June 22, 2015
By Mish Schneider
After writing a carefully thought-out piece on The Top 5 Characteristics of a Good Shepherd over the weekend, apparently I forgot the one about not falling asleep while tending to one’s sheep. ZZZZZZZ!
After the longest day of the year on Sunday, a sleepy rally occurred on Monday.
The usual gathering of the Modern Family members ensued. Russell 2000s and Biotechnology made new highs, Retail held the pivotal 100.00 level, Semiconductors crept higher, Regional Banks firmed near the recent highs and Transportation recaptured 152.00.
A family that moves together-one thing we have learned this year with sheep-like trading- hasn’t always translated into a Family that stays together. Hence, we turn our attention to observing other developing relationships.
Monday began with optimism with Greece (Cousin Eddie) and no real fear of rising interest rates.
Soft Commodity prices moved up while diversion between the gold and silver (silver outperformed) became noteworthy. This seems to translate to a prevailing perception that signs of global growth are overriding a lot of other current concerns.
Sunday night, our typically quiet neighbors banged a drum repeatedly for about 30 minutes. Since we’re not talking Buddy Rich type drumming, I was about to lose it when the drumming suddenly stopped just as the sun set. It dawned on me that the drumming was meant as a ceremonial homage to the summer solstice.
Why this year and not any other years before this one, I asked myself? A lone drummer, welcoming the summer-what should we be welcoming?
Will it be a huge gap above recent highs in the other lagging indices? Will NASDAQ in particular, take out 111.16 and continue to run or will it be the same run and then retreat as it has been doing all year?
Will a predicted El Nino have its way on the already parched areas around the world and the declining aquifers causing commodity prices to spark?
Will Greece resolve and world peace break out? (I think we will need a whole lot more drumming for the latter outcome!)
Or maybe, the neighbor bought a new drum and just needed an excuse to go outside and bang it.
Welcome to summer!
S&P 500 (SPY) Volume light, while this remains range bound
Russell 2000 (IWM) Quietly unstoppable and not overbought
Dow (DIA) Back to an unconfirmed bullish phase which means has to defend 180.30 now the 50 DMA
Nasdaq (QQQ) Until we get a decent clearance over 111.16, lots of range bound noise
KRE (Regional Banks) Back near the highs
SMH (Semiconductors) Over 58.47 better but good its clearing from the 50 DMA
IYT (Transportation) Back over the 152 area and weekly moving average-if stays here a very good sign
IBB (Biotechnology) Impressive move to new highs!
XRT (Retail) Granny has to hold 100 to keep the others happy-others I mean IYT SMH in particular
IYR (Real Estate) Buckled to the rising rates-but holding 74.00
XHB (US HomeBuilders) 36.98 is the highest weekly close since 2007- Maybe this week
GLD (Gold Trust) Typical lack of follow through type action since April-just as we were about to get interested too
USO (US Oil Fund) Noisy until it clears 21.50 or fails 19.00-note though over 20.45 clears calendar ranges
TAN (Guggenheim Solar Energy) If holds 42.00 good and over 43.50 even better
TLT (iShares 20+ Year Treasuries) Ugly with a break of the weekly moving average if stays below 117.20
GREK (Greece) If this holds now over 11.34 seems 13.00 will be the next hurdle
CORN (Corn) Looks like it wants to base
BAL (Cotton) So does this
DBC (DB Commodity Index) And this
SGG (Sugar) And this
JO (Coffee) And this
PHO (Water) And this
Every day you'll be prepared to trade with: