January 11, 2017
By Mish Schneider
A picture says 1000 words. Yet as a writer, naturally I am compelled to write a few.
We begin with a riddle: What has a bronze head, a red skull, and is dusted in snow?
Seemingly larger than life itself, the market like a bronze bust, sits stubbornly on its pedestal near the highs.
Stubbornly, in that 20,000 continues to elude the Dow.
Stubbornly, in that two of the Modern Family (Biotechnology and Retail) are not participating in the market’s strength.
Stubbornly, in that volatility continues to fall as though if we have nary a care in the world.
Stubbornly, as the market, like a bronze sculpture, endures rain, ice, snow and heat.
Stubbornly, like the alloy bronze, the market is hard, durable and easy to cast.
The 4th Millennium BC began the rise of the Bronze Age. Hence, 2017 begins with an administration led by the “bronzed” one.
With just 3 trading days left before we establish the 6-month Calendar Range, will the market’s Olympic rally win the gold, silver or bronze metal?
If we look to the Modern Family, the 2017 trading ranges are fairly tight.
Thus far, the Russell 2000 has a range from 134.50-137.96. That means that once its range breaks up or down, traders who seek manageable risks will have a good one regardless of direction.
Retail (XRT)’s range is a bit wider but still manageable. 43.63-45.34 must break one way or another.
Transportation (IYT) or what I consider the best “tell” for following a calendar range break has traded between a low of 161.58 and today’s high 165.51.
Semiconductors (SMH), similarly to IYT, made its low on day one 71.32 and closed today on new January highs, 73.38.
Regional Banks (KRE) has a relatively tight range, which makes sense given that the 20+ Year Bonds have rallied. 54.85-56.73 yields a practical risk once that range breaks.
Finally, Biotechnology (IBB) no surprise, has the widest range of the family. IBB began the year with a low posted of 266.72. Yesterday, IBB rallied to 287.17. Today, IBB fell hard with more promises to control price gauging by the big pharma companies. Risky at best.
Of course, we are still officially 3 days away from completing the January Calendar Range. Nevertheless, the range break excites me because of the nature of the risk. Like Bronze, easier to cast.
In the Urban Dictionary, Bronze means “deliciously golden, a god on earth, to be worshipped by all non-bronzers.”
That, my friends, remains to be seen.
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) Yet another new all-time high. 120.00 support and 121 pivotal
KRE (Regional Banks) 55.90 pivotal, 56.50 point to clear and 54.25 support that should hold
SMH (Semiconductors) 72.35 level pivotal support. 74.00 resistance to clear
IYT (Transportation) 165 now pivotal support then 163.43. 168 resistance
IBB (Biotechnology) holding the moving averages which is something
XRT (Retail) A bit of a weak reversal unless it fails 44.00
IYR (Real Estate) If this breaks a trendline around 75.70 that would not be good
GLD (Gold Trust) Resistance at 114.40 and 111.50 support.
SLV (Silver) Technically today was a decent entry point at 15.75. Must clear 16.00 now to be good
GDX (Gold Miners) So far so good-think tomorrow could be more decisive
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) 122 pivotal now that it confirmed a recovery phase
UUP (Dollar Bull) 26.45 is a clear pivotal number