The Year of The Fire Rooster Part 3

With about 7.5 billion people living on the planet, 1.5 billion of them celebrate the Chinese New Year. Approximately 2.5 billion road journeys will occur while millions more will travel by air or rail to celebrate with family.

Why does this matter?

Modern psychological and economic research identifies herd behavior in humans to explain the phenomena of large numbers of people acting in the same way at the same time. Collective consciousness.

If billions of people optimistically believe that the fire rooster is good for the stock market, then any surprise the Dow finally visited 20,000 just days before the new year begins?

The Trump bump alone cannot take the credit.

If Chinese politics have anything to do with it, President Xi Jinping just stated his intentions to offer a vigorous defense of globalization thereby signaling Beijing's desire to play a bigger role on the world stage.

I have no knowledge of how closely President Xi follows the predictions for 2017, this year of the fire rooster. However, fun to conjecture whether his recent comments at Davos reflect the open-minded, confident and innovative implications the fire rooster conveys to solve obstacles.

At least, according to Raymond Lo, until August and October, which will bring serious setbacks.

What happens when the fire burns too hot?

In China, Goldman Sachs Research Chief and Asia-Pacific Economist Andrew Tilton sees potential for “additional gains from productivity improvements in India, Indonesia and the Philippines.”

In the U.S., Goldman Sachs Researcher Jan Hatzius sees “above-trend growth and potential fiscal stimulus causing a modest overheating in 2017 and 2018, putting upward pressure on inflation, interest rates and the dollar.”

Coupling those thoughts along with President Trump’s more isolationist stance and withdrawal from the Trans-Pacific Partnership, Lo’s interpretations of the fire rooster could very well turn out spot on.

A Modern Family of Roosters and Hens

Since the Russell 2000 could not clear the early 2017 highs nor the January 6-month calendar range high today, Gramps does present as the best indicator going forward. Should he sputter, take note.

If IWM continues to run, watch Transportation and Regional Banks follow his lead. Otherwise, Sister Semiconductors, who currently fuels the fire, could wake up one day shivering cold and wondering why she’s the only one left at the campsite.

Interestingly, Granny Retail and Big Brother Biotechnology are not currently part of the fire rooster roster. I read one 2017 prediction that retail and healthcare/pharmaceuticals should shine especially bright in April.

That could mean that the disparity we have witnessed for quite some time does not mean very much to the overall picture.

When might the whole fire extinguish?

If you can wrap your head around the logical conclusions the actions and words of economists and politicians spell out, take heed.

If the prophesies of the Chinese philosophers I’ve noted in my last 3 Daily’s hold water for you, then take heed.

Lo predicts a long term bearish market as of the fall of 2017 and winter of 2018 because there are no more fire years before the Tiger year 2022.

Sounds awfully cold.

S&P 500 (SPY) Runaway gap to new all-time highs? Need confirmation which means cannot fill that gap to 228.34

Russell 2000 (IWM) 138 key resistance and 135.50 key support

Dow (DIA) Oh sweet mystery of life at last I found you-Ode to 20k

Nasdaq (QQQ) Like SPY, possible runaway gap if holds

KRE (Regional Banks) 56.73 important

SMH (Semiconductors) Like SPY and QQQs, possible runaway gap if holds gap

IYT (Transportation) 171.16 the high. If good should hold over 168

IBB (Biotechnology) 274 resistance

XRT (Retail) 43.90 pivotal resistance

IYR (Real Estate) A close this week over 78.25 would be interesting

GLD (Gold Trust) Maybe at 112 area worth a new shot

SLV (Silver) 15.75 should hold if good

GDX (Gold Miners) A drop to around 21.50 would be a gift

USO (US Oil Fund) Another hammer doji day which means on hold

TAN (Solar Energy) 18.00 key

TLT (iShares 20+ Year Treasuries) Broke the 120.25-119.50 support.

UUP (Dollar Bull) 25.80 support held again. Key

FXI (China) 36.20 should hold now