“I am a lonely painter, I live in a box of paints,
I’m frightened by the devil, And I’m drawn to those ones that ain’t afraid.”
I hope my last 2 blog’s references to the devil (both from favorite musical artists from the late 1960’s early 1970’s) doesn’t scare anyone too much. I have, however, been writing about terror, gremlins, sheep and shepherds since last Sunday-partly because the market is relatively spooky and partly because we are about to have a deeply religious weekend, for those who observe.
The Joni Mitchell song lyrics refer to us traders waiting for clarity. We respect the market’s weakness and we find ourselves drawn to both the fearless bulls and bears all at the same time. (Plus, she is in the hospital so we send her our thoughts and prayers).
We are in a unique environment with an optimistic yet dovish Federal Reserve regarding the US economy and any hints at a rate increase (as in doubtful for the time being). Simultaneously, we see Emerging Markets adding liquidity and China’s ETFs on new multi-year highs. Add to the mix, concerns in Iran, Yemen and Syria. Total all those factors together and what do you get? Warning Phases now confirmed in the Dow, S&P 500 and NASDAQ and a Bullish Phase in the Russell 2000s (with a solidly good close I might add, over Tuesday’s low.)
I love my modern family since it helps me keep track of the top sectors and groups that relate directly to the overall market tone (and the allegory has been spot on). Retail (XRT) did not confirm the topping formation and has a very positive bullish phase intact. Regional banks (KRE) is my go-to if the market stabilizes for sure, Transportation (IYT) under 154.35 is in more trouble which if coupled with Semiconductors (SMH) under 54.85 spells double trouble (closed right at 54.85). Biotechnology (IBB) has one job-to hold the 50 DMA, which it is trying hard to oblige.
Joni sums it up best;
“She knew your devils and your deeds.
And she said, "Go to him, stay with him if you can
but be prepared to bleed.”
S&P 500 (SPY) Held 204, now looking at 208-ping-pong anyone? Subscribers: Negative Positive in all
Russell 2000 (IWM) Over 125 should help the rest of the market and under 122.25 see the 50 DMA
Dow (DIA) Really, over 178.50 is the place to clear and now we have a couple of bottoms at 175.50 area
Nasdaq (QQQ) 104.50 major support with 107 major resistance
XLF (Financials) Over 24.25 new ballgame.
KRE (Regional Banks) Over 41.06, I think I love you
SMH (Semiconductors) Over 55.75 now has to clear and like to see this hold around 54.85
IYT (Transportation) 155.34 the place to hold
IBB (Biotechnology) Over 344 and we can say thank you!
XRT (Retail) Not a reversal candle
IYR (Real Estate) Lagging due to interest rate concerns-over 80.00 could have a bounce and under 78.60 see more downside
ITB (US Home Construction) Correction not topping
GLD (Gold Trust) 116 next point to clear and 115 support now
USO (US Oil Fund) Has to clear the 50 DMA to keep going
XLE (Energy) Looking for a close above 78.00
XOP (Oil and Gas Exploration) Held 50.00, now pivotal
TAN (Guggenheim Solar Energy) Looking for a new buy
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs rallied into resistance
UUP (Dollar Bull) Inside day
EEM (Emerging Markets) Basing
EWP (Spain) Looks good over 36.50
RSX (Russia) Like to see it hold 17.00
BAL (Cotton) Basing maybe
SGG (Sugar) Cash over 12.37 interesting