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October 3, 2015
By Mish Schneider
Somewhere Over the Rainbow, Dreams Really Do Come True
Dreams without action is a world of make believe. As Warren Buffett has said, “When the tide goes out, you discover who’s been swimming naked.”
On September 29th, I wrote a daily called Solar Energy: Why It Could Be A Win-Win. (http://mish.marketgauge.com/solar-energy-why-it-could-be-a-win-win/). My point was, as an essential component to the US economy and considering our role in the world as “innovator”, Solar Energy is good for everyone.
It’s one thing to take personal dreams and work on transforming them into reality. It’s quite another to have global and stock market dreams and ever believe that those dreams can be realized.
Adages confirm our powerlessness when it comes to controlling what the market does. Quotes like, “One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute. William Feather” Or,
“To be clear, the market doesn’t care what you feel.” Keith McCullough, elucidate that point well.
So what happened last Friday in Solar that took my dream from make believe to actionable?
Put a Timeframe To It
I haven’t mentioned this in forever, but as this is the Year of the Sheep, according to Chinese Zodiac, from January 2nd until August 20th, 2915, the indices (looking at the Dow (DIA) traded in a humongous trading range (as sheep stay within the boundaries of their pasture). In the current market and now that the 8-month trading range has broken, is it possible we see a new 3-4 month trading range develop?
The trading range in the Dow just might remain between the August 24th low 150.57 and the September 17th high 169.44 for the rest of this year.
How does that relate to trading Solar Energy?
TAN, the ETF for Solar, up until recently had a 2015 low of 31.77. Its peak in April was 50.00, exactly where the 80 month moving average sits!
The new low was made last week at 25.25. On Friday, TAN rallied 7% to close at 28.65. If the Dow takes on a new sheep-like quality and potentially trades up closer to 169.44, where might that put the price of TAN?
I’m going to go with a projected move up to around 30.75-31.00 or right around the 50 DMA and then reassess. First Solar (FSLR) the heaviest weighted stock in TAN, cleared back over the 200 week moving average closing the week at 45.46 (up 6.19%). Comparably, FSLR’s 50 DMA sits at 46.80.
It’s one thing to dream, it’s another to watch a dream turn into reality. Yet, for trading in an “unfeeling” market, it’s imperative to have an actionable trading plan with the proper risk and a logical timeframe.
The direction of your dreams may determine the direction of your life. In trading, however, dreams without an actionable plan, could leave you naked at low tide.
S&P 500 (SPY) 192.50 pivotal and 197.43 above the monthly moving average. Nice to see an accumulation day in volume Subscribers: Positive Pivots in all
Russell 2000 (IWM) 110.00 pivotal for this although there is resistance all the way up. Going with the trading range theory here too
Dow (DIA) Over 162.50 pivotal. 170 major overhead resistance
Nasdaq (QQQ) If 103 holds, maybe a rally closer to 106-107 for a new and less risky short.
XLF (Financials) More consolidation
KRE (Regional Banks) Held the monthly MA not the weekly-vulnerable
SMH (Semiconductors) Needs a second close over the 50 DMA to confirm the recovery phase.
IYT (Transportation) 142 resistance which if clears could mean 144.75 next. Under 139.35 trouble
IBB (Biotechnology) First to go green last Friday. 322 is the weekly moving average resistance and now needs to hold 310
XRT (Retail) 44.00 pivotal 45.40 Resistance
IYR (Real Estate) It’s all about the 50 DMA now at 72.50 to clear and hold
ITB (US Home Construction) Held key monthly and weekly MAs but still has a weak daily chart
GLD (Gold Trust) Gappedy gap-but now over the 50 DMA
SLV (Silver) I like and trust this more than GLD, especially over 15.00
GDX (Gold Miners) Unconfirmed phase change to recovery
USO (US Oil Fund) Major consolidation which for now looks good to the upside when clears
XLE (Energy) Friday’s action is worth noting especially if the run continues
XOP (Oil and Gas Exploration) Ditto here like in XLE
TAN (Guggenheim Solar Energy) Totally awesome move especially after my plea for buying solar!
TLT (iShares 20+ Year Treasuries) Your guess is as good as mine now
UUP (Dollar Bull) 25.00 pivotal
FXI (China Large Cap Fund) Will be very curious to see what happens at the 50 DMA
CORN (Corn) Over 24.00 gets real interesting
DBA (PwrShs DB Ag Fd) Eyes on
SGG (Sugar) Love the ones that move under the radar!
JO (Coffee) Right up to the 50 DMA