October 20, 2015
Mish's Daily
By Mish Schneider
Big Bro’ Sends Regrets
Referring to the pending shotgun wedding between NASDAQ and Semiconductors, Monday night I wrote: “Since the essence of a Shotgun Wedding is that it is hurriedly planned, that could explain the Modern Family’s delay on retuning their RSVPs.”
Furthermore, I concluded with, “Bulls have to hope the Modern Family shows up. Bears have to assume if the Family stays home, the marriage between NASDAQ and Semiconductors is doomed.”
It seems that one member of the family, Biotechnology (IBB) or Big Bro, sent the first definitive RSVP.
But does that mean the wedding is off?
The intended groom is NASDAQ. Our blushing bride, Semiconductors. QQQs are holding above the 200 DMA in an Accumulation Phase.
SMH has made 4 attempts to take out the 200 DMA in the last week. With Tuesday’s action, one can really only say that the retreat from the 200 DMA is just that-a retreat and not a full blown failure.
Granddad Russell (IWM) is sitting on support above 114. 116, the next ideal number to clear, is but a push away. Granny Retail (XRT) got herself dressed and ready, clearing the 50 DMA. With phase changes, we look for a second consecutive close to confirm.
Prodigal Son Regional Banks (KRE) keeping in line with its definition, left the family when it traded beneath both the 50 and 200 DMAs. Since then, KRE has returned home, repenting and holding up well with Tuesday’s outperformance.
If KRE can clear 42.75, we can assume he plans to accompany his grandparents to the wedding.
Transportation (IYT), even with the green close, sits on the fence. With a small trading range and low volume day, it seems our trannies, concerning future plans, wish to follow rather than lead.
What’s up with Big Bro Biotechnology (IBB)? It looks like a bear flag is forming. And just like a bear, IBB could possibly be heading into hibernation.
On August 21st, the volatility (fear) index started climbing. 3 days later, the market cracked. Today, VXX continues to defend that August 21st low.
Considering Biotechnology’s underperformance, punctuated by the underlying fear factor, even with the hopeful family presently supporting the QQQs and SMH, if I were them, I might delay paying the caterer until more RSVPs of “Yes” come in.
S&P 500 (SPY) A move over 204 takes it over the 65 week moving average with 202 decent support to hold
Dow (DIA) 170 pivotal with a move over 172.54 reason to think 175.50 next
Nasdaq (QQQ) 109.46 next resistance point with 107.70 level support to hold
XLF (Financials) 23.69 place to clear (high 23.70) with 23.40 nearest support.
KRE (Regional Banks) Good if can hold over 42 otherwise, has to hold over 41.28
SMH (Semiconductors) 54.15 the 200 DMA to clear with 53.30 support to hold
IYT (Transportation) Unless this closes out October over 147.50 have to think lower prices coming
IBB (Biotechnology) An October close under 296 is troubling indeed
XRT (Retail) Seasonally makes sense to see this firm. Needs a second close over the 50 DMA
IYR (Real Estate) 76 (on a closing basis) major overhead resistance with 73.20 support
ITB (US Home Construction) Cleared 27.73 all major daily moving averages and now needs a second day to confirm
GLD (Gold Trust) 112.82 the 200 DMA and pivotal
SLV (Silver) Inside day just under the 200 DMA. Like this
USO (US Oil Fund) Sitting close to the 50 DMA
XLE (Energy) 70 key to take out
TAN (Guggenheim Solar Energy) A good correction and a possible buy opp if holds 31.00
TLT (iShares 20+ Year Treasuries) Over 123 could have a low risk buy. Even better over 124.70
UUP (Dollar Bull) 24.60 now support to hold
DBA (PwrShs DB Ag Fd) Good performance. One more push over 21.42 and we could see a new leg higher
SGG (Sugar) Great consolidation
Every day you'll be prepared to trade with:
