November 18, 2017
By Mish Schneider
A Trumpet, in the hands of an accomplished musician, can be played to sound like the penetrating cry of an elephant.
How ironic that the elephant in the photo is a wooden shell of a prehistoric wooly mammoth, or another version of our Rallysaurus.
The rally is blowing its own horn in the face of the relentless bull market.
Some of the tunes resemble the sounds of cool jazz.
While others can make even an apathetic listener cry.
Over the course of last week, several instruments changed directions, hence, phases.
The Russell 2000, confirmed a Bullish phase.
Regional Banks (KRE), jumped from a Distribution to Warning to a Bullish phase.
Biotechnology (IBB), improved from a Distribution phase, to a confirmed Warning phase.
Yet, our Rallysaurus’ melody ultimately resonated with a sector that had nearly gone extinct.
As we enter the short holiday week, who hears the trumpet cry and who hears a stentorian sound?
Transportation (IYT) could not close the week out over 172. It remains in a weak warning phase as the slope on the overhead 50 daily moving average is positive.
However, with an inside trading day on Friday and a red close, IYT wept at the sound of the Rally’s trumpet.
Should IYT’s price stay below 172-173, we will be watching to see whether it can hold 168.50.
With a stentorian and triumphant tone, Granny Retail (XRT) confirmed the Recovery Phase and then struck a high note into an unconfirmed Accumulation Phase.
After tracking what looked like slow death to brick and mortar this year, the potential double bottoms from August and then just 2 weeks ago, will look a lot better should XRT clear 42.00.
In commodities, gold took center stage on Friday.
GLD picked up the trumpet and blasted a warlike note. Warlike because in the face of the U.S. Dollar, which closed out the week below the key 200-week moving average, the economy still faces a possible dilemma not easily resolved.
This Thanksgiving, bulls should give thanks for this spectacular rally.
Nevertheless, if Gold is our emerging Miles Davis, we could see commodities get a high level of recognition while equities move to the shadows.
“Stagflation” is a tune not trumpeted since the 1970’s. The Federal Reserve, should stagflation occur, will require Miles Davis’ cool improvisational skills.
S&P 500 (SPY) 258.25 pivotal support broke with an inside day. 254.35 the 50-DMA
Russell 2000 (IWM) Rallied to the top of a channel on the daily chart. A break of 147 will not look good yet a clearance of 149 much better
Dow (DIA) Broke 234.75 the 10-DMA support. Now looking at 232 the 229 if cannot retake 234.60
Nasdaq (QQQ) Inside day above the 10-DMA
KRE (Regional Banks) 55.70 pivotal support at the 50-DMA
SMH (Semiconductors) Broke 103.35 with an inside day. 102 then 100 support. Over 104.35 better
IYT (Transportation) Looks vulnerable unless it clear 173. Under 168.50 I will take a much more defensive posture in the market
IBB (Biotechnology) 308 near-term support.
XRT (Retail) Granny wowed. Closed right on the 50-week MA. Needs to clear 42 hold 41.10
IYR (Real Estate) 82.00 pivotal support marginally held
GLD (Gold Trust) Unconfirmed bullish phase if holds 122.36
SLV (Silver) Got to 16.30. Next hurdle 16.50.
GDX (Gold Miners) Needs to clear 23.07
XME (S&P Metals and Mining) Looks good again through 31.05
USO (US Oil Fund) Great close on Friday-setting up for more upside
TAN (Solar Energy) If doesn’t get back to 24.99 an exhaustion gap top could be in play
TLT (iShares 20+ Year Treasuries) 123.50 the 200 DMA. 125.50 pivotal support 126.80 resistance
UUP (Dollar Bull) 24.37 the 200-week MA failed. Last gap support 24.30
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