December 21, 2016
Mish's Daily
By Mish Schneider
Donning wreaths, tinsel, ornaments and lights, the Dow Jones Industrial Average crept towards 20,000.
Crept is the operative word. The DJIA made it to 19,987.63 without volatility and on half to three-quarters of the average daily volume.
With so much publicity and emphasis on 20k as a milestone, once the Dow gets there (or if this is as close as it gets) investors will decide to stick around or leave the Dow party. Yet, I’m guessing we will not really know how the party turns out or when it ends until after the holidays.
Even then, I suspect March-April will be the better time of reckoning. Why? Because the first 100 days for the Trump administration ends late April.
Mark the date.
However, I am getting ahead of myself. Rewind to the present and the seasonally decorative façade.
Yesterday, the Dow, S&P 500 and the Russell 2000 had inside trading days (hesitation). Whereas the Dow, S&P 500 and the Russell 2000 all closed above previous day highs today, NASDAQ 100, which did better yesterday, had its turn for the inside day. I really like the October NASDAQ high 119.65, as the point to hold or fail from.
Of the Modern Family sectors, Transportation, Semiconductors, and Retail resumed the rally. Yet, impressive as that looks, none closed above what I consider critical resistance. Regional Banks closed higher as well and marginally above the resistance levels.
Here are the comments made yesterday in the ETF section below:
KRE (Regional Banks) If this cannot get back over 56.00 (closing price 56.11), then expect lower levels with 54 then 52 support.
SMH (Semiconductors) 71.50 support to hold if this is good. Over 72.50 better
IYT (Transportation) A huge correction would bring this down to 154. If recaptures/closes 168 never mind.
Biotechnology, the weakest sector of the Family, closed green. Again, not all that impressive considering the teeny range within yesterday’s trading range.
I certainly do not mean to sound like a curmudgeon. Rather, I view strolling rather than jogging towards the 20k milestone somewhat anti-climactic.
As one who ran (jogged) a marathon and practically crawled to the finish line, what matters is I finished. Oh sure, my hips and knees hurt, my feet had blisters. After all the training, the finish was anti-climactic. But I did live to run another day.
S&P 500 (SPY) Inside day. Under 224.50 trouble and over 227 better
Russell 2000 (IWM) 134-134.50 pivotal support to watch. Back over 138 better
Dow (DIA) 200 to clear 196 to hold.
Nasdaq (QQQ) 119.65 pivotal area
KRE (Regional Banks) Now has to hold over 56.00 or expect lower levels with 54 then 52 support.
SMH (Semiconductors) 71.50 support to hold if this is good. Over 72.50 better
IYT (Transportation) A huge correction would bring this down to 154. If recaptures/closes 168 never mind.
IBB (Biotechnology) Unless this clears 275, could see move to 240
XRT (Retail) A break of 45.50 would be where the real fun begins. Over 47 better
IYR (Real Estate) Rounding bottoming action if holds 75.80
GLD (Gold Trust) Held the recent lows but again, needs to do more
SLV (Silver) Now this had an interesting reversal pattern. After nearly matching April’s low, it rallied on better than average volume and closed on the highs
GDX (Gold Miners) Not as exciting as silver, it did make a possible new reversal low
USO (US Oil Fund) 11.73 to clear and 11.40 to hold
TLT (iShares 20+ Year Treasuries) 116.35 very big support on a monthly chart. Now, 118.50 resistance
UUP (Dollar Bull) Runaway gap if holds over 26.50
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