It Takes Courage to Believe in Chaos

As I went through the tweets of those I follow before the market opened today, I literally felt like my head could explode. Opinions, opinions, opinions and more opinions. And why not? Everyone’s got one. Twitter makes it easy for opinions to reach an eager and impressionable audience.

The market’s going lower, higher, Brexit will happen, it will be revoked, oil will tank, it will rally, gold has topped, it will go much higher, US is going into a Recession, US is in Stagnation, Inflation…

Back in February and at a time of a much lower low in price than now, I felt similarly-how do I turn off all the noise?

And then I remembered-my Modern Family.

Last night I saw that the Russell 2000 (IWM), under the 200 DMA had indeed held the longer term 200 weekly moving average. As a phase watcher, daily phases have changed in IWM in 2016 eight times already. Weekly phases have changed four times.

Are Phases Really Important Right Now?

For one instrument all by itself, phases, especially while changing so rapidly, are not the end all be all.

Weekly phases, less volatile, help to see a trend further out. However, unity or disharmony among the Family members remains my favorite way to tune out the noise.

Today, the Gross Domestic Product came out a lukewarm 1.1%. Consumer confidence however, rose. The Retail Sector (XRT), in a Bearish Phase held a very critical support level. Seems safe to say that with the negative phase, a good rally is an opportunity to short.

The Regional Banks Sector (KRE), currently in a daily and weekly Distribution Phase, traded within Monday’s range for an inside day. Conclusion there-pause-ain’t buying it just yet.

The Transportation (IYT) sector and my preferred tell really didn’t tell me very much at all about today’s rally. Also within Monday’s trading range, I will look for a move over Monday’s high as a positive sign. Equally important, a move under Monday’s low will look negative. Also possible, another inside day whilst it waits out the activity of its stronger and weaker Family members.

That leaves Biotechnology (IBB) as our weakest and Semiconductors (SMH) as our strongest in the Family.

IBB found notable support and courageous buyers at February’s low. The uphill battle is culpable with volume on today’s reversal not nearly enough to be extremely convincing.

Meanwhile, SMH rallied as well. But compared to the recent confidence it had, this rally seemed more reluctant even with the better than average daily volume. Therefore, we have to wait and see if we get another day up here or not.

Sometimes, it pays to look beyond the Family, especially if there is no real leadership. Today, I give the best hope to Nasdaq, who once wooed Semiconductors into an almost shotgun marriage until she became the runaway bride.

Back on January 12, 2016 I wrote that “Nasdaq is Such a Tease.” With a potential reversal pattern in the works and in its current Bearish phase, much can be said today. On January 13^th, Nasdaq opened higher and tanked. That level? 106.23 or right in the ballpark of Friday’s high, 106.50, before the crash.

One last thought meant as a suggestion not an opinion-watch interest rates. Huge volume the last 3 days on the move up in TLTs has a blow off top feel to it. Now, there’s chaos I will have the courage to believe in.

S&P 500 (SPY) 202.20 pivotal area on both the weekly and daily charts. Possible reversal today. Market loves V bottoms this year so we shall see

Russell 2000 (IWM) Inside day wedged between the 100 and 200 DMAs. Mondays range becomes important in the how it breaks one way or another

Dow (DIA) 171.85-172.35 the pivotal area where moving averages live. Like SPY, possible reversal pattern

Nasdaq (QQQ) Possible reversal pattern with 106.50 a huge overhead resistance point and 103.30 today’s low a great point to hold

Volatility Index (VIX) If you are trying to trend trade this, I can’t imagine how really

XLF (Financials) “If 22 clears a relief.” It did marginally so needs follow through.

KRE (Regional Banks) Inside day so watch Monday’s range

SMH (Semiconductors) Back in unconfirmed Bullish phase-if fills gap to 55.13 better. If not and fails the 50 DMA weak

IYT (Transportation) Inside day so watch Monday’s range

IBB (Biotechnology) 253 is the 200 week moving average to get back above

XRT (Retail) Also an inside day-so that’s 3 Modern Family members all paused within Monday’s big range

IYR (Real Estate) Loves the low rates and looks like it’s in its own trading bubble-but wait-bubble-watch those rates

GLD (Gold Trust) 125 nearest support. Most interesting to me is how it ends the week relative to the 200 WMA

SLV (Silver) Has to get over 17 to see a new leg up-looks like it will

GDX (Gold Miners) 2 Inside days-very interesting

USO (US Oil Fund) Noise until it clears the 50 WMA

OIH (Oil Services) Inside day but back over the 50 WMA

UNG (US NatGas Fund) First time over the 200 DMA since July 2014-needs to confirm

TAN (Guggenheim Solar Energy) I like that it returned over 20.00. I just wish there was volume with that

TLT (iShares 20+ Year Treasuries) Huge volume, new highs, I smell trouble

UUP (Dollar Bull) 25.05 the 200 DMA resistance which failed perfectly. 24.70 support