January 10, 2017
Mish's Daily
By Mish Schneider
In NYC, our hotel window faced this window. The only object in the room was the bed. The inhabitant made the bed each day and left the room clearly visible.
At the risk of appearing a bit of a voyeur, I found this room both inviting and ominous at the same time.
Starting out 2017 appearing as a bit of a market voyeur, I find the trading action both inviting and ominous at the same time.
Participating mainly through a lens, I have watched certain instruments make spectacular moves. For example, Brookdale Senior Living (BKD), one of my 2017 picks, ran up 20% in one minute on takeover rumors. (Impossible to catch if not already long.)
Conversely, listed as “one to watch” JC Penney (JCP) fell dramatically by nearly 20%. (That took 5 days rather than 1 minute).
The indices, except for NASDAQ, are as exciting as an empty bedroom. Their inaction has kept my voyeurism high and my risk exposure low.
What will transform me from safe voyeur to active risk taker?
Like the apartment dweller, investors wake up each morning, tidy the bed and then leave the room.
The opening bell has for the most part, been a non-event with the indices beginning the sessions basically unchanged.
Since the start of the year, the S&P 500 has traded within a $4.00 range. Most of the exciting action is in the NASDAQ 100. That has made the market inviting.
Moreover, a rotation in certain other instruments have made the market more ominous. For instance, the 20 + Year Treasury Bonds rise in price suggests some flight to safety.
Last night, I wrote about the 6-month January Calendar Range, now only 4 trading days away from completion. Granted, waiting for the range to set up by Tuesday the 17th is four days ahead of a new administration.
Nonetheless, I suspect how the confirmation hearings go over the next few days will help build enough confidence to follow whichever way the calendar ranges break.
Last year, under very different circumstances, we sat out for the first 10 trading days. Then, the lights turned on. This year, we are hardly aside, but hold a comfortable and relatively low risk portfolio.
That means we can maintain voyeur status until the resident (January 6-month Calendar Range) comes home.
Therefore, for the next four days, we will continue to watch primarily through a lens. Then, it’s either lights out for the market or it heads out to party.
S&P 500 (SPY) 225.50 support and above 228.34 the high.
Russell 2000 (IWM) 134.50 is big now-if breaks should see selling. 135.50-136 pivotal. Over 138 better
Dow (DIA) 200 to clear 198.00 should hold now if good.
Nasdaq (QQQ) Another new all-time high. 120.00 support and 121 pivotal
KRE (Regional Banks) 55.90 resistance, 56.50 point to clear and 54.25 support that should hold
SMH (Semiconductors) 72.35 level pivotal support
IYT (Transportation) Must clear 165 and hold 162 or trouble.
IBB (Biotechnology) 285 pivotal support
XRT (Retail) 2-day reversal possible unless it fails 44.00
IYR (Real Estate) If this breaks a trendline around 75.75 that would not be good
GLD (Gold Trust) Resistance at 114.40 and 111.50 support.
SLV (Silver) Filled the gap-will be looking for an entry.
GDX (Gold Miners) Doji which makes the case for patience
USO (US Oil Fund) 12.00 is big resistance and 10.80 big support
TAN (Solar Energy) Not inspired to buy until a phase change
TLT (iShares 20+ Year Treasuries) 119.50 is the place to hold for this to remain in the monthly channel. 122 resistance to clear. Went into an unconfirmed recovery phase
UUP (Dollar Bull) 26.45 is a clear pivotal number
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