August 17, 2016
Mish's Daily
By Mish Schneider
A divided Federal Reserve Committee caught a “Hey, careful dudes” sort of sideways glance from our Rallysaurus.
As if to say, “We need our friendly dinosaur to continue to roam the markets until after November”, half of the Fed stated that they want to wait longer before raising rates.
The other half believes the U.S. is close to a fully recovered job market, implying that the Rallysaurus will roam regardless because the economy is sucking on its own fossil fumes.
Next up, the September meeting where once again we are hearing rate rise rumors coming up from the ground like a bubbling crude.
If you could turn the pages of the above issue of the Scientific American with our Goliath on the cover, what might you learn?
Guess what? I did.
“An extinct, flesh-eating, crawling monster that made life unpleasant for the Texas Lizards of his day. Why nature gave him a spiny crest no one knows. Perhaps this curious excrescence was a means of impaling enemies whose too aggressive impulses prompted them to leap on his back.”
Does that same statement apply to the market Bears in today’s world? After all, the Bulls post-Brexit have been flesh-eating the Bears. And, as if the Bulls wear a protective spiny crest, any Bear that has jumped on its back has wound up impaled.
With that all said, the Modern Family has yet to work in synch with one another.
If indeed the U.S. real economy is improving, the Russell 2000 (IWM) must not repeat the price action from last July/August. After peaking at 123.67 in the summer 2015, (this week’s high 123.68) every rally thereafter was met with heavy selling.
Furthermore, Retail (XRT) has yet to make new 2016 highs let alone trading anywhere near August 2015 highs.
Inherent weakness, in spite of the recent tear to new all-time highs in the S&P 500, Dow and NASDAQ, persist. Although the Fed takes heavy criticism from maybe everyone, truth is inconsistencies do exist in the stats they use to measure the health of the economy.
According to the article written for the May 4, 1907 Scientific American, “it is thought that he (Rallysaurus) was an awkward, slow moving creature with a small brain, his actions being chiefly automatic reflex with little or no intelligence or cunning.”
Oh my.
S&P 500 (SPY) Closed above the 10 DMA. Makes 117 support and it needs now to clear recent highs to continue beyond 220.
Russell 2000 (IWM) 121.95 the 10 DMA support held. So although it didn’t clear August 2015 highs, it has the chance of refueling if holds above 120
Dow (DIA) Held the above the 10 DMA making today’s low key support
Nasdaq (QQQ) Looks pretty good to me after holding the 10 DMA
XLF (Financials) January high 24.27 to clear. 23.90 area is now pivotal support. Looks good here
KRE (Regional Banks) 42.00 big resistance and next point to clear
SMH (Semiconductors) Held the 10 DMA perfectly
IYT (Transportation) If can get back over 142-way better
IBB (Biotechnology) As long as it closes out the week over 290, it’s doing its job
XRT (Retail) Held the 10 DMA at 45.00-also key.
IYR (Real Estate) Today looks like that was it for the reversal. Back over the 50 DMA which is good thing
ITB (US Home Construction) Held the 50 DMA
GLD (Gold Trust) So far all its doing is trading within the range of last week 127.20-129.26
SLV (Silver) 18.90 a good place to finally clear once and for all
USO (US Oil Fund) A move over 11.45 would be exciting
XOP (Oil and Gas Exploration) Looks higher from here
TAN (Guggenheim Solar Energy) Held the 50 DMA
TLT (iShares 20+ Year Treasuries) 138.40 the 50 DMA which it’s been above since June 1.
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