May 11, 2017
By Mish Schneider
What’s a carnival without a Funhouse?
After all, interacting in a space with obstacles, surprises and challenges can amuse and/or scare visitors.
In a Funhouse, trick mirrors, shifting floors, rotating barrel slides and unexpected clowns are also meant to bewilder carnival goers.
So why the prehistoric looking creature in the mural?
Because, that’s our Rallysaurus, still very much alive.
Yes, this market may have its share of obstacles and challenges. And certainly, its share of surprises and bewilderments too.
Yet, one constant that appears as old as the dinosaur itself, is the resiliency to keep the rally going.
In the market Funhouse, the mirror mainly distracts investors for just that moment from the “seriousness” of business.
For instance, if you were watching the Russell 2000 early in the session, you probably thought it would fail the ever important 50 day moving average.
Hahaha. Joke’s on you, carnival goers. That was only IWM standing in front of a distortion mirror.
Or was it?
Earlier in the week, I wrote about a final stage of disbelief (in this rally) that has yet to occur.
That final stage is a blow-off rally when the last of the last of the skeptics finally buy with a vengeance.
The way I see it, the end of this move will not look timid, like a kiddie ride. A dramatic finish, more like a roller coaster ride, seems guaranteed.
This market will either end with that anticipated blow off run or, it will gap open lower by 2% or more and never look back.
The Funhouse also includes movable floors. The Modern Family’s favorite part!
Semiconductors, no matter which way the floor rotates, stand upright. Our dear sister made another new all-time high.
Granny Retail, though, falls for the zigzag every time. Out and about over the 200 DMA yesterday, today XRT stumbled.
Regional Banks, Biotechnology and Transportation-los tres hermanos-like rolling around on the undulated floor. All closed red and threatening in an accelerating warning phase.
If the Modern Family is like the rotating barrel slide, then it’s Semiconductors’ sure footing that keeps everyone coming back for more fun.
Until the market takes the “fun” out of funhouse, query the reflection in the mirror. Real or momentarily distorted?
S&P 500 (SPY) 239-240 resistance could turn into a launchpad if all goes well. 237.70 support then 236.60
Russell 2000 (IWM) 140 pivotal. 141.50 to clear and 136.80 to hold
Dow (DIA) Resistance at 210-212. 207.70 support
Nasdaq (QQQ) 137.50 support through 138.50 good
KRE (Regional Banks) If clears 55.40 better. 53.30 should hold if good
SMH (Semiconductors) By golly, she’s holding a new runaway gap.
IYT (Transportation) 161.40 support and through 166 much better
IBB (Biotechnology) 287-284 the key support area
XRT (Retail) 42.35 key support.
GLD (Gold Trust) Looks a bit bearish
GDX (Gold Miners) Looks better than gold but into some resistance now at 22.67-22.80
USO (US Oil Fund) I want to like it but….
XLE (Sel Energy Spdr Fd) 68.00 a good pivotal number
TAN (Solar Energy) Some consolidation over 18 good
TLT (iShares 20+ Year Treasuries) Closed near the intraday highs holding support. 117.50 next if fails
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