June 7, 2015
Mish's Daily
By Mish Schneider
National Lampoon’s Vacation
It was suggested to me last week that our hapless Modern Family seemed headed to Walley World, not unlike the Griswold’s ill-fated trip in the film “National Lampoon’s Vacation.”
After all, last Thursday we left our family on the side of the road in an overheating minivan. The Griswold’s drove a Wagon Queen Family Truckster! During their travels, they run into numerous mishaps-my favorite–their very “blackish” sense of humor of tying dead Aunt Edna’s corpse to the roof of the car.
Our Family came real close to having to deal with corpses, first with the earlier dump of Sister Transportation, who then finds a new lease on life by the week’s end. Then, Brother Semiconductors, who had a dramatic selloff until last Friday, when it ultimately held above the 50 DMA.
Despite the Griswold’s misfortunes, Clark, the dad, becomes obsessed with getting to Walley World. How perfect that our Granddad, Russell 2000, seems equally obsessed with keeping the rest of the family intact regardless of news, fears of higher rates, stronger dollar, etc.!
Clark’s greatest ally is his son Rusty. Russell 2000’s greatest ally is KRE, the Regional Banks, blasting to new highs on Friday.
That leaves Big Brother Biotechnology and Grandma Retail. Biotechnology in particular, as the most affable of the bunch, closed at the top of a month-long range. Retail, did the same, although its range is not nearly as impressive. The peak high in March was 102.50. Retail closed right on the 50 DMA.
How the coming week unfolds begs the question, will it evolve comparably to the Griswold’s when they finally make it to Walley World only to find it closed for repairs?
If we stretch the analogy further, replacing the Federal Reserve with Walley World, the action of the 20+ Year Treasury Bonds last week suggests QE is closed for repairs, putting to bed those wondering if the Fed might come back in to ease further.
Therefore, If Granddad Russell 2000 does like Clark Griswold did slipping into madness realizing all of his efforts had been for nothing, we might find our Family ditching the car to fly home.
But, if the Fed, like the Walley World Park Owner, understands the Russell 2000s impassioned longing to take his family on the perfect vacation, then we could see the Fed hint of a rate rise, while giving everyone ample time to enjoy the park as its guests.
S&P 500 (SPY) Unconfirmed warning phase with support now at 208.40 and if clears 210.58 better
Russell 2000 (IWM) Tore away from the pack and over 125.93 will lead the others
Dow (DIA) Down to test late April early May lows in a confirmed warning phase
Nasdaq (QQQ) Double top looking more possible with support to hold at 108.35
XLF (Financials) 24.95 the point to clear with 24.45 the 50 DMA
KRE (Regional Banks) Closed on the highs for the year-well, I am rather proud of our conviction here through thick and thin!
SMH (Semiconductors) Giving it leeway to 56.50 and over 58.00 much better
IYT (Transportation) 151.80 the pivotal weekly moving average cleared handily. That should help the market
IBB (Biotechnology) 368.25 next hurdle
XRT (Retail) Sideways Grandma-trying to align with her strong and her weak family members-divided and maybe the decisive factor next week
GLD (Gold Trust) Possible reversal off the lows which will look confirmed over 112.40
USO (US Oil Fund) Over 20.00 better
TAN (Guggenheim Solar Energy) A possible reversal after making new lows which confirms over 42.00
UUP (Dollar Bull) Stronger dollar but nowhere near the recent highs
RSX (Russia) Possible reversal off the lows which will look confirmed over 18.04
DBC (DB Commodity Index) Confirms a reversal over 17.58
SGG (Sugar) Trying to bottom
PHO (Water) Held where it needed to
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