Big Brother Biotech & The Holding Company

July 14, 2015

Mish's Daily

By Mish Schneider


I could write about the American rock band Big Brother and The Holding Company that formed in San Francisco in 1965 best known for featuring Janis Joplin as its lead singer. I could write about the album “Cheap Thrills” and its major hit -Joplin’s bluesy rendition of “Summertime.”

Or, I could write about our Big Brother, Biotechnology, who during the 2015 summertime, is holding company for the rest of the Modern Family, giving bulls both cheap and dear thrills.

With Biotechnology posting new all-time highs, not only does the role of Big Bro go beyond fulfilling the expectations of what we all hope our big brothers can do, but also proves that the “smart” money that came into the market last week, turned out to be pretty darn smart.

I included Biotechnology as an integral part of the Modern Family (one Index-IWM and 5 Sectors-IBB KRE SMH XRT and IYT) because it has been an accurate measure for speculative money.

I continue to maintain that the logical sequence of this recent rally began with the other Brother or our Prodigal Son, Regional Banks, followed by Granddaddy IWM. However, my bold analysis last week calling for this rally, before the “smart” money showed up, was fueled by Biotechnology seeing it never broke beneath the 50 DMA when literally everyone else in the family had.

Where Do We Go From Here?

The DJIA faced its elusive gremlin, the Dow at 18,000, which as mentioned Monday night, if holds should provide some psychological respite.

Granddad Russell 2000 sits just above the middle of the March to July 2015 trading range. Wednesday, July 15th, is the official date of the next 6-month Calendar Range. The lineup should prove noteworthy. Over 126.50 will begin with a breakout over the new Calendar Range high. That should take IWM back to 129 area where our Year of the Sheep Theory-the bigger 2015 trading range high should be tested.

Conversely, should the market reverse, we will look to see what happens in IWM under 121.28. Should that level break, then for the first time this year, we will look to go longer term short figuring that the low of 2015 (114.20) will not only rear its ugly head, but the prospects could get uglier.

Nevertheless for now, as Janis Joplin wailed, “But until that morning
Honey, n-n-nothing’s going to harm you now,
No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no
No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no
No, no, no, no, no, no, no, no, no,
Don’t you cry.”

S&P 500 (SPY) Unconfirmed bullish phase if holds over 210.13 on a closing basis.

Russell 2000 (IWM) 124.75 key support to hold and over 126.50 should have more

Dow (DIA) Unconfirmed bullish phase if holds over 179.65 on a closing basis.

Nasdaq (QQQ) 109 the 50 DMA support with the highs within reach if no perceived disasters are looming

Volatility Index (VIX) Heading into trading range support and back in a confirmed bearish phase

XLF (Financials) Strong day with the JPM earnings. 24.75 the 50 DMA

KRE (Regional Banks) 45.00 next resistance to clear with support at 43.95

SMH (Semiconductors) OK day so one to watch for signs of weakness especially under 53.15

IYT (Transportation) Holding Monday’s gap

XRT (Retail) Granny is holding 100 and needs to clear 102

IYR (Real Estate) 74.50 the 50 DMA resistance overhead

XHB (US HomeBuilders) Another one approaching 2015 highs

GLD (Gold Trust) 110 is important to hold or this can drop another $10.00 quickly

SLV (Silver) Held the key point for the island bottom barely

USO (US Oil Fund) 18.00 is the number to clear otherwise aside

TAN (Guggenheim Solar Energy) Approaching resistance

TLT (iShares 20+ Year Treasuries) Near 2015 lows with Beige book this week

UUP (Dollar Bull) support at 25.00

EEM (Emerging Markets) 39.00 pivotal

GREK (Greece) Kind of amazed this chart didn’t spook the US market

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