Market Analysis for Trading on 6/22/2015

Mish Schneider | June 22, 2015

Wolves Don’t Lose Sleep Over The ‘Pinion’ Of Sheep

Top 5 Characteristics of a Good Shepherd (Trader) in The Year of the Sheep

1. Understands the needs of the sheep better than they do-In Market terms-if you are a position swing trader (different than a buy and hold no matter what investor), understanding that sheep will herd, graze, scatter, poop then rejoin the herd-means you understand that this is the nature of the 2015 trading range. The Shepherd should be one step ahead of the herd!

2. Understands what threatens sheep and what makes them sick-The market fears uncertainty. Currently, there are a few areas of concern. Greece might be the number one. The Federal Reserve’s ongoing policy is another. Then, there’s basic fearmongering prevalent pretty much always, but particularly rears its ugly head when fueled by the above uncertainty.

3. Works tirelessly to provide protection and security-This is where trading with a calm head and having a bottom line level of risk exposure planned for in advance (position sizing based on a sane percentage of your overall equity), are ways to take emotions out of the trading process.

4. Shears sheep and examines each one for injury or disease-In a trading range or enclosed sheep pasture, it is beneficial to lock in profits or shear your positions when they are going your way. That way, if a trade gets “injured” you have already taken profits off the table.

5. Keeps sheep “on the move” so they don’t get into a rut-This means two things really. First, having a well-balance portfolio so should one position falter, trading across several asset classes helps your portfolio from falling into a “rut”. Secondly, even with locking in profits on rallies, holding partial positions going your way, takes advantage of potential further momentum.

Our flock consists of the Modern Family. They (Russell 2000s, Retail, Semiconductors,Biotechnology, Regional Banks and Transportation) have taken turns running from potential threats, moving as a herd over the cliff and/or following the Golden Ram as leader.

Therefore, as we head into the coming week, mind the trading range, watch for eitherdiversion or unity among the Russell 2000s and the other 5 highlighted sectors and most importantly, try to subscribe to the 5 characteristics of a Good Shepherd to avoid becoming one of the herd.

S&P 500 (SPY) Baa Baa Black Sheep back below the 50 DMA for an unconfirmed phase change to warning. Not a good close to the week, but not a game changer eitherSubscribers: Negative Pivots in all except IWM

Russell 2000 (IWM) Tight range inside day on Friday. Russell’s continue to lead

Dow (DIA) Struggled all last week and continues to do so. Unconfirmed phase change to warning 179.25 area support. Over 180.30 looks better

Nasdaq (QQQ) Inside day. 111.16 is the place to clear and over 109 healthy

XLF (Financials) 24.60 now support with the dramatic selloff from new highs typical of this year-looks great-SELL!!!!

KRE (Regional Banks) Inside day. Digestion seems most likely

SMH (Semiconductors) Inside day and defended the bullish phase

IYT (Transportation) Couldn’t close out last week over 152, so not expecting the big crowd that Michael Jordan or LeBron James drew last week

IBB (Biotechnology) Made a new high and closed better than pretty much everything else

XRT (Retail) Held 100 but did not get the follow through Trannies would have like to see to hold over 152

IYR (Real Estate) Inside day at the resistance point

XHB (US HomeBuilders) 36.98 is the highest weekly close since 2007-close, but no cigar. Maybe this week

GLD (Gold Trust) Inside day over the 50 DMA which means has our attention for and like even more over 116, the 200 DMA

USO (US Oil Fund) Noisy until it clears 21.50 or fails 19.00

TAN (Guggenheim Solar Energy) If holds 42.00 good and over 43.40 even better

TLT (iShares 20+ Year Treasuries) So far, holding the 200 week moving average with 119 area resistance

UUP (Dollar Bull) 24.33 is the 200 DMA

GREK (Greece) If clear over 11.34 and I would suspect some positive news precedes or follows

EWI (Italy) Subscribers: Inside day and holding at a good spot

EWY (South Korea) Subscribers: Still looks okay if can hold Friday’s lows