September 17, 2015
Mish's Daily
By Mish Schneider
“If you think dogs can’t count, try putting three dog biscuits in your pocket and then give him only two of them.”
—Phil Pastoret
Today, I wrote a joke on twitter. If you missed it: Our dog lives in constant FED decision anxiety. Every time I get up she wonders, “Will or won’t I be FED?”
Ok, maybe I won’t get called by the talent scouts on Late Night TV, but for me, lesson learned after the FED did nothing, citing inflation at 2% as the target before they raise rates.
But did the FED do nothing?
The Fed might have paved the way for commodities to finally gain some traction. Gold and Silver sure like a weaker dollar. Draghi could help too. He recently stated that they have lots more room for Quantitative Easing if need be.
I have been on top of the 2 major Commodity related ETFs all year, DBC and DBA.
To repeat the difference:
DBA’s major holdings are cocoa, corn, live cattle, soybeans and sugar. DBC’s main components are gasoline, crude oil, gold, some corn, aluminum, soybeans, wheat and zinc.
Currently, both ETFs are in Bearish phases. Gold, Silver, Oil and Sugar are all in Recovery Phases. Key will be, especially in DBC, if it can recapture and hold over its 2008 low of 21.52.
On to the Modern Family
Granddad Russell 2000 (IWM), in a bear phase, ran (no small feat for our old man) up near the 50 DMA. Not surprising though, since I expected a test of 120 or so, where it originally broke down from. Furthermore, remember when the bull to warning back to bull phase erraticism ruled the first half of this year?
Logically and perhaps equally, we can see similar erraticism between bearish and recovery phases. In other words, thinking the market will go right back up seems awfully presumptuous.
Thinking this rally will end abruptly actually feels less presumptuous and perhaps even more feasible.
Granny Retail (XRT) more like jogged to the 50 DMA. Point is, Retail remains quite a way from looking like the bottom (or more than just a temporary rally off the recent lows).
Prodigal Son Regional Banks (KRE) red among his brethren. Why? Banks prefer a boost in rates. A drop under the 200 DMA will put pressure on his seniors, (XRT and IWM).
As far the siblings, Semiconductors (SMH), Biotechnology (IBB) and Transportation (IYT), seems each are wildcards in their own way. IYT, the underdog and one I tend to root for as the best measure of the 3 on the strength of the US economy, should be a major focus for how to play next big move.
Perhaps we all need to take a lesson from the dog. Only when I get up is she anxious to be fed. In between, she sleeps peacefully at my feet. The daily trend intact.
The FED just threw us a bone. We chewed and swallowed it. Now my fellow dawgs, find comfort in your daily trading routine. The Phase is my master. Woof!
S&P 500 (SPY) Never expected this to clear the 50 DMA. IN fact, may be a good short opp now unless 200 clears early and holds
Russell 2000 (IWM) Yesterday “This is either one giant bear flag forming, or Granddad is bent on visiting 119-120 to suck in more longs.” Today Happened and now we watch 116 as key support
Dow (DIA) Didn’t fill gap overhead to 170.22. If filled more positive. If not, more negative
Nasdaq (QQQ) Closed over the 200 DMA marginally. 106.93 pivotal
XLF (Financials) 23.20 pivotal-weak open Friday under not a good sign
KRE (Regional Banks) Test of 50 DMA, retreat, break of 200 DMA-all in a day’s work
SMH (Semiconductors) 50.90 the 50 DMA pivotal
IYT (Transportation) 146 the 50 DMA pivotal
IBB (Biotechnology) Ran to the 50 DMA, retreated yet in best shape
XRT (Retail) 46 area the best support to hold
IYR (Real Estate) Another one that ran then retreated from the 50 DMA. Us TA’s call this the gift short
ITB (US Home Construction) And XHB still in bullish phases so best place to look at buying on a dip and hold to the 50 DMA
GLD (Gold Trust) confirmed recovery phase. Let’s see if it can get to 110 and hold 106.90
SLV (Silver) confirmed phase change to recovery if holds 14.20
GDX (Gold Miners) Another day of big volume suggests its getting accumulated. But still has the 50 DMA to clear
USO (US Oil Fund) 15.20 pivotal down to around 14.90.
XOP (Oil and Gas Exploration) Has to clear the 50 DMA
UNG (US NatGas Fund) Been basing since May with 12.28 rock bottom support
TAN (Guggenheim Solar Energy) Over 30.93 clears the 200 weekly moving average. 29.50 near-term support
TLT (iShares 20+ Year Treasuries) Big volume, move up to the resistance-fun to watch but hard to trade
EWI (Italy) Of all the country ETFs, this one is in the best phase making it a contender. 14.80 risk
FXI (China Large Cap Fund) got to 37.94 and I wanted to short against 38.00-not too late since now we know risk
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