July 27, 2015
By Mish Schneider
Growing in our yard this summer, we have annual and perennial flowers plus vegetables. Growing in our kitchen, we have 2 varieties of orchids.
Before I left for a quick respite, the tomatoes and peppers were starting to make an appearance, while the geraniums were beginning to lose a lot of bloom. The orchids lost their flowers as well, but immediately after the flowers dropped, new buds emerged.
When I returned, the number of tomatoes and peppers were precisely the same, the geraniums were dry and withered, but the buds on the orchids indoors, sprouted into stunning white flowers.
Thinking of the market as such, we simultaneously have blooming orchids, stalled produce and wilted geraniums.
Our garden, so to speak, which has come to depend on fertilizers to boost growth, struggles now to thrive merely on sun and water.
Fertilization came in the form of Quantitative easing since 2009. With the Fed meeting this week and expectations of interest rates firming, can the market produce a more cohesive bounty?
For now, unless you are growing orchids, which we can replace with the top performing NASDAQ stocks, (note that the QQQs are in a bullish phase), the rest of the market looks either stalled or wilted.
Looking at phases, the S&P 500, Dow and Russell 2000s all oversold, broke their 200 DMAs yet all have decent footing well above their 2015 lows. (SPY in the final moments, managed to close on the 200 DMA).
Using the July 6-month calendar ranges, DIA and IWM are beneath, while SPY trades within it.
In sectors, Retail (XRT) broke the range though staying above the February 2015 lows and marginally clutches for dear life to its 200 DMA.
Transportation (IYT)’s best shot (or is that best shoot?) comes from the early July reversal pattern intact. Semiconductors (SMH) look the most like our poor geraniums. Not dead, but trying to find the right combination of water and sun to revive it.
Regional Banks (KRE) are trading above the July Calendar Range low. My eyes are here for sustenance, similar to the one tomato and two peppers I hope multiply soon.
Biotechnology (IBB) like QQQs are in a bullish phase. Not quite as pretty as the orchids since they have no new buds, but at least they have flowers on their stems.
Technically, since the rally began in 2009, the IWM and XRT (Granddad and Grandma) have officially switched from a neutral (during corrections) and an outright bullish bias to a bearish one.
Yet, like a southwest garden that contends with an assortment of problems, garden enthusiasts always seem to find a way to keep the desert fruitful.
S&P 500 (SPY) 200 DMA magnet, now a good place to see hold.
Russell 2000 (IWM) I would be totally negative if not for 3 factors-the proximity to the 200 DMA, oversold conditions and the early 2015 lows which are far still far off
Dow (DIA) Double top, head and shoulders breakdown-all feasible-nothing goes straight down though
Nasdaq (QQQ) The only index still holding its bullish phase with 109.76 the 50 DMA to defend.
XLF (Financials) Also in the bullish phase and therefore, a good barometer
KRE (Regional Banks) Confirmed warning phase although held the July lows
SMH (Semiconductors) Put in another new 2015 low. Next support is around 49.34, a monthly chart area.
IYT (Transportation) I’m still going with this might have bottomed out already
IBB (Biotechnology) The only member of our modern family still holding a bullish phase, with 372.32 the 50 DMA to hold.
XRT (Retail) Support at 96.02 held to a tee
IYR (Real Estate) Like this over 74.25
XHB (US HomeBuilders) confirmed warning phase.
GLD (Gold Trust) Why we always wait for confirmation-it didn’t
USO (US Oil Fund) Held the 2015 low for now.
TAN (Guggenheim Solar Energy) Oversold-always looking for a safe long
TLT (iShares 20+ Year Treasuries) Recovery phase
UUP (Dollar Bull) 25.15 now support to hold
FXI (China Large Cap Fund) Held 40.00. Something to be said for that
CORN (Corn) Weather got nicer, speaking of gardens
PHO (Water) 23.16 and 23.17 both the lows this year
Every day you'll be prepared to trade with: