February 28, 2016
Mish's Daily
By Mish Schneider
Gypsys, Tramps and Thieves
In the song, written by Bob Stone and made famous by Cher, a young girl is “born in the wagon of a traveling show” while her mother “danced for the money they’d throw.”
Dad did whatever he could, “preached a little gospel, sold bottles of Doctor Good.”
In market terms, imagination could stretch to just about any instrument as the role of the young girl. For our purposes, let’s call the Dow Jones Industrial Average the young girl.
Later in the song, the girl gets knocked up by a young man. He lives with the family until the girl gets pregnant, then he leaves her as a “gal in trouble.”
Seems appropriate to name the U.S. Oil Fund (USO) as the young man who last week, impregnated the market (DJIA) with the birth of a good rally, after oil rose from the doldrums.
By Friday though, the market looked somewhat like a “gal in trouble”, after oil failed to hold early gains and the DJIA closed down 57.39 points.
Who is Mom and Dad? And how much money did mom’s dancing and Dad’s gospel yield for the rest of the Modern Family?
In the song, the people of the town insulted the girl, mom and dad, by calling them gypsys, tramps and thieves. Yet even so, the people paid them well “every night” for their services.
That sounds to me like the economists and talking heads who insult the market using words like “recessionary, cataclysmic, 2008 all over again”, though show up every day nevertheless. And more than likely, whether a bull or a bear, they throw their own fair share of money at the market.
That’s where the Modern Family comes in. This year in particular, with naysayers, voyeurs and disgruntled investors constantly hurdling commentary at the market, my Family gives us a simple and clear focus in the midst of the volatility.
IWM
For fun, he can be the dad preaching gospel and selling bottles of Dr. Good. But did Granddad Russell convince the crowd to throw enough money at him?
He tried to get to the overhead 50 DMA. He got close, but not close enough. So yes, he captured some money, but still has a lot of selling of himself and his secret brew to do before he can trade above the 50 DMA.
XRT
Granny Retail sure fits the bill as our dancer for money. She mustered up all she has to get the crowd to throw enough money that she was able to clear the 100 DMA. Good sign. Perhaps best sign for this week.
IYT
Conceivably the driver of the wagon that pulls our little traveling show, Transportation (Trannies), could not quite get up to the gap fill at 134.23. However, with 128 now solid support, he could still have enough strength to pull that wagon up to that level and beyond.
As for the rest, Semiconductors, Biotechnology and Regional Banks, once again SMH showed best promise because technology still tends to attract speculative money. Also, some companies like Nvidia had solid earnings this quarter.
Regional Banks, KRE remain a reluctant participant in this rally. Over the pivotal 35.81 marginally, it has way more to do.
That leaves Biotechnology (IBB), our most speculated sector and the Family’s Big Bro. Undoubtedly, its underperformance continues to represent the lack of investor money in the market. Maybe that money will be the last to come in or maybe not. One thing is for certain, we need an audience willing to throw money at the market. Oil alone, doth not a market make.
S&P 500 (SPY) I would consider 195 an important level. If it can hold above great. If not, I would still consider the huge head and shoulders top possibility. Subscribers: Positive pivots in all
Russell 2000 (IWM) 104.05 the 50 DMA. It does not have to get there. It could just be it rallied to test that level of resistance and will fail. Too soon to tell
Dow (DIA) Confirmed Recovery Phase but the slope on the 50 DMA is down so a weak recovery for now
Nasdaq (QQQ) 103.50 the monthly resistance with one more day of the month. 104.65 the 50 DMA. Under 102 more troublesome
Volatility Index (VIX) Next time this gets above 26.00 fasten your seatbelts
XLF (Financials) Closed above 20.87 the 200 week moving average so safe for now
KRE (Regional Banks) 35.81 pivotal-closed just above
SMH (Semiconductors) Confirmed Recovery Phase with 50.00 pivotal
IYT (Transportation) Would feel a lot better if it can fill the gap to 134.23. If not, has to hold 131 then 128
IBB (Biotechnology) 267.60, if this can move over there, great sign
XRT (Retail) Closed over the 100 DMA but now a bit overbought.
IYR (Real Estate) Moved right up to the 50 DMAs then closed just beneath it.
GLD (Gold Trust) As long as it holds 115, move up intact. Back over 118, new leg up
GDX (Gold Miners) Perhaps a 2-day reversal top in play. Under 18.50 more likely otherwise, over 19.00 again looks great
USO (US Oil Fund) I love that this is so technical. That makes 8.90 pivotal, a close over 9.35 best close in a month and support at 8.50
UNG (US NatGas Fund) I could say that the inside day with huge volume on Friday (nearly 3x the norm) spells bottom.
TAN (Guggenheim Solar Energy) Still aside on this although if fills the gap to 23.88, I would look to buy the next dip
TLT (iShares 20+ Year Treasuries) Held 130 which means under see 128.50 and over 131 back to a rally
UUP (Dollar Bull) 25.50 should be resistance.
Every day you'll be prepared to trade with:
