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Mish's Daily: Worst ISM Data Since 2009 Sends Modern Family To Recess

December 1, 2015

By Mish Schneider

The ISM Manufacturing Index monitors employment, production inventory, new orders and supplier deliveries from more than 300 manufacturing firms.

"The November PMI® registered 48.6 percent, a decrease of 1.5 percentage points from the October reading of 50.1 percent.”

If you are interested, you can check out the breakdown of this number into production, employment, price, new export orders and import indices.

Or, you can take my word for it-all disappointed giving the doom and gloom folks a chance to mutter their favorite word, “recession.” Maybe that’s their second favorite word-the first one is probably ‘depression.”

Ten out of 18 manufacturing industries reported contraction in November, falling to its worst levels since June 2009.

At that point, the country was trying to climb out of recession.

Let’s look at the word “recession.” The root word is “recess.”

Recess has several meanings. 1. The act of receding 2. A hidden or secluded place or part 3. An indentation 4. A suspension of business or procedure often for rest or relaxation.

Maybe it’s me and my optimistic nature, but none of those definitions sound so scary relative to the market. Considering the time of year, a recess seems appropriate. Furthermore, it begs the question what “hidden” measure might emerge from our friends at the Federal Reserve?

Thinking about the Modern Family, the Concierge Doctor took them to the playground to watch the how each one behaved when given some rest and relaxation.

Granddad Russell 2000, after his amazing hurdle over the 100 DMA a week ago, seems to love recess. In fact, IWM was observed jogging in place looking like he’s readying to jump over the 200 DMA next.

Grandma Retail’s Arthritis flared up a bit. During recess, she played Canasta. Shuffling cards helped her hands some and it’s quite possible that she will feel well enough to shop at the 50 daily moving average (DMA) mall just .50 cents away.

Prodigal Son Regional Banks’ Sciatica is better. A move over 46.00 should prepare him for new 2015 highs.

Semiconductors took out the October 23rd high. His Macular Degeneration is in remission as the distance between it and the 200 DMA increases.

Big Bro Biotechnology’s Pernicious Anemia prevented him from taking part in any rigorous play. As the whole family remains concerned that without IBB the party cannot sustain, the Doc gave him another B-12 injection and hopes to see him rally over 343.

Transportation is still a bit constipated. She spent most of the time at recess looking for the bathroom. Should we see IYT clear 148.40 on Wednesday, well, let’s just say we can assume “Eureka!”

The Federal Reserve and the near-term future of Interest Rates, TLTs (20+ Year Treasury Bonds), are the Family’s Park Rangers. Talk of raising rates puts stress on the already partially blocked arteries of the market.

However, fighting back the stress recession would yield by intimating for softer rates gives the market a lot of extra red blood cells hence lowering blood pressure substantially.

Everyone loves recess. But remember, school is not out yet!

S&P 500 (SPY) 213.78 resistance, 210 pivotal and 208.85 support

Russell 2000 (IWM) 119.36 pivotal with 117.75 support and 120.68 overhead resistance.

Dow (DIA) 175.75 support with 180 the hurdle to clear

Nasdaq (QQQ) 115.47 takes it to new highs and must hold 114

XLF (Financials) If holds 24.50 good and must clear 24.97

KRE (Regional Banks) A close over 46 and new highs in the works

SMH (Semiconductors) Cleared 56.35 and closed on the intraday highs-a wee bit overbought

IYT (Transportation) 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) Confirmed bear phase but with the 50 DMA at 45.17 to clear if good

IYR (Real Estate) 75.10 now big support to hold

ITB (US Home Construction) New high close since September and a target of 3 ATRs reached from the 27.70 buy rec

GLD (Gold Trust) Didn’t do enough to be impressive and still looks weak

SLV (Silver) Under 13.40 trouble. Over 13.80 way better

GDX (Gold Miners) Big day. Now has to hold 14 and clear 14.65 the moving averages

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 if can clear 38.00

TAN (Guggenheim Solar Energy) 26.50 now support with 28.00 next level of resistance

TLT (iShares 20+ Year Treasuries) Unconfirmed move to a Recovery Phase

UUP (Dollar Bull) Back testing the 25.95 pivotal area

EWW (Mexico) Inside day and looks good over 54.66