The Disambiguous Ambiguous Market Waltz

August 8, 2017

Mish's Daily

By Mish Schneider

blankWho is beating the drums? He’s smiling so he must be happy, right?

Same question to the market. Who is buying the new highs in the S&P 500, the Dow and NASDAQ?

With so much money around and no other place to put it, the U.S. banks, corporations and China (lots of money sloshing around) are.

So, they must be happy, right?

Who is singing?

Perhaps with equal passion as the man in the photo, emerging markets are.

Greece, India, Brazil and yes, China, have sung their way through the rally.

China, with all that cash, sings the ETF (FXI) praises. FXI made new new 2017 highs.

Who is dancing?

Actually, they are waltzing. I shot the photo (on the outside looking in) of the time-honored tradition called Quinceañera.

Quinceañera’s literal translation is disambiguation.

Disambiguation means the removal of ambiguity by making something clear.

Is that a good way to describe the activity in the market today? The disambiguous ambiguous waltz?

The celebration (Quinceañera) refers to a girl turning 15 years old.  It’s her transition from childhood to womanhood.

That’s clear. What’s not so clear is what today’s action means.

With that said, one statement could be the culprit.

If North Korea escalates nuclear threat, “they will be met with fire and fury like the world has never seen.” President Trump.

The President just transitioned from fan of money flowing to the stock market to fan of money flowing to the war chest.

Hopefully not. Markets do not like that.

Remember last night I wrote, “The market’s quiet tone is characteristic of the summer. Yet August can also yield surprises. Big ones!”


So, what happens now?

Watch the Family-not the Dow.

The Russell 2000 still has a failure at the monthly channel. 142.90 in IWM is the top and sure looks like that top could stick.

Furthermore, IWM is in a warning phase waltzing at the pivotal 140 price.

Transportation (IYT) is in a warning phase.

Semiconductors, Regional Banks and Biotechnology are all in Bullish Phases. Yet none of them came close to making new highs along with the 3 indices that did.

Granny Retail started out great. Now, with a 2-month high early on and a close on the intraday lows, her Recovery could be short-lived.

The drummer is smiling at me as I tried to focus my camera through the glass. He pulled back the curtain to make it easier for me to shoot.

In that same vein, buyers have pulled back the curtain on every market dip to buy some more.

Now, we shall see if they continue to smile.

S&P 500 (SPY) Cleared 248 but closed below. Reversal? Needs to break 246.83 then 245.68.

Russell 2000 (IWM) 140 majorly pivotal.

Dow (DIA) Broke the 9-day streak of new high closes.

Nasdaq (QQQ) 144 pivotal

KRE (Regional Banks) 54.25 pivotal support

SMH (Semiconductors) 88.00 could not clear. Now watching the 50 DMA at 85.60

IYT (Transportation) Failed 166.50 so now pivotal

IBB (Biotechnology) 308.50 major support with 322 the place to clear

XRT (Retail) 41.00 pivotal

IYR (Real Estate) Like to see this hold 80.00 on a closing basis

XLU (Utilities) 54.00 cleared

GLD (Gold Trust) 119.00 the 50- DMA support

SLV (Silver) 15.25 support. Over 16 looks good

GDX (Gold Miners) Like to see 22.00 hold and 22.60 clear

USO (US Oil Fund) 9.95 pivotal. 10.60 big resistance to clear

TAN (Solar Energy) 21.85 now nearest support

TLT (iShares 20+ Year Treasuries) Failed 124.86 the 50 DMA now pivotal

VXX (Volatility Index) Some fear back in the market-surprise surprise

UUP (Dollar Bull) Returned over the 200-week moving average at 24.20. Now pivotal number

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