November 3, 2015
Mish's Daily
By Mish Schneider
Is the Dow reaching 17,977 enough of a move up to evoke an oldie but goodie-Terror in the Dow at 18K?
Are the Russell 2000s trading at their trifecta of resistance enough to stop this rally dead in its tracks?
Are the current performances in the key sectors and groups enough to continue this rally?
Are the last 2-day up moves in many underperforming sectors merely the backdraft from our Alpha Male NASDAQ 100?
Will the S&P 500, which made 6 stabs at the 213 level between May and July see the 7th stab a charm?
If you’re like me, these questions occupy your mind and define your trading decisions (or indecisions).
If you’re like me, you are having debates with yourself on these very questions.
If you’re like me, you are also having these debates with other traders who are equally searching for a definitive answer on the market’s next logical direction.
If you’re like me, you are wondering if logic should even enter the debate.
Wednesday, the Federal Reserve is scheduled to testify. They have hinted at a rate rise in December while they continue to voice concerns about the global and US economy’s rate of future growth.
Interest Rates (TLTs) and the Metals (GLD) have acted like a raise is imminent.
At the same time, IWM met with major resistance at the infamous September 17th spike high, the 65 week moving average and the 100 daily moving average, which all converge around 118.50-119.00.
Maybe Tuesday was the peak on this rally with digestion on the way (or worse.)
But before I get too logical:
Interesting is that Gold miners held up well. Silver continues to find support at the 50 DMA. More fascinating is that the Oil and Energy Sectors all enjoyed big gains.
Agricultural commodities also performed. Sugar continues to rally. Corn, Cotton, Cocoa have bottoming formations on their daily charts. Coffee seems to have found support.
For the Fed and the Market, will we go back to a chicken/egg question?
Is it possible that inflation numbers will increase precipitously while the FED begins to tighten?
Will the possibility of rising inflation demand the FED to tighten more, which will cause the US dollar to rise?
If US rates rise while the dollar strengthens, will Europe falter?
If Europe falters, will the FED’s next concern be causing a free fall in all the markets if they have to continue to raise rates?
“Judge a (wo)man by his/her questions rather than by his/her answers” – Voltaire (if he were a woman)
S&P 500 (SPY) 210 pivotal now
Russell 2000 (IWM) Closed under all of the trifecta of resistance so best place to look for clues.
Dow (DIA) Every time this year the Dow traded on near or above 18,000, gremlins appeared on the wing of the plane. For now the most interesting stat I can give you is the 99.25% RSI overbought on the weekly chart
Nasdaq (QQQ) With another new high on Tuesday, 114.39 the old high, an important level to hold on a weekly basis
Volatility Index (VIX) Even this closed green-what??
XLF (Financials) Got the second close over the 200 DMA
KRE (Regional Banks) Could not close over 43.91 with the reversal pattern off of last week’s high is still in place
SMH (Semiconductors) Like KRE, with the reversal from the highs still in place, until that clears the 200 DMA 54.22 becomes super important to hold
IYT (Transportation) Like most of the sectors, it doesn’t look bearish, but it doesn’t look bullish either-just like it recovered from death’s door-inside day.
IBB (Biotechnology) Closed right under resistance after testing it
XRT (Retail) The September 17th 47.68 but at least this cleared 46.50 and recent consolidation
IYR (Real Estate) Inside day over the 200 DMA
ITB (US Home Construction) The overall chart doesn’t look that great to me-looks like a giant top was made. What would change that? A move over 28.00
GLD (Gold Trust) Every correction has put in a higher low. Until that changes, not bearish even if this is in a bearish phase. 106.47 is the low to defend
SLV (Silver) Held the 50 DMA with gold down
GDX (Gold Miners) Inside day on the 50 DMA
USO (US Oil Fund) Heading back to top of range since August.
OIH (Oil Services) 32.00 now pivotal
XLE (Energy) Getting extended now
XOP (Oil and Gas Exploration) Lagging and right into resistance at 40.00
TAN (Guggenheim Solar Energy) Want to see a weekly close over 31.00
UUP (Dollar Bull) The 200 DMA at 25.20
EEM (Emerging Markets) Looks like XLE 3 days ago
GREK (Greece) Looks good over 11.00
DBC (DB Commodity Index) Recovery Phase and needs a second close to confirm
SGG (Sugar) Runaway gap if 35.10 holds
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