January 11, 2018
By Mish Schneider
In my favorite movie of all time-The Wizard of Oz-when the Scarecrow goads the Apple Tree, the tree begins to throw apples at him.
The tree’s apple throwing attack, meant to intimidate, instead bountifully feeds Dorothy and the others.
This year, when the Modern Family members thumbed their noses at the Money Tree, the tree retaliated by throwing them dollars.
Hence, the domino effect. One member of the Family moves, they all move.
Rare and wonderful to watch. Enjoy it while it lasts!
With that in mind, how much longer might we enjoy the money tree?
Today felt like a melt-up. Particularly in the Russell 2000.
IWM gained nearly 2%.
Gramps was joined by Granny Retail (XRT) who gained 2.47%.
Their Tran son (IYT) gained 2.37% as it cleared $200.
When Sister Semiconductors cleared the psychological area of $100, SMH rallied to $106 before peaking.
Perhaps we can see IYT head to $206 then stop.
As promised, the Modern Family remains the best “go to.”
And in the Modern Family, IYT, reigns supreme. After all, if goods and services are moving, so is the economy.
Regional Banks (KRE) once it cleared $60.00 rallied easily to over $62.00.
Speaking of SMH, she looks tired. It’s possible, if SMH breaks below $100, we could see the other members of the Family take note.
Biotechnology (IBB), relatively weak compared to his Tran brother, needs to clear $112 and hold $110.
So, in the what-to-look-for signs, watch Semiconductors and Biotechnology-both sectors are heavily speculated and lucidly reveal sentiment.
Should either SMH or IBB fail from here, fair warning that the tree is not evergreen but deciduous.
Lots of naysayers have emerged again. The one that resounds the most to me deals with interest rates. The theory is that rates over 2.7% will put pressure on stocks.
Probably. Which is why, like a mantra, I keep watching for the U.S. Dollar to fall, the rates to continue to firm, the economy to overheat and inflation to poke its head above the low CPI clouds.
Money will always flow-but the type of tree it falls from will indeed change.
S&P 500 (SPY) This QQQs, and DIA made new highs, but the action was in small caps. Nonetheless, not overbought so nothing new to report.
Russell 2000 (IWM) I applaud Granddaddy and his stellar run to new all-time highs. 155 now pivotal support
Dow (DIA) 251 is the fast-moving average to hold. Yet, like SPY not overbought so who knows?
Nasdaq (QQQ) Bears-nope-not unless it breaks 160