Who Has More To Gain/Lose-Bulls or Bears?

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Wash, Rinse, Repeat

In the Urban Dictionary, this means to mindlessly repeat past patterns or behaviors without critical thought-similar to a person who rebounds immediately into another relationship after a bad breakup.

Is that the same pattern we see in the market?

Our Bulls: What patterns are repeating that imply you should not buy with abandon?

And you, the Bears: Is the market setting up to hurt you by seducing you to jump back into shorts too soon?

For consistency’s sake, I like to refer to my Modern Family . However, I will also include a look see at certain commodities, interest rates and the US Dollar.

Although momentum has turned up and the Russell 2000s had a quasi 2-day reversal pattern off recent lows, both long term charts and overall momentum continue to look negative.

Granny Retail (XRT) could be the temptress for our bulls that attracts them back into a rebound relationship long. It did after all, confirm the Recovery Phase. The slope on the 50 DMA though is negative-so best we can say is a weak recovery phase until further notice.

The Transportation Sector (IYT) shrunk considerably after spending way too much time in the dryer. Recently, IYT jumped back into the washer, outperforming the S&P 500 the last 2 weeks, with a shift in momentum and is now in a Recovery Phase.

IYT and XRT could be the Bull’s vixens or their new true loves.

Regional Banks (KRE) and Biotechnology (IBB) are the Bull’s best psychotherapists, reminding them to be wary of repeating past patterns without enough confirmation.

Should Bears Tread Cautiously?

Commodities often trade countercyclical to equites. Many are basing. Beginning with Gold and gold miners, the recent impressive rally had all the signs. Not the least of which has been very impressive volume.

Oil (USO), the double edged sword of the market, seems to be basing. Nevertheless, whereas the market now focuses on its price movement for relief (reducing fears of deflation), a crazy move higher would actually be detrimental for equities. A delicate wash cycle indeed!

The decline in Agricultural prices are also running out of steam. With the increasingly volatile weather patterns globally, although supply still outweighs demand, if demand picks up or the weather wreaks further havoc, there’s a spin cycle that will have traders’ heads, well, spinning.

Interest Rates or the rally in 20+ Year Treasury Bonds scores one for the Bears. The US Dollar, currently in a Distribution Phase, if continues weakening will bode well for commodities. Then, we can really see a paradigm shift from the last several years.

“The only compromise is you get to pick
Which of these formulas is your perfect fit
Wash, rinse, repeat
Why are you fighting it?”-Kelly Clarkson

S&P 500 (SPY) Inside day pretty much expected after the recent run up. Now, 187.90 must hold.

Russell 2000 (IWM) 97.75 the 10 DMA. 101-102 resistance

Dow (DIA) Right into some resistance now. But also, holding momentum support. Hard to say what comes next

Nasdaq (QQQ) 103.50 is monthly resistance to note with support now at 98.90

XLF (Financials) 20.87 is the number it must close the week out over to sustain

KRE (Regional Banks) This closed red again-I call that a red flag. Let’s not forget that KRE is the prodigal son who must get back to prodigal status.

SMH (Semiconductors) 50.00 big resistance with 47.50 minor support to hold

IYT (Transportation) 128.60 has to hold now. Not happy about the negative slope on the 50 DMA but cannot deny this is doing better than most

IBB (Biotechnology) Has to hold 255 area

XRT (Retail) Confirmed Recovery Phase. Could be short lived with the Nordstrom’s earnings and JWN decline in the after market

GLD (Gold Trust) Up it is. 115 now ultimate support

GDX (Gold Miners) Over 101 million shares traded here today-somebody besides us likes this alot

USO (US Oil Fund) Hasn’t been above the 50 DMA since last October-watch for that or a move over 9.80. Has to hold 8.49 area now too

TAN (Guggenheim Solar Energy) Some stocks in this group look better than others. Sitting it out for now

TLT (iShares 20+ Year Treasuries) 131 resistance and now, 129.25 support

UUP (Dollar Bull) 25.27 the overhead resistance. Back under 25 trouble

FXI (China Large Cap Fund) Has to hold around 29.55