January 5, 2017
Mish's Daily
By Mish Schneider
We live in the desert so for us, a trip to the ocean is the perfect yang to our yin. The flock of seagulls, mostly flying in the same direction yet with a tinge of chaos, also serves as a reminder of the symmetry between opposing characteristics.
In current market conditions, a yin and yang or seemingly opposite or contrary forces that may be complementary, exists.
Brick and mortar retail versus online shopping is the most glaring example of yin and yang. Amazon gained 3.15% today while Macy’s fell nearly 14%.
Interestingly, Transportation, which is the only delivery choice for your online goods (that is until they perfect drones), closed down by .6%.
Federal Express (FDX) looks like it might deteriorate in phase from bullish to warning, an occurrence we have not seen since mid-September.
If you add up some salient features, the FANG (Facebook, Amazon, Netflix, Google) stocks are the yin while mall stores and Transportation are the yang.
Who wins?
Time will tell of course. Playing armchair economist, when an old reliable chain like Macy’s lays off over 10,000 people, one would think a lower GDP next quarter.
If Transportation heads into a warning phase, one would think a lower GDP next quarter.
A lower GDP should engender a status quo stance by the Fed on rates, still historically cheap. The dollar should fall as it did today. As I write this, I am struck once again by that heinous word I’ve used before-STAGFLATION.
Remember, certain real economists expressed that very concern in November after the election. A combination of increasing inflation and lackluster economic growth hurts everything from consumers to stocks prices.
“According to the most recent survey of fund managers by Bank of America-Merrill Lynch, 23% of managers cited stagflation as the biggest tail risk to the US economy, the most cited concern.” Business Insider by Bob Bryan November 20, 2016.
23% is a minority for sure. And hopefully, government spending will stay within reason limits.
That’s why we have a Modern and extended Family-to gauge anomalies. Continue to watch Retail, Transportation and the fatigued Semiconductors.
Check in on their second cousins twice removed, the U.S. Dollar and interest rates. Watch Uncle Oil and Aunt Agriculturals.
I encourage you to go sit in nature and contemplate the natural and chaotic order of things. Namaste!
S&P 500 (SPY) 225 should hold now if good and over 227 better
Russell 2000 (IWM) 135.50-136 should hold now if good. Over 138 better
Dow (DIA) 200 to clear 198.00 should hold now if good.
Nasdaq (QQQ) 120.00 pivotal as in if holds great. If fails, warning. A close over 121 better.
KRE (Regional Banks) Broke under the fast-moving average. That makes 55.90 pivotal and 54.25 support that should hold
SMH (Semiconductors) 70.35 support at the 50-DMA and 72.75 level pivotal
IYT (Transportation) If cannot hold 163 could see 154. Over 166 better
IBB (Biotechnology) 275 first line of support and then more importantly 272
XRT (Retail) Ultimately closed above the 200 day and week moving average. Those are you lines in the sand
IYR (Real Estate) A weekly close over 78 will look good.
GLD (Gold Trust) Resistance at 114.40 and now should hold 111.50 area if good.
SLV (Silver) Like to see this fill a gap to 15.87
GDX (Gold Miners) Confirmed phase change to recovery. 22.00 the support to hold
USO (US Oil Fund) 12.00 is big resistance and 10.80 big support
TAN (Solar Energy) Held 17.00 now the risk with 17.88 the 50 DMA
TLT (iShares 20+ Year Treasuries) Back in the monthly channel. Back over the 200-week MA. Approaching the 50 DMA at 122.33
UUP (Dollar Bull) 26.03 the 50 DMA
FXI (China) Approaching resistance so if long, good time to lock in profits
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