December 16, 2015
Mish's Daily
By Mish Schneider
As the holidays approach, our Modern Family wants to have a perfect family Christmas. Granddad Russell 2000 is pestering his wife, Granny Retail and his grandchildren (Biotechnology, Regional Banks, Semiconductors, and Transportation) to make sure everything is in line.
He has the tree and the house decorated. However, last week things went quickly awry when Uncle Louis (Oil-USO) and Cousin Yellen (TLTs) showed up.
Even worse, if you recall, Granddad’s boss reneged on the holiday bonus he so desperately needed.
If our Modern Family is to follow the timeline of the film National Lampoon’s Christmas Vacation, on December 16th or 9 days before Christmas, IWM sets about illuminating the house with 25,000 imported Italian twinkle lights.
As we continue the countdown to Christmas, Uncle Lewis, (USO) creates an explosion by lighting up sewage. Cousin Yellen raises the interest rates. Oil continues its precipitous decline, but most of the family still feels encouraged by Cousin Yellen’s confidence that all in the US economy will be okay.
As IWM makes an impressive move off the week’s lows, question is, can he join the other indices and improve his phase from Bearish?
What havoc might Oil wreak? Hard to believe, but in the face of nearly a 250-point rally in the Dow, oil tumbled once again and does not appear to be done with its downward pressure.
If IWM is any indication, he has a lot to go to clear the 50 DMA at 116. At this moment in time, it looks more like he ran up with the rest of the gang. It has 2 factors in its favor. First, the reversal pattern off of Monday’s lows and secondly, pretty good volume.
Therefore, that might give it the juice to test the overhead resistance, but will it peter out once it gets there? Stay tuned.
Granny Retail (XRT) is in similar shape. The 50 DMA is overhead at 44.98. Her new support to hold is 44.00. Of course in the advent of a rate rise, all eyes are on the Prodigal Son Regional Banks (KRE).
KRE improved the phase to warning and now must confirm that closing over the 200 DMA once again at 42.57. Then, we can look at its overhead 50 DMA.
Semiconductors (SMH) look better. However, this too has major hurdles to cross. 54.10 area now the line in the sand to hold for health.
Biotechnology (IBB) and Transportation (IYT).
IBB crossed back over the 50 DMA as perhaps now in hindsight, an early head’s up for the overall market strength. SMH may be in a bullish phase, but it’s the IBB sector that needs to clear 343 to look like it fast tracked from a bear flag to a solid base.
Trannies, (IYT) has miles to go to even be considered a contender.
All in all, most of the family remains weak compared to the super stars that haven’t really faltered much, even during the corrections (AMZN, GOOG, FB). Yet for me, it’s my Modern Family that ultimately helps me “see” under the hood.
A final word about Solar (TAN). It was over a week ago I pointed out the unusual volume patterns and suggested a long trade. Since then, many solar stocks have flown (FSLR is on new 2015 highs) and TAN is up over 20%.
Perhaps we choose our families as many therapists suggest. If so, I hope you continue to choose yours well or at least know the family you’re a part of.
S&P 500 (SPY) Now 206-206.36 pivotal. Good news not overbought giving it room to 210 the next major hurdle
Russell 2000 (IWM) 112 pivotal, 116 point to clear
Dow (DIA) Unconfirmed bullish phase so don’t be surprised to see Terror at 18k in the Dow at a theater near you!
Nasdaq (QQQ) Confirmed phase change back to bullish. 115.75 was the high and 112 now the must hold low
XLF (Financials) Pretty significant resistance at 24.95. Now, 24 is the place to hold
KRE (Regional Banks)
SMH (Semiconductors) Confirmed bullish. Needs a lot of fuel to get back to the highs.
IYT (Transportation) Call 140 a good place to clear. I would certainly keep my eyes on this. Fed or no Fed, the market needs transportation for sustained strength
IBB (Biotechnology) 330 support 343 resistance
XRT (Retail) I feel like I have for some time-looking at 2 different markets just as many say 2 different realties in economic standing. Over 45 better
IYR (Real Estate) I wrote a few times that this was “A decent looking chart” 74.84 now support.
ITB (US Home Construction) Ran right to the 27.70 resistance. Above could be a bright spot
GLD (Gold Trust) Intrigued this did so well. If holds 102 and clears 104 might be a decent buy.
SLV (Silver) If holds the gap low, also a long consideration
USO (US Oil Fund) Weak
OIH (Oil Services) Inside day. This looks better than USO with a potential triple bottom but has to clear 30.50 longer term
XLE (Energy) A good reversal pattern if holds with possible triple bottom especially if clears 67.15
TAN (Guggenheim Solar Energy) Getting near a profit target although still see much higher in the longer term
TLT (iShares 20+ Year Treasuries) Considering the FED hiked, this held up relatively well.
UUP (Dollar Bull) 25.25 support 25.60 resistance
EEM (Emerging Markets) Big move off the week’s lows but if good, should hold up over 32.80
GREK (Greece) Subscribers: Looking to be a buyer over today’s high with a risk down to the recent lows
EWG (Germany) Eyes here over the 50 DMA.
FXI (China Large Cap Fund) Good start. 38 is the ultimate place to clear
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