July 5, 2017
Mish's Daily
By Mish Schneider
Fastest car in its day, the 1955 Mercedes Benz 300 SL Gullwing Coupe took advantage of the booming post-war American market.
Incredibly gorgeous to look at, the unique upward opening doors made entry and exit from its cockpit problematic.
The Transportation chart (IYT) looks to take advantage of the booming post-Trump American stock market.
As of Monday, IYT’s price moved above the monthly chart’s channel line resistance.
That makes Monday’s low price 172.85 important. Not only could it serve as the July Calendar Range low, but also the official “breakout” number to watch hold for further gains.
A chart gorgeous to look at, yes.
Nonetheless, will its unique position as the only Modern Family to begin July on new highs make entries and exits problematic?
The chart shows IYT on a monthly basis. Each candlestick represents one month.
The black line is the channel resistance. Since July began this past Monday the 3rd, the jump above the resistance line is notable.
As for the rest of the Modern Family:
The Russell 2000 has monthly channel resistance at 142.90.
IWM gave back Monday’s gains. Although the chart appears to be in consolidation mode, a breakdown under 140, 138 and then the worst of it, under 136 should stop Trans in its tracks.
Semiconductors (SMH), as suspected after making a 10% correction, rallied 1.9% today. That move did not impact the Warning Phase.
Biotechnology (IBB) held 310 early. On June 22nd, IBB posted a high of 323.45. Should 310 continue to hold, we need to see specs continuing to buy this sector.
Regional Banks (KRE) took out 56.00 after the FOMC announcement.
Several officials want to start the process of reducing the Fed's large portfolio of Treasury bonds and mortgage-backed securities.
But others want to wait due to the softness in inflation numbers. The rate-setting committee is scheduled to meet to decide interest rate policy on July 25-26.
Regional Banks (closed shy of 56.00) and the Financial sector could remain wobbly until then.
Granny Retail (XRT) after a great start to the month on Monday, fell significantly. Yet not enough to break the extremely important 40.00 level.
Divisiveness among the Family has played out big time thus far this year.
Therefore, Transportation is my “go-to” this week.
Aerodynamics played an important role in the Gullwing’s speed.
So too will IYT’s aerodynamics play a role if it can keep its place above the July calendar range low.
S&P 500 (SPY) 244-245 resistance to clear. 242 pivotal Under 240 not so good
Russell 2000 (IWM) I’d still consider the channel resistance at 142.90 as the number to watch. 140 pivotal. 137.50 support
Dow (DIA) 213.75 pivotal. 212 support. Over 215, onto new highs
Nasdaq (QQQ) 140 resistance. 137.70 pivotal. If fails 137, 135 next stop
KRE (Regional Banks) Inside day. Must hold 54.75 clear 56.00 once and for all
SMH (Semiconductors) 83.50 pivotal resistance. 80.75 support.
IYT (Transportation) Inside day. 172.85 support to hold
IBB (Biotechnology) Holding 310 perfectly keeping this in the game.
XRT (Retail) 40.00 pivotal-above 41 better
IYR (Real Estate) If holds 79.50 better
GLD (Gold Trust) 115.50 support with a move over 117.25 interesting
GDX (Gold Miners) Its holding the 200-WMA. A push over 22 would be interesting
XME (S&P Metals and Mining) Through 30.60 seems like a good place to get long
USO (US Oil Fund) 9.00 the ultimate support
TAN (Solar Energy) 19.44 should now hold if good. Must close above 20.00 to keep going.
TLT (iShares 20+ Year Treasuries) Held support at 124. 126 resistance
VXX (Volatility Index) Over 13.30 could get interesting
UUP (Dollar Bull) 24.90 pivotal
FXI (China) Good setup if holds 39.35
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