June 20, 2016
Mish's Daily
By Mish Schneider
Photo by Mish
The cactus flower is a symbol of maternal unconditional love because it can endure and thrive in harsh conditions. The cactus itself is considered prickly and unwelcoming. Therefore, we can see how in essence, this plant represents the perfect paradox.
The market begins the week with a similar paradox. Although unconditional love is a stretch, we can see that the indices all tried hard to improve in phase today, thus enduring in what many see as harsh conditions.
The Russell 2000, Granddad, acting more like a maternal figure, strengthened right out of the gate, outperformed the other indices and held the gap up from Friday’s closing price.
The Dow and S&P 500 spent most of the day above their 50 daily moving averages. Had they stayed above that level, it would have put them both into unconfirmed bullish phases. Alas, by the end of the session, all each could do was maintain the gap higher.
In spite of its early valiant effort, the Nasdaq 100 did not recapture the 200 daily moving average for an improved phase change. As the weakest of the four indices, nor could NASDAQ hold the gap up from last Friday’s close.
The market sustains some prickliness, especially as we head closer to the Brexit vote. With other prickly factors such as rising commodity prices and a falling dollar in the mix, the paradox is further exemplified by our divided Modern Family.
Besides the Russell 2000, the rest of The Family- Retail, Transportation, Semiconductors, Regional Banks and Biotechnology-did not improve nor deteriorate in their perspecitve phases.
With 3 members of the family in bearish phases-Regional Banks, Biotechnology and Retail, I see spiny leaves. With Semiconductors and the Russell 2000 in bullish phases, I see flowers.
The Transportation sector is like a bud than can either bloom or break off the stem should a strong and arid desert wind blow hard.
Until we see solidarity among the Family, we find it difficult to predict the next big move up or down. The move up this year in commodities was definitely the easier prediction to make. To date, we see that upward trend well intact.
As this week continues, take heed of the cactus flower. It’s message--don’t let the market bring you down. Everything we need is inside the Modern Family. It can produce beautiful things in the middle of an empty desert. It can give you painful warnings if you don’t watch where you step.
S&P 500 (SPY) Warning phase. 207.95 is the 50 DMA and pivotal. With more weakness expect to see 202.50. Over 211, way better
Russell 2000 (IWM) 113 level important. 115 pivotal. If gets over 116.50 impressive
Dow (DIA) 177.86 the 50 DMA to clear and close above
Nasdaq (QQQ) Over 108.50 will prove renewed strength. Otherwise, 106.35 level has to hold up
Volatility Index (VIX) Why I stopped trading this a long time ago. There are better ways to hedge
XLF (Financials) 22.40 support and 23.25 resistance. The range for now
KRE (Regional Banks) If good must clear 40.10
SMH (Semiconductors) The best looking of the family. By far.
IYT (Transportation) I give this a decent shot to come back unless it breaks under 137.
IBB (Biotechnology) Inside day and hardly impressive. A rally without this is suspect for sure. Close to a $40 breakdown under 250
XRT (Retail) If can hold 41.75 could see her way to 43.15
IYR (Real Estate) 80 wasn’t exactly new life, more like a brush with new life. Possible reversal after making new highs and closing on intraday lows. Needs confirmation
ITB (US Home Construction) confirmed return to a bullish phase. Not a bad place to look if the market holds
GLD (Gold Trust) Today a prime example of the buy opp on a lower opening. Now, has to clear 124
SLV (Silver) 15.75 support with overhead at 17.00-could very well be writing a new range higher this week
GDX (Gold Miners) 25.55 pivotal area
USO (US Oil Fund) Confirmed Accumulation phase. Not out of the woods though until we get a weekly close over 12.15
OIH (Oil Services) Was surprised this closed red. 28.30 is the support area
UNG (US NatGas Fund) 8.35 the 200 DMA
TLT (iShares 20+ Year Treasuries) 135.35 pivotal resistance with 131 level support
UUP (Dollar Bull) I just noticed the island bottom from early May which gave this a great run. Today that island was negated
FXI (China Large Cap Fund) Unconfirmed recovery phase
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