November 15, 2015
Mish's Daily
By Mish Schneider
(Written while listening to Mozart Piano Concerto No. 17 (K453) and No. 25 (K503) Conrad Tao, Piano)
I mention this as last week we began with a Modern Family hopeful and ended the week with several members in despair. Music soothes the savage beast, which reared its ugly head.
I might add that the Family tried. First, by heading to the Museum of Modern Art to check out a de Kooning painting to gain inspiration. What they got though, was merely the deconstruction part of his work plus an abstract vision very different from the one they sought.
Then, they opened a book of poems by Yeats. In reading the “Second Coming,” although they hoped to find more encouragement, instead the message of that poem said, “the best lack all conviction.”
Last week began with Regional Banks (KRE) or Prodigal Son about to enter a Bullish Phase running to new highs not seen since 2007.
This move was on the backs of the Federal Reserve and their now more obviously delusional calls for “Mission Accomplished;” let’s raise the interest rates.
Each of the cast of the Federal Reserve gave a version of the spiel that the war on joblessness is over and inflation is nearing their target. Insert guffaws here.
Our Modern Family ended the week listening to David Bowie’s “Ashes to Ashes.” They were saddened to learn that Major Tom is a junkie and that he was hitting an all-time low.
The future for the Family still might rest with KRE. Although the week ended with this far from those new highs, the bullish phase exists. The 65-week moving average sits well below at 41.00, giving the correction a lot more room if necessary.
Looking elsewhere, Granny Retail (XRT) had a different trajectory in mind. On Monday, right out of the gate, Retail fell hard. Then, with the slew of bad earnings reports in many retail chains-Nordstrom, as prime example, Granny sank lower and lower.
She ended the week very close to the August lows. Trust those weekly moving averages as since August, the 65-week has eluded our dear Retail sector.
Like Granny, Transportation (IYT) never came close to taking out the 65-week moving average. Now, back in a Bearish phase, unlike Granny, the trip down to the August lows would most likely be a ways off. The market will be incredibly oversold before it gets down to levels of 130.
Remember the trifecta of resistance in the Russell 2000s (IWM) at 118.50-119? Granddad tried valiantly to clear those levels. “Monday, Monday” though, we couldn’t trust that day.
Since then, it’s been all downhill. On the weekly and monthly charts, IWM shows deterioration and once again is the representative index of doom and gloom.
Big Bro Biotechnology (IBB) ended beneath the 65-week moving average as well. At this point, except for a move back over 340.00, I would not be fooled by Friday’s green close.
That leaves Semiconductors (SMH). Second best phase to KRE, SMH is in a recovery phase while the others of his brethren are bearish.
What’s it gonna be? Will KRE, SMH and IBB surprise many and run right back up? Not sure what the fix would be although I’m guessing it might have something to do with that “junkie, funky” stuff the Fed gives out for pain.
Commodities?
“In the case of commodities, death will lead to resurrection. It’s the nature of things,” was my last statement on Thursday. As Sugar and Cocoa have already made their moves, I’ve got other areas of focus on listed below. Two closed green and both are trying their hardest to bottom.
Some commodities react to dreadful events: war, drought, shortages, and military coups. I’ve been writing about commodities for some time now. I hope my sense isn’t prophecy. As traders, better to be prepared.
“Melody is the essence of music. I compare a good melodist to a fine racer, and counterpointists to hack post-horses; therefore be advised, let well alone and remember the old Italian proverb: Who knows most, knows least.”-Wolfgang Amadeus Mozart
S&P 500 (SPY) Now 203.50 first area of resistance to clear and 200.00 support
Russell 2000 (IWM) Possible move to 112 next area of support with 114.75 the point to clear
Dow (DIA) 171.80 first area of support, then 169-170. Resistance 175
Nasdaq (QQQ) 108 area next best support with 112.10 overhead resistance
Volatility Index (VIX) Ran to the 50 and 200 DMAs as now resistance area 22.00
XLF (Financials) 23.46 the 50 DMA
KRE (Regional Banks) 42.10-42.70 support area and 44.65 resistance
SMH (Semiconductors) 52.20 needs to hold and a move over 53.75 better
IYT (Transportation) 143.50 recent swing low. The not much until 142. Over 145.10 better
IBB (Biotechnology) Under 317 not pretty
XRT (Retail) 41.63 the August 24th low
IYR (Real Estate) See 71 as best support to hold with 73.50 resistance to clear
ITB (US Home Construction) 26.50 keeps this alive. Then 25.50 or if by some miracle, a move over 27.70 is a close your eyes and follow trade
GLD (Gold Trust) Teeny trading range and inside day. That means the chance of a reversal is good if clears and holds over 104.32
SLV (Silver) Way oversold at major support around 13.50
GDX (Gold Miners) One of the two commodities I am watching. Over 14.02 good trade to probe
USO (US Oil Fund) Broke 13 but then closed above it. As a commodities trader I can’t help thinking that oil wells are a target given the current volatile situation in Paris and elsewhere
XOP (Oil and Gas Exploration) Eyes here too
UNG (US NatGas Fund) Holding the one day pattern reversal low from 9.35 and closed well Friday. The other featured commodity. Like this over 10.00 risk to lows
TAN (Guggenheim Solar Energy) 26.00 is do or die
TLT (iShares 20+ Year Treasuries) A gap Monday over 120 should be followed for an active
UUP (Dollar Bull) 25.60 next support level 25.80 pivotal
EWG (Germany) Not a bad looking chart if holds 26.10
SGG (Sugar) Over 35.10 should continue higher
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