April 17, 2017
By Mish Schneider
On April 4th I asked, “Is Wall Street the New Sesame Street?”
At the time, we surmised that Elmo is a worried NASDAQ and Abby with the lower position on the seesaw, is a cautious Modern Family.
With Earnings Season upon us, we may finally get the answers to the questions:
Will QQQs and the FANG stocks hold up? And, if they gain weight, could that give the Modern Family more leverage to rise or more reasons to fall harder?
This week began with an inside trading day in many instruments. That makes last Thursday’s trading range important.
Ordinarily, inside days indicate a pause by traders as they ponder the market’s next direction.
Today’s inside day is particularly noteworthy.
Today’s trading range inside last Thursday’s trading range also sits below the 50-daily moving averages in the Russell 2000. In NASDAQ, the price holds above the 50 DMA.
Mr. Potato Head, dressed as a pirate with one good hand and one replaced by a sword, may hold the market’s fate in his hand.
Will Mr. Pirate Potato Head give NASDAQ and the Modern Family a thumb’s up or a thumb’s down?
Going into this week, not one member of the Modern Family is in a Bullish Phase.
The Russell 2000, ended last week on its lows and in a warning phase.
Retail (XRT), unless it clears 42.50, the 50-DMA, may have formed a new top.
Semiconductors (SMH), in a warning phase for the first time since June 2016, traded in line with the Family and posted an inside day below the 50-DMA.
Regional Banks (KRE), was the lone exception to the inside day. KRE broke below last Thursday’s low but came back strong ending the session on its intraday highs. However, way more work is needed to get this even close to the overhead 50 DMA.
Biotechnology (IBB), disappointed. It too had an inside day under the 50 DMA. However, we hoped to see it take a leadership role and gather enough velocity to clear its 50-DMA.
Nevertheless, the whole point of noting these inside days is that should last Thursday’s high clear, IBB can still be the first one in the family to recapture a bullish phase.
Another influencer for Mr. Potato Head’s decision about the next direction of the market could be that the 20+ Year Treasuries reversed direction today and closed below an important inflection point.
Gold gave back some of its recent gains. And, Volatility or the fear factor diminished.
"Now they give shows of their own. Thumbs up! Thumbs down! And the killers, spare or slay, and then go back to concessions for private privies" from Juvenal's Against the City of Rome (ca. 110–127 B.C.)
S&P 500 (SPY) Did not have an inside day. 235.15 is the 50 DMA to clear and 132 the spot to hold
Russell 2000 (IWM) 132.40 is the 3/27 low to hold with a lot of resistance up to 137
Dow (DIA) 203.81 the 3/27 low with 206.60 the 50 DMA to clear
Nasdaq (QQQ) Must hold 130.40 and clear 131.75
SMH (Semiconductors) Inside day. Warning phase. 77.65 the 50 DMA
IYT (Transportation) 158.18 the 3/27 low and 163 big resistance
IBB (Biotechnology) This must clear and close over 292.45 to return to bullish
XRT (Retail) If cannot get over 42.50 expect to see 40.00
IYR (Real Estate) 79.00 the 200 DMA to hold.
GLD (Gold Trust) 125 in focus if holds 120
SLV (Silver) 17.40 pivotal
GDX (Gold Miners) 24.75 the 200 DMA
USO (US Oil Fund) We got the weekly close over 11.02. If that continues to hold then through 11.26 looks higher
TAN (Solar Energy) 17.00-17.30 now the support to hold.
TLT (iShares 20+ Year Treasuries) Three highs at 123.14-in Nov. 2016, Jan., and today. Super important pivotal area. Closed below today
Every day you'll be prepared to trade with: