That Market Tiger Went Tiger!

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Inside the Jungle Night Club

Earlier this week I wrote about the 2016 Market Rules in light of the colorful and unusual Night Club rules we saw in Jamaica.

A quick recap:

No Follow Through -No Confirmation -No Real Volume -No Overconfident Traders- No More QE from the Fed- No Easy Money.

Then, right on cue, the Federal Reserve, acting like bouncers, tossed out the glitterati who danced on the backs of low interest rates, and left alone hopeful bulls to party in the ephemeral light of a bank rally.

Nevertheless, in the words of Chris Rock, the very next day “That Tiger went Tiger!” Or at the very least, its eyes lit up ominously. The early part of the market session probably scared just about anyone and everyone inside and outside the club.

By the day’s end, certain trends that began in January demonstrated muscle in spite of Fed speak.

Our Prodigal Son, the Regional Banks (KRE), changed phases yet again making that 7 times since April. Failing to hold yesterday’s move over the 200 DMA, KRE is back in an unconfirmed Recovery Phase.

Although no other indices or major sectors/groups changed phases today, the recent action demonstrates an erratic and nervous environment laced with just a wee bit of hope.

No doubt, when major moving averages are pierced then violated over and over again, the end result has several ramifications.

Besides a growing weariness by investors to speculate, erratic and choppy trading does eventually lead to a much bigger move one way or another. Trying to predict the next direction of interest rates and how that will impact the market is not a good trading plan.

In fact, I currently find predicting where equities are heading extremely tough. I am having a much better time following and trading commodities and/or equities related to commodities.

Neither the US Dollar recovering from recent lows nor interest rates firmer by ¼% concerns me very much vis-à-vis the strong trend up that continues in the metals and miners.

Bull Trend

You are witnessing a bull trend in several other commodities as well, equipped with normal and healthy corrections. As far as oil, the softs and agriculturals go, I do believe they too have bottomed.

Trading successfully in 2016 depends upon knowing which timeframe you wish to trade in. Then, knowing how to position size according to your risk/reward. You want to dance in the Jungle? Fine. You can either ride the Mechanical Bull or keep your eyes on the Tiger.

S&P 500 (SPY) I like where it held. 206 area to clear. 210 hurdle.

Russell 2000 (IWM) 107 underlying support with 111.15 the 200 DMA

Dow (DIA) 174 pivotal 172 support. 178 resistance

Nasdaq (QQQ) If the May 6^th low is good, this should hold above 104.40

XLF (Financials) 22.80 the 50 DMA held. Closed above the 200 DMA for a confirmed phase change to accumulation. 23.05 pivotal

KRE (Regional Banks) There is a gorgeous trendline under 38.63. Unconfirmed phase change to recovery. 40.20 pivotal.

SMH (Semiconductors) Confirmed Warning Phase. Inside day. Thru 53.75 impressive

IYT (Transportation) 134.27 important support. If that holds and this clear 137.25 better. Through 140.60 get bullish.

IBB (Biotechnology) A weekly close under 249 would not be good

XRT (Retail) 40.00 support. 41.75 resistance

IYR (Real Estate) confirmed warning phase

GLD (Gold Trust) 119.50 the 50 DMA which it managed to hold. 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

USO (US Oil Fund) Friendly here and like where it held. 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) A weekly close over 34.57 is a good sign for this

UNG (US NatGas Fund) Could be a flush and now more rally in store

TAN (Guggenheim Solar Energy) I am patiently waiting for a new buy opp down here

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. Inside day today

UUP (Dollar Bull) 24.55 pivotal