Treehouse Of Horror IV

March 29, 2015

Mish's Daily

By Mish Schneider

The Simpsons

Happily, we began last week corking the champagne and staying sober. Then, on Thursday night I watched a rerun of The Simpsons that goes back to the 1990’s called “Terror at 5 1/5 Feet". That show was an adaptation of the classic Twilight Zone’s “Nightmare at 20,000 Feet.”

In The Simpsons, Bart sees a nightmarish gremlin hanging on the side of his school bus, and he tries in vain to get anyone to believe him.

The end of the show leaves everyone wondering whether or not the gremlin sighting was real or not. I see that similar scenario playing out in the overall market or what we might call “Terror at 18,000 in the Dow.”

The gremlin can easily be replaced with Janet Yellen (no offense meant-just poetic license), with the question, is a Fed Interest Rate hike hanging on the side of the school bus or not?

The Dow closed the week at 17,712. The indices remain divided with NASDAQ and the Russell 2000s in Bullish Phases and the S&P 500 and the Dow in Warning Phases. QQQs and IWM are above the critical January Calendar Range, DIA and SPY are not.

In the final fifteen minutes of the week, Intel announced that they are in talks to buy rival chip-maker Altera. That took big brother Semiconductors screaming back to the 50 DMA with a close just shy of it. In The Simpsons episode, Bart dreams of his school bus losing control and being run over by a semi-truck. Semis-end of day rally-real or a dream?

Transportation held the 200 DMA with an inside day and Biotechnology defended the 50 DMA. Regional Banks found support at 40.00 with a blah end of week performance. Retail closed back over 100 and not too far from recent highs.

At the end of Terror at 5 ½ Feet, the bus makes it safely to school (despite that it's completely wrecked). Bart gleefully announces he was right; however, he still gets shipped to the New Bedlam Home for the Emotionally Interesting. The viewers are left with an unsettling image: A gremlin holding the severed head of a still-smiling Ned Flanders, spinal column and all.

So, is the market going to correct more or rally back to the highs? Will our Gremlin Yellen wreak havoc and if so, will it be withstanding? Is the Gremlin holding the severed head of a market rally or the spinal cord or a correction without body? Are we all ready for the Home for the Emotionally Interesting as we try to figure this out?

S&P 500 (SPY) Inside day. Let’s call 204-208 the new range

Russell 2000 (IWM) If 122 continues to hold, we will look for a move over 124.20 next.

Dow (DIA) Inside day. 173 support and 177.50 resistance

Nasdaq (QQQ) Closed right on the 50 DMA but not enough over it to record an official phase change back to Bullish. It did clear and close above 105.50 with 104 the big support and over 107 getting interesting

XLF (Financials) Inside day. 23.75 support and back over 24.10 much better

KRE (Regional Banks) 40.00 support to hold and over 40.70 way better

SMH (Semiconductors) 55.59 the 50 DMA to clear of fail from

IYT (Transportation) Inside day on the 200 DMA-like over 156.13 risk to the 200 DMA

IBB (Biotechnology) 354 Resistance and 334 major support

XRT (Retail) 100 cleared-good sign ahead of lots of economic data that could impact this group coming up

IYR (Real Estate) 78.50 support

ITB (US Home Construction) Cleared 27.50 and could be the next one to make new highs

GLD (Gold Trust) 115 now nearest support to hold and now a very pivotal area

USO (US Oil Fund) Unconfirmed Bear phase with 17.00 back to support

TAN (Guggenheim Solar Energy) Looking for a new buy

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs unconfirmed bull phase and inside day so one to watch for range break