January 21, 2015
Mish's Daily
By Mish Schneider
Josh Turner
Wish I could say the January Calendar range rectified itself and we are now, fill in the blanks (Bullish Bearish or Neutral). On the other hand, the longer the range takes to rectify, the more powerful the signal shall be.
Concerning ranges, perhaps the biggest technical news (I wait with bated breath for the fundamental news) is the move in the long bonds or TLTs during Wednesday’s session. Early on, TLTs made a new high then reversed, closing near the intraday lows. Furthermore, the daily average volume was big enough to think blow off and the trading range a bit wider than the typical average true range.
I note this move for 3 reasons. First, is to illustrate the power of the ranges not only when the range is penetrated, but also the power of a move when the range is penetrated only to see it reverse. Secondly, to point out volume and trading range patterns at new highs on extended moves and what reversals look like. Finally, to put a bug in your head to think about why rates could bottom in the US in the face of the ECB rate announcement?
Another layer to the interest rate saga of course, as with any technical signal I see and write about, is we must have confirmation. Therefore, we will look for a continuation move lower on Thursday and if not, the aforementioned information on interest rates is nothing more than a way to look at ranges, range breaks, range break reversals, volume trading ranges and of course, CONFIRMATION.
These are the progression of steps I delve into for all instruments and especially now, during this exceptionally important time of the year- the January Calendar Range.
S&P 500 (SPY) Warning Phase 202 remains pivotal, 200 support and over 204.70 much better
Russell 2000 (IWM) Warning Phase 114.23 huge support and bottom of range. Now, has to clear 116.75 then 117.20 the 50 DMA
Dow (DIA) Warning Phase 173 support then 172 and over 175.35 better, over 176.77 better still
Nasdaq (QQQ) Warning Phase 101.35 pivotal, 99 big support and over 103.25 new ball game
XLF (Financials) Unless this clears 23.75 looks vulnerable
KRE (Regional Banks) Under 36.40 see lower in store
SMH (Semiconductors) Confirmed phase change to bullish with an uphill battle, but at least it lived to fight the battle
IBB (Biotechnology) Inside day after making new highs. Hopefully resting and not failing
XRT (Retail) Inside day and still under the 50 DMA
IYR (Real Estate) Reversed from the highs with interest rates a main focus for next direction
ITB (US Home Construction) Inside day
GLD (Gold Trust) Still strong although hasn’t cleared the weekly channel yet
USO (US Oil Fund) Not failing not rallying but a good range to watch between 17.40 and 18.00
OIH (Oil Services) Looks better over 33.20
TAN (Guggenheim Solar Energy) Inside day after making new multi-year lows
TBT (Ultrashort Lehman 20+ Year Treasuries) Watch for topping action in TLTs
EWG (Germany): Confirmed a recovery phase-Here is one that broke out over the January Calendar range which is bullish
FXI (China Large Cap Fund) Been expecting this to do what it did-on new multi-year highs now
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