Bears Could Be A Bust In The Hall Of Shame
In the mother of all metaphors, The Wizard of Oz, the Tinman wasn’t always made of tin.
He was originally flesh and blood. The Wicked Witch enchanted the Tinman’s ax so that it cut off his body parts. Since that happened slowly enough, he could replace each severed part with tin.
The Bears began 2017 also made of flesh and blood. But as their body parts have been slowly cut off, each has been replaced with bronze.
Hardly a bust in the Trader’s Hall of Fame, Bears look more like a mascot for the Hall of Shame.
May 1st and Technology, along with the FANG stocks, continue to do all the heavy lifting.
Conversely, the Russell 2000 (IWM) remains below the monthly channel line featured in the weekend daily. Although it traded above 140 briefly intraday, ole Granddad closed shy of that important pivotal point.
The Tinman had an oil can to release him from his agony.
What might bronze bears have that can release them from their agony?
The best shot for the Bears- Regional Banks (KRE), Retail (XRT), and Transportation (IYT) could not improve in phase despite the strong move in NASDAQ.
However, Semiconductors (SMH), the Modern Family leader, cleared its key inflection point, 80.00.
Biotechnology (IBB), the one bright spot in the Family last week, tried hard to clear 300.
That means should KRE, XRT and IYT remain weak while SMH fails 80.00 and IBB falls back from the 300 resistance, the Bronze Bears could still see the rally melt.
Interestingly, the market has discounted a Federal Reserve interest rate hike. Nevertheless, the Bears could find themselves ruling when and if a rate hike happens.
Meanwhile, NASDAQ chugs along, which to the Bears, resembles the Wicked Witch flying through the sky on her broomstick.
Will the bronze bears ever feel like flesh and blood again?
Seems that a vague tax plan, tensions in North Korea, upcoming French elections, and low approval ratings for this administration have little impact for now.
Why should anything impede the rally when corporations have mega cash? Apple announced it has a cool $250 Billion laying around.
Big Banks? Did you hear the one about President Trump thinking about breaking up the big banks? Perhaps that’s why the financial ETFs sit in warning phases.
But really? With Goldman Sachs’ veterans at the helm? Who are those men behind the curtain?
So, tender bears, I feel your pain. Nevertheless, accept this as the Land of Oz-a parallel universe now more perpendicular.
S&P 500 (SPY) 239-240 resistance 236.65 key support
Russell 2000 (IWM) 140 pivotal. 141.50 to clear and 138.60 to hold
Dow (DIA) Resistance at 210-212. 207.40 support
Nasdaq (QQQ) Rare to see-monthly chart overbought as the May begins
KRE (Regional Banks) If clears 55.40 better.
SMH (Semiconductors) 80.00 super pivotal
IYT (Transportation) Closed red. 161.50 support and through 166 much better
IBB (Biotechnology) Needs to hold 292.25 and clear 300
XRT (Retail) 43.83 the 200 DMA and 42.40 key support
IYR (Real Estate) 79.00 pivotal
GLD (Gold Trust) Support 118.75-120 area. Time for this to move beyond 121
SLV (Silver) Even more oversold-aside for now
GDX (Gold Miners) Getting close to March lows support levels
USO (US Oil Fund) Needs to get back over 10.40
TAN (Solar Energy) A close over 17.60 with volume will be interesting
TLT (iShares 20+ Year Treasuries) 120.77 to 120.17 support. Then, 118 next
UUP (Dollar Bull) 25.50 area support on multiple timeframes holding
Disclosure: None.
If #Trump installs #GlassStegall and ends the insane regulatory environment that does little to protect the populace it would be the single greatest victory for the American people in decades.
That said, the market is not crashing because #Yellen isn't raising rates substantially and what she does do is slower and slower every day. The bubble won't pop until people start blowing into it or a tear occurs. In the meantime what's driving the market is people getting out of short term deposits waiting to put it in higher term bonds and CDs and getting into the only assets paying decent returns even if it implies bigger and bigger risk (mainly stocks and real estate).
Hi there and thanks for writing. Do you know how the book Wizard of Oz ends? The Tinman-or for our purposes the bronze bear-becomes the ruler of the entire land.