September 20, 2016
Mish's Daily
By Geoff Bysshe
Later tonight the Bank of Japan will hold its equivalent of our Fed’s FOMC meeting and reveal its intentions regarding continued quantitative easing. So by the time our stock market opens on Wednesday the central banks’ news flow will be well under way.
Like the first half of any close sports competition, I would be careful not to assume that how the markets trend in the morning will be indicative of where they’ll end by the close of they day.
Both central banks are capable of providing the “deciding catalyst” of the markets’ next move that could last for weeks.
In situations like this, where the news flow is very likely to create volatility capable of smashing though the finer points in the market technicians’ charts I like to apply my ‘crayon or fat marker’ rules of technical analysis.
These rules are simple.
Use a crayon, or a fat marker, to highlight the major levels of support and resistance on your charts and don’t worry about all the details in the chart that the blunt lines hide.
If the crayon isn’t precise enough to identify the levels to your satisfaction, use this as a reminder that now is not the time to be focused on such details, but rather it’s the time to step back, be patient and see the big picture.
The big picture is unlikely to be revealed until Thursday’s (not Wednesday’s) trading day concludes, because all too often the market changes its mind the day after the news comes out.
S&P 500 (SPY) 212.00 critical support to hold with a move over 216 better
Russell 2000 (IWM) 120 ‘crayon’ support. Through 124.25-way better
Dow (DIA) support at 180, bullish over 184.50
Nasdaq (QQQ) 118.12 the high to clear. 116.00 then 114 are the big numbers to hold
XLF (Financials) Removed the REIT part of this and now big bank financial-so prices changed as did historical data
KRE (Regional Banks) 41.20 (50 DMA) to hold and 42.50 to move higher
SMH (Semiconductors) 65 area to hold and new highs to continue higher
IYT (Transportation) 139 is support and 143 is the resistance to break
IBB (Biotechnology) 285-290 support, and big breakout at 300.
XRT (Retail) 43 and 44.75 are the pivotal numbers.
IYR (Real Estate) 78.50 is support, with big resistance at 82.
GLD (Gold Trust) 124.50 is the support it must hold, needs to clear 127 to start moving up
SLV (Silver) the range to watch is 17.50 to 18.50
USO (US Oil Fund) Uninteresting until it clears the weekly moving average
TLT (iShares 20+ Year Treasuries) Key support is probably 132. Many be a quick pop from 136 to 137 but there’s lots of resistance up to 140.50
UUP (Dollar Bull) Just noise until under 24.20 or over 25.20
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