March 6, 2017
By Mish Schneider
Lots of folks got bit by a bear fang on Sunday.
With good reasons.
The Fed has yet to confirm or deny an interest rate rise. Unsettling White House tweet storms dominated the news. Rising geopolitical tensions in East Asia after North Korea fired four ballistic missiles weighed on stocks.
Nevertheless, most of the market brushed off the bad news bear fang.
Beginning the session with a gap down, the S&P 500 went from a classic bullish runaway gap to a potential scary island top.
However, the island top did not pan out.
Although a small index with a basket of 30 blue chip stocks, the Dow Jones held on to its runaway gap.
NASDAQ 100 respected support levels and closed within last Friday’s range.
The Russell 2000, simpatico to his wife Granny Retail, did not behave as optimistically as his bejeweled fellow indices.
IWM held the bullish phase, but closed weaker than his brethren by a significant margin.
Does the photo above illustrate that when the market gives you bear fangs, should you make crystal pendants?
Granny Retail. I know I’m a bit obsessive about her. XRT fell, yet held the early 2017 low at 42.11.
Think about it though-while DIA holds a runaway gap to new highs, our Retail sector gets accolades for not making a new 2017 low.
Regional Banks (KRE) likes 57.00. Good idea to think bear fang should that level break down.
Transportation, the driver of the van for gelato dessert last week, today didn’t look as happy. If IYT cannot retake 171-171.10, pay attention.
Biotechnology (IBB) is okay if it can hold over 299-300. With speculative interest, we look here for direction. Should specs feel confident, that will help the weaker Modern Family members. If they bale, another bear fang emerges.
Speaking of FANG, Semiconductors and Technology remain the bull in a China shop. Unaffected by a strong U.S. dollar or the prospect of higher rates, SMH and XLK (Technology ETF) will not quit.
However, a bull in the china shop is a precarious notion. Therefore, we will watch carefully to see if SMH holds today’s lows.
Today, the market found only one bear fang. If the market finds a few more, it could be the official start of bear season.
S&P 500 (SPY) No more runaway gap. If holds 237 a good active stop point after a four-day correction
Russell 2000 (IWM) 136.70 the 50 DMA. Must hold.
Dow (DIA) Runaway gap held. A gap below 208.37 would not be good. But if holds 209 much better
Nasdaq (QQQ) 130 key support
KRE (Regional Banks) 57 major support to hold and back over 58 better
SMH (Semiconductors) Unless this clear 77.50, looks toppy especially if fails 76.22 today’s low
IYT (Transportation) 167 major support. More sideways since December than up
IBB (Biotechnology) Must hold 299 to stay in the game
XRT (Retail) 42.011 ultimate support.
IYR (Real Estate) Tested the 200 DMA and held. Has to keep holding 79 area
GLD (Gold Trust) Getting into some good support levels although needs to show muscle
SLV (Silver) Starting to look weaker if cannot hold 16.75
USO (US Oil Fund) 11.06 the 200 DMA holding.
XOP (Oil & Gas Exploration) Held a possible good volume reversal pattern above the 200 DMA.
TAN (Solar Energy) Held 18.20 on the close so still a contender
TLT (iShares 20+ Year Treasuries) 118 support and 120 pivotal resistance
UUP (Dollar Bull) I think maybe lower on the basis of a bear wedge
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