December 29, 2016
By Mish Schneider
Luckily, the Market is Tagged
For the first time, Diego perched himself on this chair by our trading screens. As today is the last Mish’s Daily for 2016, I wondered how Diego’s and the market’s action might be related.
The Urban Dictionary defines “Diego” as a guy who is afraid to admit what he really wants and acts differently around certain people. If he's into you, you're his queen. But once that's over, he moves on.
Meet our Diego. We found Diego on a six-lane highway over three years ago. We are still uncertain about what he really wants. However, it seems a safe bet that he has had many owners over the years and treated each one differently.
He totally fits the bill as one who sees me as his queen. That is, until the front gate is accidentally left open. Then, he bolts out to find a new queen. He’s tagged now though, so I always get a phone call from a kindly passerby.
How might the 2017 market set up as the year of the “Diego?”
If Diego translates as a guy who is afraid to admit what he really wants and acts differently around certain people, it supports the prediction of 2017’s theme, “Uncertainty is the New Sure Thing.”
With a new administration, comprehending what the President really wants will present investors with challenges. First off, will we know what Trump really wants? We have already seen evidence that he acts differently around certain people.
The market fares better with stability. If the new administration approaches governing like Diego approaches new potential owners, then when they support a campaign promise with action the market will have certainty. If they “get over” whatever promises are made and move on, the market will be left with uncertainty.
Thus, volatility, a sleeping giant since 2012, could awaken. That in turn, may make an open gate irresistible to the market. In other words, flight to safety could prevail.
Luckily Diego is tagged. Equally lucky, the expectation for uncertainty means the market is tagged and we can approach trading in 2017 as such.
We wish all our friends and fans a Happy and Healthy New Year. Thank you for all of your support this past year. We look forward to greeting 2017 together with thoughtfulness, humor and calm.
S&P 500 (SPY) 224.50 now pivotal with over 227 better and 222 support
Russell 2000 (IWM) 134-134.50 pivotal support to watch. Over 136.25 better
Dow (DIA) 200 to clear 198 pivotal and 197.50 support
Nasdaq (QQQ) 119.30 area has been support with a move back over 120.20 better
KRE (Regional Banks) Confirms a low volume reversal pattern with support at 54.25 area
SMH (Semiconductors) Couldn’t quite confirm the reversal top making 72.75 level pivotal
IYT (Transportation) If cannot hold 163 see 154. Over 166 better
IBB (Biotechnology) Unless this clears 275, could see move to 240
XRT (Retail) Confirmed warning phase with 44.75 pivotal
IYR (Real Estate) Turned back over the 50 DMA with the lower interest rate yields today
GLD (Gold Trust) Good potential bottom with expectation of a quiet day tomorrow to end the year
SLV (Silver) 15.40 pivotal and also expecting a quiet end of year day
GDX (Gold Miners) Ran right up to the 50 DMA. Probably will see digestion tomorrow. Good volume so one to watch next week
USO (US Oil Fund) 11.80 resistance with now, 11.40 support
TLT (iShares 20+ Year Treasuries) 118.50 pivotal 118 support and resistance at 120
UUP (Dollar Bull) Runaway gap if holds over 26.50
FXI (China) A weekly close over 34.63 interesting