June 24, 2017
By Mish Schneider
Last week, the market traded like a golden bull that crooned to keep his head above the fire.
The S&P 500 began the week strong.
The rest of the week, SPY never achieved taking out the highs.
Rather, it sold off, broke the fast moving average, yet held critical support above 242.
The NASDAQ 100, after the nasty spill from its all-time highs on June 9th, spent the week trying to demonstrate it rather sing than fall into the flames.
By the end of the week, the overall market neither charmed nor burned investors.
Last Thursday’s Daily, “A Market Without a Catalyst on the Other Side of New Highs,” speculated that the run in biotechnology, FANG stocks and solar energy could be the catalyst to help the markets run north.
Yet, it seems more accurate to say that the strength in IBB particularly, did more to prevent a bigger selloff.
Picking a song for our crooning golden bull to sing, I go with Johnny Mathis’ “Chances Are.”
Investors think that just because the market wears a silly grin the moment the highs come into view, chances are the market will get to new highs.
But are the market’s chances awfully good?
My go to Modern Family trades all over the map.
The Russell 2000, with one week left to the month, sits below the monthly channel top and the declining-in-slope fast moving average.
Yet, it holds in a Bullish phase. I figure by the end of this coming week, we should know whether or not the failure to trade above 142.90 means that bull falls off the hook and into the flames.
Transportation (IYT), picked up the mike to sing. Like Granddad, IYT remains in a bullish phase yet cannot get above 170 and stick.
Regional Banks confirmed a warning phase. As a barometer of how well community money is moving, this negative reaction to the Fed’s dove-hawkish comments whistles another tune.
Semiconductors, our Wonder Woman, can do many things well, except sing. The 86.00 level in SMH could not clear. The chart pattern could still resemble a bear flag.
Last Friday I had a thought that has yet to prove right or wrong. Biotechnology made a missile launch move from 300 to 323. Huge volume within the speculative arena gave it the attention this crooner deserves.
Nevertheless, it occurred to me that the drama I seek to put a cap on this bull market could have come in the form of that 3-day rally.
This week, keep eyes on IBB and whether it can sustain itself at current levels.
Granny Retail XRT ended the week waiting for her turn at the mike. A reprieve from the fire, XRT nonetheless looks tone deaf until it clears back over 40.00.
So, are the market’s chances awfully good? If you believe the stars that fill the skies are in its eyes.
S&P 500 (SPY) Through 245 the rally continues. Under 242 suspicious. Under 240 even more so
Russell 2000 (IWM) 142.90 the number to watch. 140 pivotal. 137.50 support
Dow (DIA) Back through 214 would be better
Nasdaq (QQQ) 142 resistance. 138.75 support. Under 137.70 trouble
KRE (Regional Banks) Should this fail to retake 54, could see it follow Retails’ footsteps.
SMH (Semiconductors) 82.35 the 50 DMA. Has to clear 86.10.
IYT (Transportation) 170 resistance. 168 pivotal then under 165 trouble
IBB (Biotechnology) 320 target reached. Could see more but I’d trail up a stop if long.
XRT (Retail) A promising close considering how close it got to death
IYR (Real Estate) 81.00 pivotal
XLU (Utilities) 52.65 the 50 DMA
GLD (Gold Trust) Like if holds 118 and clears 120
GDX (Gold Miners) Unconfirmed recovery phase. That’s a good sign for gold too should this confirm
XME (S&P Metals and Mining) Warming up
USO (US Oil Fund) Don’t see much yet after the big move down
TAN (Solar Energy) The place to be last week. 19.00 now support
TLT (iShares 20+ Year Treasuries) 127.37 now support as it works above the old gap
UUP (Dollar Bull) 25.40 resistance and under 25.15 not so good