The Market's Indistinct Absurdity

October 6, 2016

Mish's Daily

By Mish Schneider

Bath Time

“What is real is not always what we think.” Kenneth R. Marvel Curator

This “juxtaposition of discordant elements” describes this piece of art and the market action perfectly!

Such is today’s report as far as phase changes within the four indices. The S&P 500 and the Dow sit in warning. NASDAQ and the Russell 2000 remain bullish.

The interest rates and the U.S. dollar gained some more. Gold and silver broke some more. Oil and solar stayed the course.

Right now, the AAll Sentiment Survey shows bullish sentiment at 28.79%, down 10% from the average. A year ago it was 28.11%.

October 6^,2015 the SPY closed at 197.79. One year later, SPY closes at 215.99. Yet investors remain as placid as our bear’s bathtub.

So how real does real have to be before investors think it’s real?

Concerning the Modern Family, we did see quite the juxtapostion of discordant elements today. Biotechnology, which closed yesterday in an unconfirmed bullish phase, today fell over 2% and back into an unconfirmed warning phase.

If Biotechnology is the bear bathing, Semiconductors are the rubber duckies playfully coaxing the bear to lighten up. SMH is only a splash away from making yet another new all-time high.

Not a measure of the US Economy, rather a more “speculative” representative of the level of investor interest, Biotechnology’s status differs from the rest.

Moreover, the Retail, Transportation and Regional Banks Sectors did little to help us discern reality. Nevertheless, all 3 did perform well enough to keep us optimistic.

The painting means to encourage viewers to “suspend disbelief and enter a new way of looking and thinking.” Retail, Trannies and Regional Banks must also entice investors to do the same.

The whimsy of both the painting and the market tells us that “indistinct absurdity is a fact of life.”

Clearly, the market’s indistinct absurdity “exists just below the surface of what we think normal to be.”

S&P 500 (SPY) Pivotal point 215 then 212 rock bottom support. Must clear 217 to keep going.

Russell 2000 (IWM) Working a reversal top unless it gets back/closes over 124.75. The 50 DMA at 122.50

Dow (DIA) 184 to clear and must hold 180

Nasdaq (QQQ) Must close over 119 and hold 117

KRE (Regional Banks) Once cleared 42.50 got the all clear-now that must hold

SMH (Semiconductors) 69.81 point to clear next and 68 to hold

IYT (Transportation) Holding pattern

IBB (Biotechnology) Unconfirmed warning pattern.

XRT (Retail) I won’t get that excited until this closes over 44.00.

IYR (Real Estate) Not a good enough reversal