The Market's Trail to the White House

November 2, 2016

Mish's Daily

By Mish Schneider

mdaily-20161103One of the best known and most dramatic Anasazi cliff dwellings is the White House Ruin located in Canyon de Chelly National Monument.

Named for the white plaster that decorated a long wall in the upper dwelling, the inhabitants abandoned it around 1300 due to pressure from outside groups and climate change or enduring drought.

Fast forward to today and the U.S. race to the White House in D.C.

Investors continue to search for signs of the enduring status quo or for the end of life as we know it.

To the market’s credit, the Dow trades right at the Terror Zone 18,000. NASDAQ and the S&P 500, although they sold off further, closed above the prior day lows.

Only Gramps Russell 2000 continued to slip beyond the previous day’s lows. As the anointed “Chief” of the Modern Family, his cautiousness is noteworthy.

Retail (XRT) traded within the trading range of Tuesday. Transportation closed higher and with a bullish phase intact. Regional Banks closed lower but holds dearly onto its Bullish Phase.

Semiconductors flashed warning closing slightly below the 50 DMA, while Biotechnology remains out of favor with speculators.

Like the Canyon de Chelly White house, seems market inhabitants are disappearing as well.

Is it because investors sense impending climate change or economic drought? Is it the pressure they feel from outside groups?

Most likely both.

Weighing the technical pros and cons, let’s follow the market’s trail to its White House.

Today, the Federal Reserve announced the totally expected. Rates will stay unchanged but a December hike is on the table. Treasury Bills or TLTs most likely already discounted that news flash.

On the monthly chart, the long term bullish trend persists. On the weekly chart, a close over 131.71 with unemployment on tap, will keep that bullish trend intact. A weekly close below will put TLTs in a warning phase.

Last night I wrote that, “If the FED does nothing, that could temper the Gold.” Right on cue, GLD the Gold ETF fell from the early gains to close higher than the previous day’s high. Yet, it priced considerably lower than the intraday high and beneath the 50 DMA.

In the exploration of evidence to support or deny the possibility of stagflation, oil clearly sided with “deny.” Cheap oil prices (back in a distribution phase), support waning economic growth. Yet also denies the case for out of control inflation on the immediate horizon.

Moreover, the Fed continuing to talk December rate hike curtails the perceived stagflation possibility.

The Anasazi or Ancestral Puebloans loved their White House. Although they built most of the dwellings between 350 and 1300 CE, they constructed the White House very close to the end of that stretch. Soon after, they were forced to abandon.

America’s White House and the next person to inhabit it will have similar challenges. Pressure from outside groups and economic climate change is mirrored by the market’s behavior.

Nevertheless, given today’s technical patterns, whether there is a mass exodus forthcoming seems too soon to wholly predict.

S&P 500 (SPY): 211.20 pivotal and 208 the 200 DMA support

Russell 2000 (IWM) 116.95 area the monthly MA now resistance. 114.25 the 200 DMA support

Dow (DIA) 180 pivotal 182.50 resistance to clear 177.38 the 200 DMA

Nasdaq (QQQ) 114.75 the 100 DMA support. 116 pivotal and 118 resistance

KRE (Regional Banks) 43.50 resistance and support 42.50

SMH (Semiconductors) Unconfirmed warning phase and an inside day. Needs to clear and close back over 67.29 to stay in good shape

IYT (Transportation) Inside day. 143.40 the 50 DMA support must keep holding

IBB (Biotechnology) First one to abandon the white house

XRT (Retail) 40.00 area the underlying support. A miracle would be a move back over 43.00

GLD (Gold Trust) If breaks 123.20 could see it back down to 122.00

SLV (Silver) 17.00 support to hold

GDX (Gold Miners) 24.45 support

USO (US Oil Fund) Back under the weekly moving average. That makes 10.60 pivotal

TLT (iShares 20+ Year Treasuries) Support at 130. Weekly MA at 131.75

UUP (Dollar Bull) I thought it might revisit 25. Got to 25.12. Could see more bounce

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