Economic Modern Family Narrowly Escapes Eviction From The Sheep Pasture
I’m a big fan of using Metaphors to describe the Market action, and it’s a bonus is when the same metaphors can be applied continually.
2 prevailing images-the Chinese Zodiac for 2015,-Sheep and of course, the reliable Economic Modern Family continue to give us mileage.
Last Sunday I wrote, “From January 2nd until August 20th, 2015, the Dow (DIA) traded in a humongous trading range (as sheep stay within the boundaries of their pasture).”
I proceeded to ask, “In the current market, now that the 8-month trading range has broken, is it possible we will see a new 3-4 month trading range develop?”
As the Dow’s current trading might very well be from the low of August 24th of 150.57 to the September 17th high of 169.44, or Wednesday’s high of 169.48, where does that leave our Economic Modern Family, especially as many other indexes flirt with their 50 DMA?
Last time we checked in with the Economic Modern Family, comprised of the Russell 2000s (IWM) Granddad, Retail (XRT) Grandma, Regional Banks (KRE) Prodigal Son, Biotechnology (IBB) Big Bro, Semiconductors (SMH) Younger Bro and Transportation (IYT) Transgender Sibling, they were ready to lease out their house with an option to buy for the highest bidder.
Granddad Russell has a wide trading range from a low of 106.99 to a high of 118.89, if I use the same time period as described for the Dow.
With a big pasture to play in, we can expect that range to hold up for the time being. We might also speculate that with the 50 DMA close to 116, IWM has a much better chance of testing the top of the range if it can confirm a Recovery Phase.
Grandma Retail, with a trading range equally broad, looks a bit weaker than her husband, but as a dutiful wife, will most likely follow his lead.
Prodigal Son Regional Banks earned his status once again as the ONLY one of our Family back in an unconfirmed Bullish Phase. The recent strength could be in anticipation of a FED rate hike. Will or won’t the FED raise rates is a debate though, that has been a lesson in frustration for everyone.
Big Bro Biotechnology, went into a Death Cross. With no significant bottoming pattern, he will have a huge influence on the rest. Speculative money is required to keep the rally going. If IBB fails back under 295, that’ll be a hard sale.
Interesting that Younger Bro Semiconductors is trading just about back to the January-August trading range lows or around 52.00. Plus, SMH is in a Recovery Phase. Not typically a market leader, speculators will park money in SMH. A good sign.
Trannies (IYT) are very much grazing in the new pasture along with Granny and Granddad. As first to experience a Death Cross back in May, IYT could just be our most reliable lead indicator for now.
If IYT cannot hold 144.60 area (the 50 DMA) I would regard that as weakness. If IYT trades and holds over 144.60, it’s likely that IWM and XRT will follow in kind, impressed with Trannies confidence.
“The best way to control cow and sheep is to give them a big grazing field”–Shunryu Suzuki
S&P 500 (SPY) 199.84 the 50 DMA. 195 big underlying support. September 17th high 202.89 Subscribers: Positive Pivots in all
Russell 2000 (IWM) 115.83 the overhead 50 DMA. 114 pivotal and 111 major support
Dow (DIA) September 17th high tested with now resistance. 165 support. First to go bearish of the indices and first to head back to Recovery Phase, albeit a weak one.
Nasdaq (QQQ) Unless this clears 106, could be one sign rally is tired
Volatility Index (VIX) Came closer to testing the 50 DMA with an inside day
XLF (Financials) As far as I can see, still consolidating with 23.20 pivotal
KRE (Regional Banks) Unconfirmed bull phase which means must hold 41.47. September 17th high was 42.53
SMH (Semiconductors) Let’s see what happens at 53.00 and to if it can hold 52.00
IYT (Transportation) Crossed the 50 DMA so now must stick for a second day
IBB (Biotechnology) Once again looking at 310 as pivotal
XRT (Retail) Inside day. 46.00 resistance with 44.50 support to hold
IYR (Real Estate) 74.01 is a gap to fill or not
ITB (US Home Construction) Back over the 200 DMA. When an instrument has erratic up and down action around a major moving average something bigger is coming
GLD (Gold Trust) I like this, especially for tomorrow over 110
SLV (Silver) The last time this was over the 200 DMA was last May
GDX (Gold Miners) See higher
USO (US Oil Fund) Looking for a dip closer to 15.00 to buy
TAN (Guggenheim Solar Energy) Overbought now but over the 50 DMA for an unconfirmed recovery phase. Since I wrote about Solar energy, this has done nothing but rally
TLT (iShares 20+ Year Treasuries) Inside day just above the 50 DMA
UUP (Dollar Bull) 25.00 resistance. 24.60 support
EWI (Italy) confirmed bull phase
FXI (China Large Cap Fund) Back to an unconfirmed Recovery phase
JO (Coffee) Over 21.15 looks good
