Those Magnificent Men In Their Flying Machines

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Film Written and Directed by Ken Annakin 1965

Have you ever gone to an air show? It’s where fans go for the finest in aerial entertainment and ground displays. Aviators display their flying skills and the capabilities of their aircraft to spectators, usually by means of aerobatics.

The type of displays seen at an event are constrained by a number of factors, including the weather and visibility. In addition to the weather, pilots and organizers must also consider local airspace restrictions. Most exhibitors will plan "full," "rolling" and "flat" display for varying weather and airspace conditions.

My friends, last week we all witnessed equally jaw dropping aerial entertainment brought to us by our pilots who fly in the show called “Terror at 18,000 in the Dow!”

Last Monday, the Dow soared to 18,150, then did a spectacular aerobatic plunge back to cruising altitude around 18,000. Tuesday was more of a “flat” display. By Wednesday, the pilots teasingly frightened spectators, yet not wanting to fully scare traders off, took the plane back up to the cruising altitude of 18,000 by day’s end.

Thursday, the pilots gave us a “full” death defying display, redirecting the nose by pitching down and bleeding off altitude in a hurry, diving the plane to under 18,000 and leaving the fuel tank only 1/8th full. As air shows may present some risk to spectators and aviators, everybody gasped!

Yet, with consideration to airspace restrictions, by the end of Friday’s session (day one of May-a scary month according to Market legend), the pilots “rolled” the plane straight up, ending right back at the 18k cruising altitude. What a show!

And that’s just the air show in the Dow! Granddaddy Russell 2000s (IWM) got out of bed after Thursday’s malaise, yet stayed inside the range Thursday on Friday and has not fully convinced us that he’s ready to resume Grand Poobah status. In fact, a relapse looks more likely right now.

Grannie Retail (XRT) left the house finally and cleared the 100 DMA. She hasn’t gone on a buying spree yet though, so we are watching to see if she retreats or keeps walking towards the mall.

Brother Biotechnology (IBB) didn’t lead, more followed in line with the Russell’s, having an inside day although closing green. They both seem to be looking for clues before reconciling the recent drop and the large trading range it left.

(KRE), Regional Banks, after holding up the family all week, caught Russell’s fever. It failed the 50 DMA and once again, gives pause in the unconfirmed warning phase. No surprise, Sister Semiconductors (SMH) helped calm everyone. As the 2nd top leading sector this year, she put on her tutu and danced herself into an unconfirmed bullish phase.

Semis inspired the Transportation (IYT) sector. He/she also put on a dance outfit, pirouetting above the 200 DMA and improving to an unconfirmed warning phase.

So with KRE ailing, IWM and IBB sitting inside the house, XRT possibly heading to the mall, SMH and IYT dancing as fast as they can, all eyes surely will be looking up to the aviators of the Dow.

S&P 500 (SPY) Unconfirmed BULLISH phase which of course, has to confirm

Russell 2000 (IWM) Inside day. Under last Thursday’s lows will be hard to stay positive, even if it takes the others a bit to catch up. Over 124, everyone will be dancing.

Dow (DIA) Inside day. Blew out the longs Thursday, headed up Friday and back to an Unconfirmed BULLISH phase. 180 pivotal.

Nasdaq (QQQ) Had an inside day but did a good job clearing above the 50 DMA. The one that kept hope alive at the end of last week and still keeps hope alive.

XLF (Financials) Inside day but back to an unconfirmed bull phase

KRE (Regional Banks) Not sure why this had such a tough time last Friday, but it did close under the 50 DMA. With support around 40.00, it could just be the noise rather than a precursor

SMH (Semiconductors) Rose 2.7% last Friday and well above the 50 DMA. 58.00 still a good place to clear

IYT (Transportation) 157.50 resistance and now, like to see it hold 156

IBB (Biotechnology) Inside day and still in a warning phase. Good possible bottom though if carries on over 345.60

XRT (Retail) After the new 60 plus day low, could have bottomed if confirms and holds over 97.20

IYR (Real Estate) Worked off the oversold condition and needs to clear the 200 DMA to be convincing.

ITB (US Home Construction) Looks like a possible low in place with lots of overhead resistance to clear

GLD (Gold Trust) Your guess is as good as mine

GDX (Gold Miners) 20.00 near term support. 17.00 the big support and over 21.30 a game changer for real

USO (US Oil Fund) Still like this as a bottoming pattern

OIH (Oil Services) Inside day and good looking chart

XOP (Oil and Gas Exploration) With all the bad press lately, that should not stop us from looking at what looks like decent basing action

TBT (Ultrashort Lehman 20+ Year Treasuries) Friday could have proved that the market is ready and ok for a bit higher rates

EWI (Italy) Huge base and inverted head and shoulders bottoming formation

EWY (South Korea) Island top confirms

RSX (Russia) Closed in an unconfirmed accumulation phase

BAL (Cotton) Futures look good and even better over 68.00

SGG (Sugar) Futures now back below the 50 DMA still could be bottoming but with lots of chop.

PHO (Water) Worth watching if closes over 25.55 for a long term swing long