Market Analysis for Trading on 8/19/2015

Mish Schneider | August 18, 2015

As The Phase Turns

As The World Turns, is an American TV soap opera that ran for 54 years on CBS. The creator’s (Irna Phillips) intention, psychological character studies of families, their relationships and difficulties, is best described by, “As the world turns, we know the bleakness of winter, the promise of spring, the fullness of summer and the harvest of autumn—the cycle of life is complete.”

As the phase turns, we look at our central figure the Dow (DIA). In the soap opera, the creator preferred a gradual evolution over radical change. With the Dow, the eventual move to a Bearish Phase, has yet to engender any radical moves (trading range overrules there).

However, if the Dow has moved into the “bleakness of winter”, how might the other characters fare?

I love that one of the Phillips innovations was to introduce a Greek Chorus to her stories. TheGreek Chorus, a collective voice, comments on the crises faced and decisions made by the soap opera’s residents.

The market’s Greek Chorus is comprised of literally Greece, along with China, Russia,Deflation and the FED.

This “Chorus” or collective voice, not only comments but also helps to create the crises the market faces. The members of the chorus collectively complete why the Dow is bearish. Our other characters (indices) in the meantime, live in the same town but reside in different phases.

The Russell 2000 is in a Distribution Phase. The S&P 500 has wavered 22 times this year alone, between a warning and bullish phase (with one quick stint in a Distribution phase.)

NASDAQ has held steadily in a Bullish Phase, the protagonist of the soap if you will.

Fans of As The World Turns were upset when it was taken off the air after 54 years. It lost its spot on TV not because of a cycle completion, rather, due to its low ratings.

By no means is the stock market going away. Yet, its choppy action relentless trading range, and divergence of phases, peppered with the end of the summer and many viewers on vacation, this gradual evolution, which many believe will be to the downside, right now feels more like a fade-out.

Note: For the record, I have never seen an episode of As The World Turns. This is for you, Grandma!

S&P 500 (SPY) Confirmed bullish phase. 209.50 is where the 50 DMA lives and this has crossed it 22 times already! Subscribers: Positive Pivots in all except IWM.

Russell 2000 (IWM) Inside day after it rallied right into the 200 DMA resistance. 120 support to hold

Dow (DIA) 174.44 pivotal. Not dismissing that 177 is probably a good place to go short should it get there

Nasdaq (QQQ) The leader leading with resistance at the 111-112 level, which it back away from Tuesday

XLF (Financials) Looks good if holds over 25.00

KRE (Regional Banks) 42.85 support, 43.60 pivotal and 44.20 resistance

SMH (Semiconductors) A major thorn in the market’s side and looks like it’s headed to 49.80 next support

IYT (Transportation) I like this and have for last 3 weeks-it is basing

IBB (Biotechnology) Narrow range day under the 50 DMA

XRT (Retail) Held the 200 DMA thus far

IYR (Real Estate) Heading to the 200 DMA resistance 77

XHB (US HomeBuilders) A possible runaway gap to new highs

GLD (Gold Trust) Maybe it’s bottomed, but if rates do firm, wonder if this is where one should have money.

SLV (Silver) I have been suspicious of the recent move up and Tuesday’s action shows why

USO (US Oil Fund) Found some buyers but guessing more like some short covering

XLE (Energy) Inside day and think that has potential

TAN (Guggenheim Solar Energy) Needs to clear over 34.00

TLT (iShares 20+ Year Treasuries) FOMC Wednesday and this is acting like it expects policy change

UUP (Dollar Bull) Stronger dollar-another indication of possible FED policy change

EWI (Italy) Looks the best

JO (Coffee) This chart looks good-basing over key moving average