The Market Does the Jarabe Dance

March 27, 2017

Mish's Daily

By Mish Schneider

blankDuring a Mexican Hat Dance, a man invites his partner to the dance.

She rejects his advances. Yet, as the dance warms up, the man’s persistence wears down the partner’s resistance.

The market invited the bulls to dance after they rejected those advances overnight and during the early part of today’s trading session.

The market’s persistence wore down much of the bull’s resistance.

During the Mexican Hat Dance, eventually, the man places his sombrero on the ground, kicking and sliding it around.

Once the woman picks up the hat, the romantic interlude is sealed with a kiss.

Did the bulls pick up the hat to ignite their romance with the market?

Was today’s selloff a short-lived correction now complete and sealed with a kiss?

Last week Semiconductors and Biotechnology spared the rest of the market from falling further.

Today, both SMH and IBB did so again. Although SMH did not clear Friday’s high of 79.99, her more important job was to hold last week’s low. She did.

IBB, not quite as skilled as SMH, managed nonetheless, to hold the 50 daily moving average and clear the pivotal area of 290.

Retail XRT, our Granny, grabbed the sombrero off the floor early. Not only did she embrace last week’s low, a price that matched November 2016’s low, she also danced back above 41.00.

As an experienced yet fickle female dancer, now that her partner Russell 2000 has moved in for the kiss, no guarantee she will oblige him.

The Russell 2000 (IWM), quickened by Granny’s relative strength, rallied back over the 100-daily moving average and the pivotal 134 area.

Transportation (IYT), with any luck for the bulls, finessed a low for this correction. That, though will have to confirm tomorrow with a close over 161.00.

Elsewhere, the market saw yields slip along with the U.S. Dollar. That in turn boosted gold, silver, sugar and coffee. However, oil and agricultural commodities refuse to bailando.

Back in the day, the Mexican Hat Dance was considered “suggestive.” In modern times, nearly every grade school in Mexico teaches it.

As the market kicks the sombrero back to the bulls, we shall know soon enough if the dance is PG or X-rated.

S&P 500 (SPY) 233 the 50 DMA. 235.75 area resistance

Russell 2000 (IWM) 134 proves to continue as key pivotal area to hold or fail.

Dow (DIA) 204.50 the 50 DMA. Back thru 208 nothing short of a miracle

Nasdaq (QQQ) 131.25 pivotal resistance. 128.25 the 50 DMA support

KRE (Regional Banks) Unless gets back over 53.00 still has issues

SMH (Semiconductors). 77.80 support and 80 resistance

IYT (Transportation) Support around 159.25 to 160.00 held.

IBB (Biotechnology) 288 now key support and over 295 very impressive

XRT (Retail) 40.50 must hold area.

GLD (Gold Trust) 120.25 the 200 DMA with 118 pivotal

SLV (Silver) Cleared the 200 DMA on a big gap. Today’s low should hold if good

GDX (Gold Miners) 23.40 pivotal

USO (US Oil Fund) Held 9.85 area so better but needs more

TAN (Solar Energy) 17.50 a good place to clear

TLT (iShares 20+ Year Treasuries) Into resistance and under 120.50 will look weaker

UUP (Dollar Bull) 25.65 now resistance to clear

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