The Market Bows, But Is That Gesture Sincere?

November 9, 2016

Mish's Daily

By Mish Schneider

mdaily-20161110Waiting for a green light the other day, I saw this bumper sticker.

Namaste, an ancient Sanskrit greeting, translates to “The spirit in me salutes the spirit in you.” “Bitches” needs no further explanation.

A huge fan of juxtapositioning opposing images, this struck me as apropos considering the post-election results among people and the market.
Here we are day one with a President Elect no person can claim to predict what his future actions will be.

Yet, a market that fears uncertainty above all else, seemed to say “Namaste” by posting a startling turnaround from the opening to closing bell.
Namaste is one of the six forms of pranama. With six members of the Modern Family, this pranama or respectful salutation to typically other people, has me wondering—

Which ones are bowing in respect and which ones are bowing but thinking “Bitches?”

Before the election I wrote, “The recent leaders have been the Dow Jones and DIA along with the Transportation sector. However, do not discount the impact of Granddad Russell 2000.”

Granddad IWM bowed in respect today, moving up over 3%. Furthermore, IWM returned to an unconfirmed bullish phase.

Since Transportation already said “Namaste,” besides IWM, the market needed to see more Family members bow with the same sincerity.

Big Brother Biotechnology not only bowed, he pressed the palms of his hands together with thumbs close to his chest. A nearly 9% gain catapulted IBB back from the dead into an unconfirmed Bullish Phase.

Likewise, so did our Prodigal Son Regional Banks. KRE rose by almost 6%.

Sister Semiconductors closed out the day red. Any coincidence that she is the only female sibling? (insert levity.)

Actually, we must consider which way the new administration will deal with technology. Especially, since so much of it is produced outside of the US. Yes, SMH bowed a little, but her sincerity remains to be seen.

Perhaps the most interesting of the nearly dead Modern Family members, Granny Retail made a new multi-month low early on and then closed above the last 8 trading days worth of work.

However, did Granny bow in sincerity or is she muttering “bitches” under her breath? XRT is after all, still in a bearish phase.

Bottom line, predicting whether or not today is the dawn of a new era seems premature. Look for the sectors that turned bullish to confirm. Look for unity to continue among the Modern Family.

Look at the next direction in commodities, interest rates and the U.S. Dollar. The Fed and a potential interest rate rise took a back seat to inexplicable euphoria. Yet short-term interest rate yields rose to over 2%, a high not seen since January.

One thing for certain, we have entered unchartered territory. Not even research on whose economy fares better, Republican or Democrats is conclusive.

Namaste friends and yes, as well to those who fit the other bill.

S&P 500 (SPY) 214.50 now support-key support as it is the 50 DMA now that this is unconfirmed bullish. 218 resistance

Russell 2000 (IWM) The 50 DMA 121.73 now an important pivotal area to hold. 124 Resistance

Dow (DIA) Already in a bullish phase, this nearly matched the all-time high. That makes 186.88 the point to clear and now 184 support. A gap and hold above all-time high would be a true runaway gap

Nasdaq (QQQ) 117.38 area cleared putting this in an unconfirmed bullish phase. Needs a second day to confirm

KRE (Regional Banks) Prodigal partied like its 2015. It took out that high and closed on a new one. But not on new all-time highs. Support 44.20. Resistance 47.30 up to 49.00

SMH (Semiconductors) 67.40 support and must clear 69.40 to stay in the game

IYT (Transportation) 146 now pivotal. 150-151 last December highs to hold and 153 next resistance

IBB (Biotechnology) The wow! 279 the weekly MA to hold by weeks end to be real.

XRT (Retail). 42.00-42.25 now pivotal support to see if she’s truly bowing

IYR (Real Estate) A party pooper

GLD (Gold Trust) Great scalping but overall very hard to read

SLV (Silver) 17.00 support to hold

GDX (Gold Miners) Like this better than gold. 24.00 a good line in the sand

USO (US Oil Fund) I would wait for this to close above 10.60 before calling a bottom

TLT (iShares 20+ Year Treasuries) Didn’t see this move coming-well did, but not today

UUP (Dollar Bull) 25.34 support as this looks stronger again

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