Market Analysis for Trading on 7/21/2015

Mish Schneider | July 20, 2015

The Weigh-Eigh-Ting Is The Hardest Part

Commentary devoted to Tom Petty and The Heartbreakers

NASDAQ followed through from its runaway gap to new 2015 highs. Biotechnology cleared the 6-month calendar range forging to new all-time highs.

Simultaneously during Monday’s session, there were 287 stocks down 4% or more on the day in the Russell 2000s (IWM). The Bloomberg Commodity Index fell to its lowest level since 2002.

Thanks to two of our automated trading systems-one that weights and buys the top NASDAQperformers and the other than uses a Mean Reversion system to go both long and short, we’ve handsomely profited from the recent orbital gainers.

Yet, I continue to worry regardless. After all, I also look after my Modern Family with Shepherdess devotion. Like a Dickensian tale, the Family measures the “heart” of the economy and not just corporate profits.

NASDAQ may be singing, Oh baby don't it feel like heaven right now”, but my Modern Family(IWM, IYT, XRT, KRE, IBB, SMH) borrowing again from Tom Petty’s songbook, is humming, “It's a long day, living in Reseda. There's a freeway running through the yard” (Free Falling)

Semiconductors are the most worrisome as the closest one to the low of the new July 6-month Calendar Range. Transportation has a better chart position relative to Semi’s, but remains in a bearish phase and continues to elude its 6-month range high.

Although Biotechnology trades in the stratosphere, the late day sell-off put that just sitting a bit over the 6-month calendar range high.

Regional Banks have a really good shot at 45.00 and, as the one that began the 2015 rally in May, remains the one I have the most faith in. Tom Petty sings, “You can stand me up at the gates of hell, But I won't back down” and so sings our Prodigal Son.

Retail hasn’t done much since early April. All it needs to do for now is clear 101.24 and hold. Otherwise, back under 98, if looking for a bear signal, is my line in the sand.

Finally, Russell 2000. If IWM does not cross 126.50, we could be hearing, “Yeah runnin' down a dream, That never would come to me,

Workin' on a mystery, goin' wherever it leads.” (Runnin’ Down A Dream)

S&P 500 (SPY) Nearing the top of the 2015 range, peaking its head to see if there are any wolves around. Subscribers: Positive Pivots in SPY QQQ DIA Negative IWM

Russell 2000 (IWM) Sitting on the 50 DMA. More importantly is what happens if it takes out 124.48

Dow (DIA) Not close enough to the 2015 highs to think it can clear

Nasdaq (QQQ) 112 is the runaway gap support-now overbought-

XLF (Financials) This is helping carry the ball and also one good reason to hope it’s not all about NASDAQ

KRE (Regional Banks) 45.00 next resistance to clear on a closing basis with support at 43.98

SMH (Semiconductors) This is weak and no matter what, a very sobering sign for the market

IYT (Transportation) Inside day. Not wowing though after the recent bottoming pattern

XRT (Retail) 100 pivotal. Over 102.50 it’s golden

IYR (Real Estate) Better chart now move convincingly holding the 50 DMA

GLD (Gold Trust) Too a while but the break of 110 has pushed this ½ way to next target 100

SLV (Silver) Holding 14.02-marginally

GDX (Gold Miners) Even more RIDICULOUSLY oversold

USO (US Oil Fund) 15.60 is the 2015 low

OIH (Oil Services) remote possibility of triple bottoms-writing this more to myself as a don’t forget thing

TLT (iShares 20+ Year Treasuries) Unconfirmed phase change to bearish

UUP (Dollar Bull) In the sea of interesting relationships, there is also a strong dollar

EEM (Emerging Markets) 39.00 pivotal