June 12, 2016
Mish's Daily
By Mish Schneider
I’m not talking about George Soros.
Mish has been talking about the lurking bear for some time now, well…
Ironically, the day Mish takes off the bears showed up in full view, and they were not intimidated by any bulls. In fact, you need only to look at the VXX (up 8.9%) to see that the markets were rattled on Friday.
So how bad was Friday for the Modern Family and the outlook for stocks next week?
After a big day it’s good to get a weekly perspective.
The weaker members XRT and IBB both were the only ones to close under their prior weeks’ low. In their case, this is particularly disappointing because they are both rolling over from key resistance levels.
This suggests that Friday’s selloff was not just a function of bulls taking profits in the stronger areas of the market, but instead a willingness by traders and investors to sell anything. This is also supported by the fact that the net number of advancing issues (598) minus declining issues (2,460) for the NYSE was the lowest number (-1,862) since February.
Fortunately we still have a supportive family environment, and while everyone had a down day, there are other members who are in stronger positions than their battered family members XRT and IBB.
As stated above XRT and IBB were the only ones to close under their weekly lows so the other four had minor pull backs in the context of the recent trends.
The key for the coming week is to watch for IWM to hold above its Friday low, and even better, for it trade back over the Friday high. This would put it back over the 10 DMA, and be indicative of a strong underlying trend.
The same is true for SMH. This has been the strongest family member over the last few weeks. However, it’s best to let it tell us if Friday was a one day rest, or it needs more time. It certainly deserves a rest, and until it heads higher it is unclear how much of a rest it will take.
Both KRE and IYT have pulled back into major support areas near their 50 and 200 DMAs, so their Friday lows are not as big of an inflection point as SMH’s low. As a result they could provide some support if the market continues to move lower.
With the upcoming Brexit vote, and the Fed meeting on trader’s minds the market is likely to test Friday’s lows this week. Let this test tell you how strong the bulls are, and…
Use the day’s opening range keep you on the right side of the trends!
S&P 500 (SPY) First close under the 10 DMA in month. Needs to close over 211 to trend higher. 208.80 is the support to watch, then the 50 DMA at 207.70. Subscribers: Negative Pivots in all
Russell 2000 (IWM) Friday’s low is a key level to hold, but 115.00 is the major support. It was a gap down and consolidate day so Monday could go either way.
Dow (DIA) 178 support. Friday’s high is pivotal.
Nasdaq (QQQ) 109.50 is pivotal, but lots of resistance above it. Friday’s low is on the 50 DMA so a beak could be serious, but 108 should be good support.
XLF (Financials) Sitting on the 50 DMA and just above the 200 DMA, but until this shows several days of strength support is hard to trust it with interest rates falling.
KRE (Regional Banks) Should have good support at 40.00, but I would not try to pick a bottom in this one.
SMH (Semiconductors) Today’s gap down may have trapped a lot of bulls. Needs to close over today’s high to demonstrate its ok again.
IYT (Transportation) Gapped down and consolidated. 140.70 is the key level to break to move higher, and a break of Friday’s low would be quite bearish.
IBB (Biotechnology) Hit hard again and now in the middle of its long term range. 265 should be good support. The phases and the 10 DMA have been great indicators lately. Use them. 250 is the big support.
XRT (Retail) 41.50 is a good area to look for it to hold and it’s Friday’s low, but the momentum is down. Next good support is around 40.80. It needs to get back over 42 first to demonstrate it’s back on track. Expect big resistance from 42.50-43.20.
ITB (US Home Construction) Pulled down with the market, but if it can get back over 28 it will look promising. Good support at 27.30.
GLD (Gold Trust) Bumping into resistance area of 122.50, then the recent highs are 124. 120.50 is the first big support.
SLV (Silver) 15.75 support with overhead at 17.00 then up close to 19.00.
GDX (Gold Miners) First weekly close over the 200 week MA (25.64) since November 2012, but not a very impressive daily pattern. Long term still bullish, but short term it needs to hold over 25.50.
USO (US Oil Fund) Broke the 10 DMA and now has to hold 11.75 which is support and the 200 DMA. 11.50 is also big support.
UNG (US NatGas Fund) Held up after Thursday’s explosive move up. Look for it to hold 7.50 short-term.
TAN (Guggenheim Solar Energy) Big breakdown. Worst close since Feb 2016. Next level of support is the multi-year low of 20. Needs to close over 21 to suggest it’s building support.
TLT (iShares 20+ Year Treasuries) Took out 2/11/15 high, 135.25, buy a few ticks and closed with a doji, but still represents the highest weekly close since December of 2015. 133.90 is key level to hold and the top of a gap down to bigger support at the 133.40 area. The Big top is at 138.50.
UUP (Dollar Bull) Big move up puts it in an unconfirmed recovery phase. Support at 24.40 and resistance at 24.70.
ILF (Latin America) Subscribers: Moved down into a warning phase and into support. 24 should be big support. 25 is likely to be big resistance, then 25.40.
FXI (China Large Cap Fund) Ugly drop back under the 200 DMA creating what looks like a double top at 35. Look for support at the 50 DMA, 33.20 and 33.00 area.
CORN (Corn) Subscribers: Down on the biggest volume all year. 22.50 is the big level to hold.
DBA (PwrShs DB Ag Fd) Subscribers: Held up nicely. Close to next target with 22 support
SGG (Sugar) Subscribers: Held up nicely. Underlying support at 39-40.00
JO (Coffee) Subscribers: Held up nicely after a huge bearish engulfing pattern, which included the two highest volume days and highest volume week since 2104. Bears need to see a confirm with a close under 20.33. Bulls want a close over 21.40.
PHO (Water) Subscribers: Hit hard but landed on good support area around 23.40. Note it’s trying to get back over its 200-week MA.
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