Market Analysis for Trading on 7/31/2015

Mish Schneider | July 30, 2015

I’m Just Here For The Cake

Every day this week, I took the analytical rather than the typical lighthearted, humorous approach to the commentary.

My brain needed to reckon the most logical way to look at current market activity. Hence, the 3 layers emerged as a means to examine the overall health of the Modern Family (IWM, XRT, IYT, SMH, KRE, IBB) along with some of its extemporaneous friends-NASDAQ, the S&P 500and sector wise-Real Estate.

The 3 Layers consist of the 2015 trading range, July 6-month calendar range and phases, particularly how many phases each member and friend has traded within thus far this year.

Thursday, Granddad Russell 2000 and Granny Retail spent the morning in the kitchen preparing a surprise. They searched the cupboard and found baking powder, sugar, vanilla and flour. Using a magical mixing bowl, they combined those ingredients with the 3 layers and baked a cake. For giggles, they added chocolate frosting once the cake was out of the oven.

Everyone else in the family was happy to feast on dessert before dinner. This week’s rally appears like dessert that replaces dinner in the same way we humans skip a meal to head right for the immediate sugar rush.

Biotechnology, Semiconductors, and Transportation (been friendly to Trannies as mentioned in every daily this week since it had gone from bearish to a recovery phase cycling through the 6 phases more logically), all indulged in cake.

Regional Banks took its index finger to scoop up a bit of frosting, but abstained from having a whole slice. Most likely, the prodigal son feels more incredulous of this rally as the future of interest rates remains unknown.

Between the mixed economic data and the inflation/deflation factors the Fed has to be thinking real hard about the inevitable raising of interest rates. If Yellen is thinking cake, let’s hope it’s not in the same way Marie Antoinette did.

NASDAQ has feasted like a king on both dinner and dessert continuing to do what leaders are meant to do-lead.

Finally, SPY confirmed the bullish phase, now approaching the July 6-month calendar range high-cake. Moreover, Real Estate, like Transportation could be next to move higher which would certainly give me more confidence that a major sector of the US economy has bottomed out.

Until then, I have TUMS on hand for the longs.

S&P 500 (SPY) Confirmed phase change to bullish. 211.28 is the July 6-month calendar range high. 209.60 has to hold Subscribers: Positive Pivots in all

Russell 2000 (IWM) 124-125 resistance with 121.24 key support

Dow (DIA) Continues to stall at the 200 DMA. 177.52 has to clear

Nasdaq (QQQ) 112.25 area resistance with 109.86 support

XLF (Financials) 25.35 next point to clear with 24.90 point to hold

KRE (Regional Banks) Over 43.90 gets interesting

SMH (Semiconductors) Did well and now, if holds 52.00 could see move up to around 54.00

IYT (Transportation) Confirmed recovery phase with an inside day

IBB (Biotechnology) Tested but popped back from the 50 DMA. 370 support

XRT (Retail) 98.00 big test but now, has to also hold 97.52 the July range low

IYR (Real Estate) Recovery phase. Inside day and over 74.78 clears July range. Subscribers: Would go long there with stop under 73.49

XHB (US HomeBuilders) Looks good

GLD (Gold Trust) I got nothing

SLV (Silver) 14.10 pivotal with an inside day-over 14.25 better

USO (US Oil Fund) 15.60 to hold

XLE (Energy) 70.85 should hold if this reversal pattern is good.

TAN (Guggenheim Solar Energy) 36.38 resistance with an inside day

UUP (Dollar Bull) Looks higher

FXI (China Large Cap Fund) 40.00 key

PHO (Water) 24.00 resistance