Technology Spins a Ghoulish Fugue

October 11, 2016

Mish's Daily

By Mish Schneider

Monday, we saw our gold-flecked and bare-toothed Rallysaurus pick up the Modern Family for a road trip. We knew that he chose to traverse the Family through unpaved roads possibly fraught with roadblocks.

With Alcoa Aluminum’s poor kickoff to earnings season, what we prepared for but couldn’t know for sure was just how badly that first left turn would wind up.

Not only did the car get a flat tire, the only station the Family could get on the radio while they got out their spare was an ominous fugue orchestrated by a ghoulish techie.

Speaking of techies, part of the huge decline came on the heels of our Sister Semiconductor’s inability to sustain its new all-time high made yesterday. Ending that session in the red and on the intraday trading range lows set her up for the big mess she had today.

Furthermore, it’s not unusual for technology and the top NASDAQ 100 stocks to be last to hit the road running. As a result, they often find themselves first in having to stop short to avoid a wreck.

Have the Rallysaurus and the Modern Family merely experienced a temporary setback? Can Tech and NASDAQ get back in the race?

Or will their final destination be a Thelma and Louise ending?

Tomorrow, if the Family returns to the road, it might have something to do with Fed Speak (FOMC Minutes).

The Consumer Comfort Index comes out as well. The Retail Sector or Granny XRT managed to outperform Granddad Russell 2000. That could imply that with a little bit of stimulus, XRT might help the rest of the market regain some of today’s lost footing.

Additionally, as the consistently weakest one of the Family, it may be a saving grace that after Wednesday, Consumer Sentiment and Retail Sales are on tap.

Then, if Granny Retail and Granny Yellen come through, the Family will have to see Big Brother Biotechnology hold today’s lows. IBB runs neck and neck with Retail as the market’s weakest link.

So no surprise that both IBB and XRT tested and held their 200 DMAs.

As for our ghoulish techie playing an ominous fugue, he could just as easily decide to play some funky music. At this point, I’m still thinking that the Dow nor our Deejay want a Halloween repeat of Terror at 18,000.

S&P 500 (SPY): Pivotal point 215 then 212 rock bottom support. Must clear 217 to keep going.

Russell 2000 (IWM) Working a reversal top unless it gets back/closes over 124.75. Went into a unconfirmed warning phase. Now it must confirm

Dow (DIA) 184 to clear and must hold 180

Nasdaq (QQQ) 118.50 pivotal. 117.25 the 50 DMA support to hold

KRE (Regional Banks) 42.50 support and 44 next point to clear

SMH (Semiconductors) A low volume potential reversal top. Must confirm

IYT (Transportation) 145 should hold if good

IBB (Biotechnology 276 key support 290 resistance

XRT (Retail) 44.50 next hurdle and 43.25 key support

ITB (US Home Construction) Also hit support across 3 timeframes.

GLD (Gold Trust) 117.50 the 50 week moving average

GDX (Gold Miners) 21.80 the 50 week moving average