- Trading Ideas
- My MarketGauge
Market Overview: Use this page for a quick measure of the markets over several important time frames, and see whether the volume based accumulation or distribution measures are flashing a significant bullish or bearish warning sign.View a Help Video About This Page
November 30, 2015
By Mish Schneider
A while back, driving home from dinner at 8:30 P.M., I saw an adorable white dog sitting in the middle lane of a busy 3-lane main road.
Unlike most lost dogs that run away from you when you try to coax them to come towards you, this one jumped eagerly into my car.
We took Diego (we found out his given name from scanning an implanted chip) to a Veterinarian and learned that he is a full bred Lhaso Apso.
Bred in Tibet over 4000 years ago, Lhaso Apso’s served as interior sentinels in Buddhist Monasteries’ to alert monks to any intruders.
Some claim that the word “apso” is a form of the Tibetan word “rapso” meaning goat-like.
That got me thinking about a theme I wrote a lot about earlier this year-the Chinese Zodiac for 2015 as The Year of the Sheep/Goat/Ram.
Did the legacy of the sheep accurately predict the market this year? Has my goat-like Lhaso provided the S&P 500 with enough protection when market intruders lurked?
This Year of the Sheep and the implications have turned out to be incredibly precise. If you recall, from January until early August-8 months-the S&P 500 (SPY) traded in a tight range or what I called “sheep grazing peacefully within the boundaries of a pasture.”
From August until early October, our sheep were threatened by intruders. Ironically, the intruder was China itself.
However, the Lhaso Apso (turning out to be the best goat-like Sheepdog), scared off China’s intrusion.
As of mid-October, SPY is back above the low end of the first 8 month’s trading range (205), trading closer to the top of the range made on May 20th at 213.78.
What might we expect for December?
If SPY holds 205, probability suggests higher. Of course, the actions of the Federal Reserve might turn out to be the significant predator our watchdog will have to try to protect us against.
If the Fed raises interest rates, I would expect 205 to break down with 195 the next best underlying support in SPY.
Should the Fed stay the course and keep interest rates unchanged, SPY will most likely remain anesthetized to the weak commodity prices and take out first 210, then the 2015 highs.
Should the Fed ease, all will benefit, including many extremely downtrodden commodities.
Furthermore, close eyes will remain on China. FXI has to hold 36.00 and will look compelling back over 39.00.
Interestingly, many believed that the bodies of the Lhasa Apsos could be entered by souls of deceased lamas while they awaited rebirth into a new body.
Who is awaiting rebirth? The Bull Run? China? Commodities?
Lhaso Apsos in Tibet were never sold. The only way a person could get one was as a gift. Diego was my gift. Many believe more stimulus will be the market’s gift.
For now, we stay ever vigilant yet content the sheep are back peacefully grazing in the pasture.
S&P 500 (SPY) 213 resistance, 210 pivotal and 206.50 support
Russell 2000 (IWM) 119.36 pivotal with 117.25 support and 120.68 overhead resistance.
Dow (DIA) 175.75 support with 180 the hurdle to clear
Nasdaq (QQQ) 112.90 pivotal and over 115.47 takes it to new highs
XLF (Financials) If holds 24.25 good and must clear 24.97
KRE (Regional Banks) 45 pivotal and over 46 better
SMH (Semiconductors) Approaching October high 56.35 and must hold 55.10
IYT (Transportation) Weak performance relative to the SPY. 145.50 the big support and 150.96 the big overhead resistance
IBB (Biotechnology) Could be forming the mother of all bear flags unless it can close over 341.50
XRT (Retail) Also weak comparatively and back in an unconfirmed bear phase with 45.20 resistance to clear
IYR (Real Estate) Perhaps forming an inverted head and shoulders bottom but no confirmation of that at this time
ITB (US Home Construction) A potential reversal from the move up. Will see what happens at 28.20
GLD (Gold Trust) Didn’t do enough to be impressive and still looks rather weak
SLV (Silver) Under 13.40 trouble. Over 13.80 way better
GDX (Gold Miners) Over 14.00 best
USO (US Oil Fund) 12.81 recent lows
OIH (Oil Services) Been in a range since early October-it’s getting ready to do something-especially if clears 32
XLE (Energy) Same as with OIH except has to really clear 70
XOP (Oil and Gas Exploration) Same as with XLE and OIH-even more compressed so drawn to this one
TAN (Guggenheim Solar Energy) Cleared 26.50 which now marginally holding
TLT (iShares 20+ Year Treasuries) Has overhead resistance between 121-122
UUP (Dollar Bull) New multi-month high