Ding-Dong, The Witch Is Dead!
Last weekend’s Daily asked, “But what if there is a man behind the curtain who can make everything all better simply by bringing him the broomstick of the Wicked Witch? What might that look like this week?
We further queried, “Will anyone get close enough to the witch to throw water on her and melt her away? And if so, will bringing the Wizard the witch’s broomstick be enough? Is there still a rally “Somewhere Over the Rainbow?”
Keeping with the film that has brought us the penultimate life and market metaphors, I call on Glinda, the Good Witch of the North. Floating into Oz in her beautiful bubble, she told us we always had the power to go home.
Both NASDAQ and the Russell 2000 handily surpassed a hearty area of resistance this last day of June. The year is officially half over and the Wicked Witch could at last be dead.
Hence, we begin the second half of 2016 with a long summer weekend and then return with a brand new six-month calendar range on the horizon!
By July 15th, (or after the first 10 trading days of July,) we will have a new six-month calendar range to trade from. It serves as a reliable indicator of the trading range to look at for the next 6 months until it resets next January.
That means after July 15th, we will have a range from which we can execute both longs and shorts from. We can either follow the direction of how that range breaks, or for a countertrade, fade when the top or bottom of the range fails.
With Brexit, an upcoming vote for a new British Prime Minister, our own Presidential election, rising commodity prices and any and everything else that can potentially emerge from our volatile and constantly changing world, the six-month calendar range makes for a solid blueprint.
How did the January 6-month calendar range work out?
Looking at the Russell’s alone, well. It told us to be short out of the gate in January. Once it crossed back above the low, it told us to fade and go long. A bit choppy throughout April, by mid-May it signaled a long. Presently, IWM trades above the range.
In the gold miners (GDX), the range provided an exemplary trading direction. Once it took out the six-month calendar range high in February, like Dorothy soaring above Oz in the hot-air balloon, it never looked back!
This week, instead of lions and tigers and bears, the market spooked the shorts with reversal patterns, V bottoms, and Money Supply. Oh my! The bulls, on the other hand, hit the jackpot!
With the Wizard in possession of the witch’s broom and without any other evil sisters emerging in the wings, we should start the long weekend rejoicing in the Merry Ole’ Land of Oz.
Some Munchkins and some Flying Monkeys, read here:
S&P 500 (SPY) it filled gaps, it went into an unconfirmed bullish phase. 207.70 the 50 DMA now pivotal.
Russell 2000 (IWM) Could not close above the monthly moving average at 115.75. It did make a heck of an attempt though. Unconfirmed Bullish Phase
Dow (DIA) Oh my-could this be heading for its 8th attempt at hurdling darts at the gremlin it keeps seeing at 18,000?
Nasdaq (QQQ) 106.50 now pivotal. Still weakest, has to clear 10765 to get above the 200 DMA.
XLF (Financials) If there’s a sector that can mellow out the market, it’s this. It must clear 23.15 and hold 22.50
KRE (Regional Banks) 37.60 the 200-week MA to close above with 38.50 resistance.
SMH (Semiconductors) Gap to fill to 58.55 or could even fail from here.
IYT (Transportation) Even more sobering than the financials, there’s this. No matter how much the market parties, if this stays home, I will remain suspicious. Flying Monkey for sure.
IBB (Biotechnology) 253 the 200 week moving average now pivotal-and today’s move not as impressive as it should have been
XRT (Retail) 42.05 the 200 WMA-also more of a flying monkey than a munchkin
IYR (Real Estate) The mayor of the munchkins!
ITB (US Home Construction) Confirmed Bullish Phase.
GLD (Gold Trust) Most interesting to me is how it ends the week relative to the 200 WMA at 126.05
SLV (Silver) On new 2-year highs!
GDX (Gold Miners) Cleared 27.71 marginally and closed just below
USO (US Oil Fund) Must clear the 50 WMA at 12.01
OIH (Oil Services) Way more bullish in the energy related sectors than in oil itself
UNG (US NatGas Fund) 8.94 the 50 week moving average
TAN (Guggenheim Solar Energy) Lack of volume again and now 21.00 good resistance
TLT (iShares 20+ Year Treasuries) Doji day near the highs-it seems obvious to me that this has to drop given the metals, sugar and soybean’s rallies, but low oil is keeping it up
UUP (Dollar Bull) 25.05 the 200 DMA resistance which failed perfectly. 24.70 support
FXI (China Large Cap Fund) Closed just on the 200 DMA for an unconfirmed accumulation phase
Disclosure: None.
Comments
