February 18, 2018
By Mish Schneider
While the market tries to decide if it wants to challenge the January highs or not, we are preparing for a year that could mirror the characteristics of dogs.
After all, this weekend begins the Chinese New Year of the Brown Earth Dog.
Business Insider Australia edition reports, “The Chinese Year of the Dog is a good time to be cautious when it comes to finances, according to the CLSA Feng Shui Index.”
Lee Shing Chak, Raymond Lo (I’ve quoted him many times), and Yeo Tin Ming are 3 feng shui experts that have each practiced for more than three decades.
Lee predicts Trump, born the Year of the Fire Dog, will see further upheaval in his staff, which could “affect the world.”
He also suggests that a power shift in the midterm elections could have Republicans losing ground. He says Trump’s policies, such as his proposal to build a border wall, will fail.
Lo goes on to say that “there will be anti-Trump movements.”
Lo foresees more obstacles and resistance for Trump, especially in the first six months (takes us to July).
However, he also muses that if Trump survives through October, then the midterm elections could turn out ok for him.
Yeo Tin Ming is more negative, predicting war and Trump’s possible removal from office.
The leader of the free world engenders mainly negative speculation.
Yet, the market shook off a nearly 11% correction by rallying over 50% from the recent lows to the January high.
The stock market slate is neutral given that we are smack in the middle of that range.
How are we to reconcile the feng shui masters’ dark projections, along with the current stock market levels?
First off, like with all news (fake, real or hypothesized), the charts remain our best friend.
In terms of phases, the S&P 500, the Dow and Retail (XRT) all confirmed their bullish phases.
Biotechnology (IBB) and Semiconductors (SMH) both held onto their bullish phases.
NASDAQ 100, the first to go into a bullish phase, held on.
QQQs, SPY, DIA, and SMH also cleared back over the exponential moving averages they had failed for the first time since November 2016.
If you look closely though at all those instruments, they require a lot more steam to catapult them back to January highs.
If they succeed or not depends a lot on how the weaker instruments do.
The Russell 2000 (IWM) and Transportation (IYT) are in warning phases. Although IWM tried briefly last Friday to clear the 50 DMA, it could not.
This week, first place to look, besides looking to see if the leaders continue to lead, is the Russells. IWM needs to have 2 consecutive closes over 153.80.
Second place to look is at IYT. Should this run and clear 193.80, then consider it safe to assume that the run up is not over.
However, given all the aforementioned factors-the leaders still leading, IWM and IYT, should they turn down and especially if IYT fails 185, I’d contemplate telling your friends that the top of the market is in.
Bold statement I know.
If the market (and Trump) is to mimic the positive characteristics of dog personalities this year, expect honesty, friendliness, faithfulness, loyalty, intelligence, straightforwardness, and a strong sense of responsibility.
That also infers the phases remain bullish.
Yet, just as, if not more likely, the market (and Trump) may mimic negative dog traits such as self-righteousness, coldness, stubbornness, deceptiveness and a lack of good social skills.
Warning Phases will look like an aggressive dog-ears back and baring teeth.
So, “Does your dog bite?” We in the US will not be able to answer that question the same way they did in The Pink Panther-“But it is not my dog.” It is.
We wish you happiness and prosperity!
恭喜发财 / 恭喜發財 (Gōngxǐ fācái)
S&P 500 (SPY) 272 pivotal support. If holds can see 275.85 next. If fails can see 267 quickly.
Russell 2000 (IWM) Under 151.50 will engender caution. Otherwise, need those 2 closes over the 50 DMA.
Dow (DIA) 251.67 the 50 DMA pivotal number
Nasdaq (QQQ) Wrote this last week, “It seems it will need a lot of buyers to push through the major resistance at 167-168. It’s major.” The high was 166.76-so there you go-over it or bust.