ag Fd) Waiting for it to clear 21.52
DBC (DB Commodity Index) Like better if can clear/hold over 15.35
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