A Rally Without Speculators Is Like.

February 25, 2016

Mish's Daily

By Mish Schneider

Ladies and Gentlemen, Start Your Engines-Wilbur Shaw

Keith bought me the new Tony Robbins book, Money Master the Game & Simple Steps to Financial Freedom. He bought it for me because I am writing a book as well. My book is not a mental, spiritual or even practical guide to “Invest like the wealthy where you participate in market gains but are guaranteed to never lose when the market drops.”

Mine is a basic and thorough guide to using phases for investments and everyday life. But that’s another story for another time.

I cannot comment on Mr. Robbins book yet. I just started to read it. However, as I perused the index, I noticed a reference to Bob Marley. OK, I’m game. Turned out Robbins used a Marley quote:

“The day you stop racing is the day you win the race.”

I thought long and hard about this quote and how it not only pertains to trading, but also how it might pertain to the information I impart each day to you, my devoted readers.

Are the comments and analysis on the daily goings on concering the Modern Family engendering you to enter the race, stop the race, win the race, or race at all?

The last few weeks I have talked about momentum particularly as it relates to the Transportation sector. As first to outperform the S&P 500 and first in the Family to exhibit waning downward momentum, my intention was to enlist you into the race as a buyer and/or at the very least, give pause to the sellers.

Each day thereafter, I have updated you on how IYT is doing. Is it bottoming, leading, stalling, turning into the new alpha of the family displacing Granddad Russell 2000?

Tuesday night I warned it could be stalling. Wednesday, I suggested both bulls and bears wait for more evidence. I wrote, “If today (Wednesday) was the dip to buy, then we should see a move over 132 on Thursday.”

Now, we have. IYT closed at 132.52 and the market gained 212.37 points.

IYT and the Modern Family Now

IYT looks better for sure. However, I like to see the slope on the 50 DMA, still declining, neutralize. IWM has a short jog to the 50 DMA, but it’s Granddad-even a short jog can still wreak havoc.

XRT, Granny and right now Queen of this move, has a neutral slope on the 50 DMA. It is sitting on the 100 DMA. The dawning of an era with a new alpha in town? Watch here.

Semiconductors (SMH) cleared the 50 DMA (negatively sloped) and has an unconfirmed phase change to Recovery.

Regional Banks (KRE) must clear 35.81 (6-month January Calendar Range Low) or this rally in the others might be short-lived. No reason to panic though, if long.

Finally, Biotechnology (IBB) still weak, reflects the more speculative area of the market. I’ve been reading about how little money there is invested in the market right now.

Longer term, speculators need to enter the race. Or maybe because they have stopped racing, they are indeed winning. Time will tell.

I googled Bob Marley’s quote. The key message is to enjoy the moment and stop constantly looking ahead.

Not easy for traders. Maybe Churchill is our better spokesperson when he said, “"Success is not final, failure is not fatal: it is the courage to continue that counts.”

S&P 500 (SPY) Got through 195 and is in an unconfirmed recovery phase. Needs to confirm. Also reminds me of another quote: Our is not to question why, ours is just to live and die.”

Russell 2000 (IWM) 104.20 the 50 DMA

Dow (DIA) Unconfirmed Recovery Phase

Nasdaq (QQQ) Hello, 103.50 the monthly resistance. 104.80 the 50 DMA

XLF (Financials) 20.87 the 200 week moving average pivotal-looking more promising

KRE (Regional Banks) 35.81 pivotal

SMH (Semiconductors) Unconfirmed Recovery Phase with 50.00 pivotal

IYT (Transportation) Has that gap to 134.23 it must fill next

IBB (Biotechnology) Last week’s high 267.60. If this can move over there, great sign

XRT (Retail) Trading just at the 100 DMA-Granny in the zone!

IYR (Real Estate) This and ITB moved right up to their 50 DMAs

GLD (Gold Trust) Inside day. That doesn’t look bearish to me. IN fact, building steam it seems

GDX (Gold Miners) Yet another new multi-month high close