20,000 in the Dow: I Got a Peaceful, Creepy Feeling

December 27, 2016

Mish's Daily

By Mish Schneider

mdaily20161227While at a holiday party, I found this Effanbee doll circa 1920 in the hostess’ guest room.

Originated in 1912, the Effenbee dolls became well known as the first realistically proportioned child doll.

What struck me about this doll, is that she looks both serene and creepy at the same time. (Not to mention that her crib resembles an open coffin.)

Realistically propotioned yet with an underlying sense of the macabre, here are today’s top headlines:

  1. Consumer Confidence Finishes 2016 On A Strong Note
  2. Amazon said it had its best-ever holiday season in 2016, shipping more than 1 billion items worldwide
  3. Nasdaq Composite hits new all-time high
  4. US home prices hit new high, up 5.6% in October: S&P CoreLogic Case-Shiller

Wow. With all this unbelievably joyous news, what’s macabre about that?

Maybe nothing. The market’s position of strength indeed offers opportunities.

But it also offers concerns. The main concern is how a new administration will live up to the lofty expectations. Are the plethora of promises realistic?

Will 2017 pan out as the year of buying the rumor and selling the news?

Last week I wrote, “I just completed a list of stocks and ETFs to watch in 2017 for both longs and shorts. In the past, I’ve always had a good idea of megatrends to follow that employ logical fundamental analysis…. However, beyond mankind’s dependence on technology, making global economic and foreign policy predictions for 2017 got a whole lot harder.”

Contrary to the happy headlines, others today support the more macabre results of producing a realistically proportioned doll.

  1. Recession, market correction next year, expect rate cuts: Rickards
  2. The New York Times:A Trump Economic Boom? The Fed May Stand in the Way
  3. S. GDP Growth Will Remain Anemic, At 2.1%
  4. Credit Card Debt Will Break All-Time Records, Topping $1 Trillion Owed

The Effanbee doll resembling a human brings up a common, scary theme: a doll coming to life.

A fear of dolls has a proper name, pediophobia, According to
psychologist Frank McAndrew, the creepiness one sees in dolls comes down to uncertainty and unpredictability.

Perhaps it is a similar creepiness many investors feel about the market in 2017. We are fascinated and enthralled, somewhat on edge but more drawn in. We have fallen under the spell of a good story-teller who encourages us to want to find out what comes next.

On a more serious note, 2 somber headlines: R.I.P Carrie Fisher and George Michael. Both gone too soon.

S&P 500 (SPY) Under 224.50 trouble and over 227 better

Russell 2000 (IWM) 134-134.50 pivotal support to watch. Back over 138 better

Dow (DIA) 200 to clear 198 to hold.

Nasdaq (QQQ) New all-time highs early today. 120.30 now immediate support

KRE (Regional Banks) Support 56.00 now that it made new all-time highs

SMH (Semiconductors) Sister Semis and another new all-time high

IYT (Transportation) Not as good looking today. A huge correction would bring this down to 154. If recaptures/closes 168 never mind.

IBB (Biotechnology) Unless this clears 275, could see move to 240

XRT (Retail) Broke 45.50. Now, we will see if it can hold 44.50

GLD (Gold Trust) 108.60 is a good pivotal area to trade off of

SLV (Silver) Held 14.85 which is good. Now 15.30 resistance to clear

GDX (Gold Miners) Filled the gap to 19.87 which is a good thing. Like to see it close out the year over 19.82

USO (US Oil Fund) Seems the bottom really is in

OIH (Oil Service Holders) A pick for 2017

TLT (iShares 20+ Year Treasuries) 116.35 very big support on a monthly chart. 118.50 resistance

UUP (Dollar Bull) Runaway gap if holds over 26.50

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