Bulls and Bears Stuck in the Same Cage

January 16, 2019

Mish's Daily

By Mish Schneider


Today, I read comments on twitter from, how aggravating this low volume rally is, to when is the selloff coming, to how do I keep track of all my trades?

These birds represent traders right now.

One thing I do not want, is to get stuck in a cage by stubbornly maintaining a strong bias that prevents clear thinking.

So, the bulls and the bears stand near one another, but right now, it’s the bulls that have the treat.

Yet, they both are caged.

And for plenty of good reasons.

Who busts out?

As mentioned over the last weekend, in December the Regional Banks ETF KRE, fell very close to the November low of 2016-or the post-election low.

As also mentioned, KRE is the market’s Prodigal Son.

Currently, it’s been that sector’s lead (and bank earnings), that has propelled the rally.

Therefore, it stands to reason, that until KRE fails under 50.00, the bears should exercise extreme patience.

After all, when the bulls drop the treat, the race by the bears to scoop up the crumbs will be on.

I imagine that we could really go either way from here.

We could have a repeat of 2017 when the market basically met every dip with buying that kept the rally picture perfect.

Or, we could wake up to a day when the market gaps 1% or more lower, and keeps on falling with big volume.

2017 taught us to not overthink.

2018 taught us not to be too complacent.

2019 has just begun.

And of course, watch the Economic Modern Family 

S&P 500 (SPY) 263 is the overhead 50 DMA. Plus, more resistance up above there on the weekly chart. 260 pivotal and under 255 trouble.

Russell 2000 (IWM) This did go into an unconfirmed Recuperation Phase with the 50 DMA at 144.21. So, let’s use that-if cannot get back above, perhaps the bear birds will get the worm.

Dow (DIA) 240 pivotal support-243.76 is the negatively sloped 50-DMA

Nasdaq (QQQ) Confirmed recuperation phase with the negatively sloped 50 DMA at 161.87.

KRE (Regional Banks) If this week closes over 50.25 then bias still friendly. Below, not so much.

SMH (Semiconductors) Weakest link at this point. Bearish Phase. 88.50 the next support. 90 pivotal and back over 91 may see new life

IYT (Transportation) This still has a long way to go to see the 50 DMA at 178.44. So for now, a close under 170 would not be a good sign

IBB (Biotechnology) 110 resistance held this from continuing up with a red close. 106 closest support

XRT (Retail) 43.75 the pivotal number still. Above good, below we are looking at 42.25 support.

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