January 4, 2017
By Mish Schneider
In 1930, right after the stock market crash, Betty Boop appeared. The U.S. was in the throes of a Depression. Betty’s persona helped alleviate the country’s blues. (She also represented a departure from the stereotypical female).
Betty Boop had a colorful family. She liked to visit her Grampy, an energetic and eccentric inventor. He created labor-saving devices and built self-playing musical instruments.
Betty and Grampy animated two societal messages. (Actually, way more than two, but for our purposes we will stick with those.)
First, Betty served as a reminder of more carefree days. Secondly, Grampy prophesized the advancement of automation.
Fast forward to today, the country takes solace in the idea of a return to more carefree days.
Grampy’s advancement of automation comes with a price.
How does our Modern Family exemplify the anomaly of the ever-increasing labor-saving devices versus a more carefree time in America?
Although Biotechnology and Retail, the two lagging sectors of the Modern Family, played catchup today, that can often signify the last gasp for the stronger players.
The Russell 2000, as I have written in the ETF comments below, had a low volume reversal top in early December. That means, it must clear and close over 138 to negate that pattern.
Yet what I find a bit more concerning is the failure of both Transportation (IYT) and Semiconductors (SMH) to clear their fast-moving averages. I particularly expect Transportation to act as a lead measure for a more robust economy.
Oh sure, IYT has done well. Nevertheless, while the Russell’s are testing the recent highs, Trans is reluctantly holding up.
If Betty Boop was in the Modern Family, she could be like our Sister Semiconductors. Betty began as one of the first sex symbols. After the Hays Code in 1935, Betty was toned down.
Semiconductors have also toned down lately. Which is ok considering how strong that sector performed last year. Current levels are important though, not only for the economy’s forecast, but also to perpetuate more investor confidence.
Yes, technology has made our lives easier and more entertaining. Great for the Grampys of the world. And for the stock market shareholders.
And yes, the U.S. market has soared with the promise of a return to more carefree days. Perhaps a cautionary tale however, regulation and reality eventually minimized Betty Boop’s zest.
S&P 500 (SPY) 225 should hold now if good and over 227 better
Russell 2000 (IWM) 136 should hold now if good. Over 138 better
Dow (DIA) 200 to clear 198.50 should hold now if good.
Nasdaq (QQQ) 120.00 pivotal as in if holds great. If fails, warning
KRE (Regional Banks) Inside day near the highs. Looks good if holds today’s lows
SMH (Semiconductors) Narrow range inside day with 70.25 support at the 50-DMA and 72.75 level pivotal
IYT (Transportation) Inside day. If cannot hold 163 could see 154. Over 166 better
IBB (Biotechnology) Great day here if holds 275 first then more importantly 272
XRT (Retail) 44.75 pivotal area and 43.98 support
IYR (Real Estate) A weekly close over 78 will look good.
GLD (Gold Trust) Before we call bottom, check out the possible bear flag forming on the weekly chart. A weekly close under 109.35 would not be good.
SLV (Silver) Better than gold. Like to see this fill a gap to 15.87
GDX (Gold Miners) Unconfirmed phase change to recovery. Needs a second day.
USO (US Oil Fund) 12.00 is big resistance and 10.80 big support
TAN (Solar Energy) 17.00 should hold now if good
TLT (iShares 20+ Year Treasuries) 120.20 area the 200-week moving average
UUP (Dollar Bull) Quadruple tops at 26.80?
FXI (China) Must close again over 35.48 to confirm a better phase.